Trade relations between Europe and the Asian economic giant are entering a new phase of fierce confrontation and pragmatic compromises. After another round of intensive negotiations in Beijing, the European institutions managed to negotiate a four-year agreement to impose strict quotas on imports of hybrid vehicles manufactured in the Asian country. The new regulations are set to officially come into force in early December, placing serious restrictions on the plans of many foreign brands.
The introduced annual ceiling of 350,000 cars represents a drastic blow to the ambitions of manufacturers, whose exports to the Old Continent have seen explosive growth and were expected to approach the startling 800,000 units within the current year. The initially agreed limit covers only less than half of this potential volume, and the envisaged mechanism for annual growth of 6 percent is unlikely to reassure the companies affected. It is important to note that the restrictions concern the physical place of production, and not the origin of the brand itself, which also affects Western concerns assembling their production in Eastern markets.
According to experts from the European Commission, the trade protection measure should reduce the market share of Chinese-made cars in Europe from the current around 12 percent to just 6 percent. Although the details of the allocation of quotas between the various suppliers have not yet been made public, the news is already causing tremors in the industry. The deal is part of a large-scale strategy by Brussels to overcome the serious trade deficit and reduce the dangerous dependence on critical supplies concentrated in a single country.
However, European leaders realize that a single agreement alone will not solve the deep structural imbalances. As early as December, the European Commission is preparing a package of additional measures, including restrictions on dependence on single sources of critical raw materials and mechanisms to support European regions affected by external trade restrictions. The topic is also expected to dominate the upcoming EU summit, where geopolitical and economic relations with Beijing will be subject to in-depth analysis.