June 21, 2024: AEGIS Europe has called for immediate action from the European Union to address what it calls “the critical and unprecedented” threat posed by economically irrational excess production capacities, especially from China and other emerging economies.
“European manufacturing stands at a crossroads,” it said. AEGIS is an alliance representing over 20 key EU manufacturing sectors.
Although AEGIS Europe does not specifically represent the energy storage industry — though Eurometaux is one of its members — the call by the group is part of a rising clamour of voices seeking tariffs and other measures to block Chinese exports into an increasingly uncompetitive Europe.
“The build-up of economically irrational excess production … is causing global market disruptions due to unsustainably low prices, undermining the EU’s competitiveness,” says the group. “In China, the economy is strategically planned to dominate globally important sectors … posing a systemic risk to the EU’s economic future.”
The calls to the European Commission to act followed last week’s announcement that the EC had re-entered the China EU tariff war announcing that it is preparing to penalize ‘battery electric vehicles that benefit from unfair subsidization.’
Although the EC said it was prepared ‘to discuss these findings and explore possible ways to resolve the issues identified in a WTO-compatible manner’, any immediate resolution of the issue was unlikely to happen.
Like-wise, AEGIS Europe said it believed that engaging in diplomatic discussions with the countries involved in this action was insufficient to cause changes required, such as rolling back Chinese state-backed subsidies. It said: “effective and immediate measures are needed as a matter of urgency”.
There is, however, an air of unreality about some of AEGIS’s demands.
Although the group said “the US had reacted in a timely manner by introducing the Inflation Reduction Act to support its domestic industries and imposing tariffs on key imports such as electric vehicles, solar cells, and lithium batteries for EVs,” it was unable to suggest an alternative for the EU apart from a trade war using tariffs.
The fact remains there is little that the European Union can do about this. It cannot match the IRA given the US response has the backing of a federal budget. The 27 EU countries do not have an integrated taxation system.
“The EU’s response lacks the urgency and effectiveness needed to protect its manufacturing sectors from massive overcapacities that are flooding the markets and dragging global and/or regional prices down,” said Inès Van Lierde, co-chair of AEGIS Europe.
“As traditional trade defence instruments can deal only partially with this situation, an immediate and robust EU action plan is urgently needed to restore a level playing field and facilitate future investments in the EU.
“The upcoming entry into force three of the countervailing duties on Chinese EV is a step in the right direction, but not sufficient to tackle the systemic issue of worldwide overcapacities”, she said.
“AEGIS Europe urges, therefore, the adoption of necessary legislation to allow the imposition of punitive tariffs or equivalent measures at the border on goods from countries supporting (directly or indirectly) these excess capacities.”
