Opinion | EU and China should join hands to lead new era of green trade

The European Union has imposed provisional countervailing duties on Chinese electric vehicle (EV) imports since July 5, arguing that Chinese companies unfairly benefit from government subsidies. On August 9, China responded by appealing to the World Trade Organization.

Although the European Commission announced a revision on August 20, reducing the planned tariff for Tesla and potentially lowering it for Chinese firms in joint ventures with EU carmakers, the duties for most EVs companies in China will remain significant.

The current tensions between China and the EU are reminiscent of the 2013 solar panel dispute, in which the EU initiated an anti-dumping investigation against Chinese-made solar panels. That dispute was ultimately resolved through negotiations. Replicating such a resolution seems unlikely.

Over the past decade, developed economies that once championed free trade and welcomed cheaper imported goods have turned towards trade protectionism and prioritised domestic re-industrialisation.

Events such as the US-China trade war, the Covid-19 pandemic and the Russia-Ukraine conflict have accelerated this shift, leading to a marked deterioration in the global trade environment. Geopolitical competition has increasingly replaced the free market as the foundation of international trade rules.

In this context, global supply chains have been restructured. Some countries, including the United States, Japan and South Korea, have reduced their trade dependency on China. Conversely, resource-exporting countries like Brazil and Australia, along with several emerging markets, have strengthened their trade relationships with China. Notably, Southeast Asian countries have further integrated into a supply chain with China, resulting in significant trade expansion.