Cars: China attempts to bypass European tariffs by selling from Turkey

Brussels – Bypassing European tariffs on cars to sell in Turkey and, through the EU-Turkey customs agreement that allows the exchange of goods without tariffs, placing ‘made in China’ products in the single market. It is what Beijing is already silently working on, quietly, with maneuvers that are unsettling EU institutions. The People’s Republic seems to have a two-pronged strategy to the trade war triggered by the European Commission’s decision to impose tariffs on Chinese electric cars, now final: legal (World Trade Organization, WTO), and that of circumvention.

Specifically, by increasing output in Turkey, Chery is believed to avoid the duties already imposed by the European Union for the same products sold from China. These are surcharges of between 17 percent and 21.3 percent over the market selling price, on top of a pre-existing duty of 10 percent. The question, therefore, arises as to the proper use of the EU-Turkey customs union agreement.

They seem to be aware of this in Brussels, even though China’s silent maneuvers have not yet produced such effects as to offer either footholds or opportunities to react. “At this stage, it is too early to assess whether these investments could have an impact on the competitiveness of the European car industry,” Valdis Dombrovskis admits, in a response in his capacity as outgoing Trade Commissioner. In light of an unclear and ill-defined situation, therefore, “it would be premature to speculate on possible measures.”

Nevertheless, the EU will not stand idly by. It will be up to the new European Commission to manage the delicate relations with the People’s Republic of China, and Dombrovskis will be part of this new European legislature. The line does not change: open economy, but protection of European interests. That is why Dombrovskis again assures “the Commission will closely monitor the situation and will take appropriate steps if necessary to ensure the continued competitiveness of the industry and compliance with relevant rules and standards.” That means trade sanctions: a warning to Beijing.

However, the political message also applies to Turkey, a country whose EU membership status is frozen but not canceled, and the government in Ankara should still fulfill the obligations arising from its position.