The European Commission launches an anti-subsidy investigation on Chinese e-vehicles

anti-subsidy investigation on Chinese e-vehicles

The Commission is launching an anti-subsidy investigation into electric vehicles coming from China” announced the President of the European Commission (the “Commission”), Ursula von der Leyen at her annual State of the European Union speech on 13 September 2023.

What is an anti-subsidy investigation?

The Commission’s DG Trade is launching an investigation into potential subsidies provided by the Chinese government to its domestic electric vehicle industry. This inquiry seeks to assess whether these subsidies are adversely impacting EU e-vehicle manufacturers in the European market.

Who probed the investigation?

In this case, the Commission appears to initiate the investigation on its own initiative (ex officio), and not on the basis of a complaint received by the EU industry. However, EU e-vehicle manufacturers and the French Government seem to have been advocating in favour of the investigation.

When will the anti-subsidy investigation be initiated?

The investigation will be officially launched once the Notice of Initiation (the “Notice”) is published in the Official Journal of the EU. This Notice will specify the precise product under investigation and outline the rights and responsibilities of all involved parties in the process. Deadlines will start running from the day of the publication of the Notice.

How will this investigation concern EU and Chinese electric vehicle manufacturers?

Following the publication of the Notice, a comprehensive questionnaire will be distributed to Chinese exporters, relevant authorities in China, EU producers, importers, and users. In cases a large number of companies comes forward, the Commission will select a representative sample, typically focusing on the largest ones. The deadline for responses to the questionnaire usually spans 37 days from the Commission’s determination of the sample. Subsequently, the Commission will carry out on-site verifications to validate the information provided.

Preparation Alert: 

Both EU and Chinese electric vehicle manufacturers must be ready to provide the Commission with precise financial and production data within strict deadlines in writing and on-site. Compliance with these requirements is crucial to avoid being subject to excessive duties due to non-cooperation with the Commission.

Other interested parties, such as importers, users, trade associations and governments are also expected to contribute to the investigation by filling out questionnaires, submitting written comments or requesting hearings throughout the investigation. Their valuable insights and input have the potential to influence the final outcome. 

How long could it take?

The Commission will conclude its investigation within 13 months from the publication of the Notice in the Official Journal of the EU. While provisional duties can be imposed sooner, they must be in place no later than eight months from the investigation’s initiation. It’s worth noting that in some cases, duties can be retroactively imposed, but only if the Commission deems it necessary to mandate the registration of imports.

What happens if the Commission determines that subsidies to Chinese electric vehicle producers distort the EU internal market?

In the event that the Commission determines that subsidies to Chinese electric vehicle producers are disrupting the internal market, countervailing measures will be imposed. These measures will involve the imposition of supplementary duties at the border. This is done to counteract the adverse impact of the subsidies and restore fair competition in the EU market. Initially, countervailing measures are put in place for a period of five years. It’s important to note that these measures are subject to potential extensions, often renewed for an additional five-year term.