China has successfully prevented the European Union (EU) from implementing its version of Section 301 trade measures by agreeing to limit exports of hybrid cars. Both sides have decided to continue discussions based on World Trade Organization (WTO) norms, easing the risk of a full-blown trade conflict.
During trade talks held in Beijing on October 9, China and the EU agreed to regulate exports of Chinese hybrid and plug-in hybrid vehicles. Maros Sefcovic, the EU's trade commissioner, stated at a press conference on October 10 that, without additional measures, exports of Chinese cars are expected to decrease by more than half over the next four years compared to previous forecasts.
The reduction is based on projected export volumes over the next four years if current trends continue, rather than actual export figures from 2025 or 2026. Therefore, it does not mean a straightforward halving of current export levels. Specific implementation methods and annual quotas have yet to be disclosed.
The Financial Times reported that a plan is being considered to set the export limit at 350,000 units for 2027, increasing by 6% annually for three years. If this standard is applied, estimates suggest 350,000 units in 2027, 371,000 in 2028, 393,000 in 2029, and 416,000 in 2030. However, these figures are not the final confirmed quotas.
In return, China has agreed to lower tariffs on seven categories of European goods, including auto parts, olive oil, and footwear. The current export value of these items is approximately 4 billion euros, and the EU expects to save at least 22.5 million euros annually once the tariff reductions are implemented. Additionally, China will streamline the export licensing process for rare earths and permanent magnets.
These concessions have successfully brought the EU back to the negotiating table. The EU has been pushing for a hardline trade approach towards China, driven by strong local sentiment, particularly from France and Germany, which have called for robust trade measures similar to the U.S. Section 301. By limiting auto exports, China aims to prevent the expansion of unilateral EU measures and secure room for negotiations on market access and raw material supply based on WTO norms.
However, the threat of a European version of Section 301 has not been completely eliminated. This agreement will be finalized after detailed implementation procedures and subsequent approvals.
* This article has been translated by AI.
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