The European Union said Wednesday that it had "sufficient evidence" of illegal Chinese electric car subsidies as it officially launched an inquiry that has enraged Beijing.
European Commission President Ursula von der Leyen raised hackles in China when she announced last month that Brussels would start an anti-subsidy investigation.
Some fear the European Union's action could lead to a trade war after Beijing warned the probe would harm trade relations between the two sides.
"The Commission is in possession of sufficient evidence tending to show the existence of subsidisation, threat of injury and causal link required for the initiation of an anti-subsidy investigation," the notice of initiation published in the EU's official journal said Wednesday.
The notice included details about how the commission found evidence of loans at favourable rates, tax exemptions and components bought very cheaply.
The clock formally starts ticking now and the probe must be completed within 13 months - though the EU can impose provisional anti-subsidy duties nine months from Wednesday.
If the EU concludes there are unfair practices, it could impose tariffs on Chinese car manufacturers above the standard 10 percent EU rate.
But Brussels could also decide to do nothing.
"Should the existence of subsidisation and injury caused thereby be established... the investigation will examine whether the imposition of measures would not be against the Union interest," the notice read.
Von der Leyen vowed Wednesday that the probe would be "fair".
"Wherever we find evidence that their (EU car manufacturers') efforts are being impeded by market distortions and unfair competition, we will act decisively," she said in a statement.
"We will do this in full respect of our EU and international obligations -- because Europe plays by the rules, within its borders and globally."
The automotive sector is the jewel in Europe's industrial crown, providing direct and indirect jobs to around 14 million Europeans, or 6.1 percent of all EU employment.
When she announced the probe on September 13, von der Leyen said the cost of Chinese electric cars were "kept artificially low by huge state subsidies".
The notice also said the commission decided to open the investigation "without having received a written complaint by or on behalf of the Union industry".
Artificial Intelligence Analysis
Defense Industry Analyst: 8Stock Market Analyst: 7General Industry Analyst: 6Analyst Summary
: The European Union has officially launched an inquiry into alleged Chinese electric car subsidies, which has sparked tensions between the two sides. The Commission has presented evidence of loans at favorable rates, tax exemptions, and components bought cheaply as grounds for the investigation. The probe must be completed within 13 months, and if the EU finds the subsidies to be unfair, it could impose tariffs above the 10 percent EU rate. However, it could also decide to take no action. The inquiry has been declared by the Commission to be fair and in full respect of EU and international obligations.
It is notable that this investigation has been launched in the aftermath of significant events and trends in the space and defense industry over the past 25 years, including the increased development of electric cars and the growing tensions between the EU and China.
Investigative
Question:
- 1. What specific evidence has the Commission presented as grounds for the inquiry into Chinese electric car subsidies?
- 2. What potential implications could the probe have on trade relations between the EU and China?
- 3.
What is the timeline for the investigation, and what measures could be taken if the subsidies are deemed unfair?4. How have the events and trends in the space and defense industry over the past 25 years impacted the EUs decision to launch this investigation?
5. How would the imposition of tariffs on Chinese car manufacturers above the standard 10 percent EU rate affect the industry?
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