China, EU must reason their way out of EV dispute: ex-Merkel adviser

Former adviser to German chancellor says dialogue, not punitive tariffs, should be basis for conflict resolution in EU-China dispute

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Lars-Hendrik Roller (left) speaks to a Russian official during a meeting of German and Russian delegations in 2020. Photo: AFP

Published: 10:00pm, 3 Oct 2024Updated: 4:35pm, 4 Oct 2024

Shortly before new European Union tariffs on Chinese-made electric vehicles (EVs) are expected to enter into force, a former economic adviser to Angela Merkel urged both sides to reach a solution through settlement and avoid “punitive” measures.

With the EU’s 27 member states slated to hold a crucial vote on Friday over additional duties of up to 35.3 per cent on the country's EVs – a hefty increase which could remain in effect for five years – Lars-Hendrik Roller suggested officials from both sides of the dispute find a “mutual and beneficial” solution before the new taxes are imposed.

European policymakers have accused Beijing of creating overcapacity in the sector by supporting major EV makers with subsidies, subsequently distorting markets with cheaper models. China has rejected these claims, with its finance minister dismissing them as “groundless”.

Roller – director general for economic and financial policy at the German chancellor’s office from 2011 to 2022 – tends toward diplomacy in his own stance on the disagreement. “I think the answer to the overcapacity problem … is not trade war, but multilateral solutions where we cooperate and solve the problem,” he said in an interview on September 24.

“It’s always going to be the approach – let’s talk, let’s solve the problems, and let’s not escalate, because in the end we will all lose,” said Roller, also the founder and chair of Berlin Global Dialogue. “We have to make sure to not fall into the independence trap. We have to build common ground, where possible, so that everybody can benefit.”

Roller recalled from his time in government that overcapacity concerns related to China had been present for “a number of years”, with the G20 trying to work out a multilateral approach on steel. China had also made “some offers” in the past, he said.