That VdL chose to launch the investigation “ex officio”, without any complaints being lodged by the European industry - even the French one - suggests it could be quite hard for the Commission to come up with evidence to support its case. What’s the betting that VdL brought it in an effort to win French support for her next job move, knowing that it was most unlikely to go anywhere and could be shelved once her future employment was secured?
As for whether the "non-Chinese" companies have lower rates of subsidization, that is not certain. In other China cases, the big money is often in input pricing (eg purchases of steel from an SOE) and financing (borrowing from state-owned commercial banks). Do the "non-Chinese" companies do less of that? Not so sure. And remember that, except for Tesla (which negotiated an exception) foreign auto producers have been required to enter into JVs with Chinese companies (hence the quotes). In other cases - Volvo, for example) the foreign company was bought outright by a Chinese company (Geely).
Ah, yes. I had meant to say something about that. Although the WTO Agreement is a bit less explicit about individual CVD rates than it is about AD, it is accepted practice. including in the EU, to calculate individual rates of subsidization by exporter. So the EU will need to perform a "limited examination" choosing specific exporters and calculating an "all others" rate for the rest. Typically the choice for individual examination will include the biggest exporters (Tesla and a couple more) although they might also try to make the sample representative. Remaining exporters would get the "all others" rate. So it could easily end up that it is exclusively or mainly non-Chinese companies that get examined. depending upon export volumes.
Cars don't need to be made by a Chinese firm to be subject to CVD. They just need to be made in China. My guess is that the largest supplier of Chinese-made cars to the EU right now is Tesla. Early on, those cars came from California, but when Tesla built a huge plant in Shanghai that all changed. Tesla doesn't supply the US market from China because of the Trump duties and the local content requirements of the IRA. This is actually a situation not so different from the China CVD case against US autos you refer to - turns out, it hit mainly BMW and Mercedes, which got big investment subsidies from US states to built factories for SUVs. The EU investigation will increase the need for Tesla to ramp Berlin.
As for Guy's comment, the big question is whether the GOC will fully respond to questionnaires about its subsidies. It tends to resent such far reaching info requests as intrusive of its sovereignty. and the outcome can be high "facts available" rates of subsidization.
As for the different time periods for AD and CVD, WTO rules allow shorter periods for provisional CVD measures (4 months) than for AD. No good reason, just negotiated separately. So if you don't want a duty-free gap between provisional and definitive duties. you need to act faster.
Thank you Jesse -- a hugely helpful comment! My assumption is that there may be some differentiation in levels of support for 'Chinese made cars' vs 'cars made in China' -- could that impact the aggregate assessment of subsidy levels?
That VdL chose to launch the investigation “ex officio”, without any complaints being lodged by the European industry - even the French one - suggests it could be quite hard for the Commission to come up with evidence to support its case. What’s the betting that VdL brought it in an effort to win French support for her next job move, knowing that it was most unlikely to go anywhere and could be shelved once her future employment was secured?
Certainly a possibility!
As for whether the "non-Chinese" companies have lower rates of subsidization, that is not certain. In other China cases, the big money is often in input pricing (eg purchases of steel from an SOE) and financing (borrowing from state-owned commercial banks). Do the "non-Chinese" companies do less of that? Not so sure. And remember that, except for Tesla (which negotiated an exception) foreign auto producers have been required to enter into JVs with Chinese companies (hence the quotes). In other cases - Volvo, for example) the foreign company was bought outright by a Chinese company (Geely).
Ah, yes. I had meant to say something about that. Although the WTO Agreement is a bit less explicit about individual CVD rates than it is about AD, it is accepted practice. including in the EU, to calculate individual rates of subsidization by exporter. So the EU will need to perform a "limited examination" choosing specific exporters and calculating an "all others" rate for the rest. Typically the choice for individual examination will include the biggest exporters (Tesla and a couple more) although they might also try to make the sample representative. Remaining exporters would get the "all others" rate. So it could easily end up that it is exclusively or mainly non-Chinese companies that get examined. depending upon export volumes.
Cars don't need to be made by a Chinese firm to be subject to CVD. They just need to be made in China. My guess is that the largest supplier of Chinese-made cars to the EU right now is Tesla. Early on, those cars came from California, but when Tesla built a huge plant in Shanghai that all changed. Tesla doesn't supply the US market from China because of the Trump duties and the local content requirements of the IRA. This is actually a situation not so different from the China CVD case against US autos you refer to - turns out, it hit mainly BMW and Mercedes, which got big investment subsidies from US states to built factories for SUVs. The EU investigation will increase the need for Tesla to ramp Berlin.
As for Guy's comment, the big question is whether the GOC will fully respond to questionnaires about its subsidies. It tends to resent such far reaching info requests as intrusive of its sovereignty. and the outcome can be high "facts available" rates of subsidization.
As for the different time periods for AD and CVD, WTO rules allow shorter periods for provisional CVD measures (4 months) than for AD. No good reason, just negotiated separately. So if you don't want a duty-free gap between provisional and definitive duties. you need to act faster.
Thank you Jesse -- a hugely helpful comment! My assumption is that there may be some differentiation in levels of support for 'Chinese made cars' vs 'cars made in China' -- could that impact the aggregate assessment of subsidy levels?