EU anti-subsidy probe becomes more absurd
The European Union unveiled a plan last year to provide $270 billion in green industrial subsidies in a bid to match the United States’ monstrous $369 billion Inflation Reduction Act, which discriminates against foreign companies.
While the EU believes that certain provisions of the IRA are a violation of World Trade Organization rules, it has not shown the courage to launch an investigation or file a case against the US with the WTO.
China, however, filed a complaint before the WTO last month charging that some of the US’ subsidies for electric vehicles (EVs) violate WTO rules.
The EU, on the other hand, has launched multiple anti-subsidy investigations in the past months against China’s green technology sector — from EVs to wind turbines — including launching four investigations in less than two months against Chinese companies using its new Foreign Subsidies Regulation.
European Commission Executive VicePresident Margrethe Vestager announced the probe into Chinese wind farms while delivering a speech at Princeton University in the US on Tuesday. She claimed the investigations are not meant to constrain China’s success, but the measures she announced and her rhetoric prove otherwise.
The argument that Chinese-made EVs cannot be trusted and may pose a security threat is not only absurd but self-defeating.
Although she did not mention China by name, the ulterior motive behind the investigations against Chinese companies became clear when she said “as we further develop the strategy for clean technologies, we must reflect about the question of trustworthiness”. She also said that “we must make sure that we can trust them, and we can make sure that they uphold our values. I believe that likeminded partners, starting with the G7 countries, should develop a list of trustworthiness criteria for critical clean technologies”.
It is abundantly clear that the European Commission, despite its flowery rhetoric, no longer sees the global fight against climate change and green transition as a common global cause, but rather a battle between different ideologies and political blocs. However, most industrial experts, including those based in EU member states, agree that China today enjoys a huge advantage in the green economy, from EVs to solar panels to wind turbines, because of its early start, innovation capability, economies of scale and efficiency rather than subsidies.
The argument that Chinese-made EVs cannot be trusted and may pose a security threat is not only absurd but self-defeating. There are far more European, US, Japanese and South Korean cars running on Chinese streets than vice versa. And Chinese politicians, unlike some of their European counterparts, have never used those vehicles to badmouth those countries.
According to the China Chamber of Commerce to the EU, Chinese companies facing the Foreign Subsidies Regulation investigations have complained that the EU has broadened the definition of “foreign financial contribution” to include elements that do not qualify as subsidies, and Chinese companies are required to submit a huge volume of materials, often including sensitive information, within a short time.
The EU’s investigations are clearly aimed at undermining China’s successful green technology sector, similar to what the US did by portraying China’s competitiveness in the green sector as “overcapacity”.
No wonder Bloomberg columnist David Fickling criticized US Treasury Secretary Janet Yellen, an economist by training, for ignoring the fundamental principles of economics to justify the policy of restricting public access to affordable and clean technology. “It’s a protectionist disaster in the making — for both the US, and the planet,” he wrote on Monday.
There is no doubt the European Commission’s protectionist investigations into Chinese green technology products will be a detrimental to the EU’s efforts to achieve carbon neutrality by 2050. Protectionist measures won’t make the EU’s green sector competitive. Instead, biased investigations will only undermine the vital global solidarity and cooperation needed to boost the fight against climate change, especially to reduce carbon emissions.