| The member states’ vote on whether to impose definitive tariffs on Chinese-made electric cars on Friday morning (4 October) showed that EU countries are split down the middle on the issue – with 10 backing the measures, five voting against and 12 abstaining. What this means is that while the lack of a qualifying blocking majority allowed the European Commission to declare that it had “obtained the necessary support” from EU countries, the backdrop for supporting the tariffs is deeply blurred and far from set in stone. If anything, the outcome of the vote – with Germany switching from abstention to rejection in a last-minute twist by Chancellor Olaf Scholz’s coalition government - means there will be even more pressure on the EU executive in the 26 days before the final verdict. German stakeholders - who are most affected given the country's close economic ties with the Chinese - were quick to remind the Commission of the stakes in its negotiations with Chinese counterparts. BDI, Germany's powerful industry lobby, triggered the flurry of reactions by warning that "the decision on countervailing duties in the market for electric cars must under no circumstances mean the end of the discussions" - throwing in a slight dig at the Commission for the way it conducted its original investigation into carmakers. “Close coordination with the European economy is essential,” the association said, adding that it had “demanded” the Commission to “involve affected European companies in investigations earlier and more closely than was the case in the case of electric cars.” Notably, however, the group conceded that the picture for EU-China relations is particularly complex, especially as “close economic ties to China's party-state-controlled hybrid economy are associated with economic and geopolitical risks.” “More and more countries are resisting market distortions by the Chinese state,” said BDI, pointing out that “the North American market in particular” is becoming increasingly closed off to Chinese imports. This, however, has made “access to the EU market [...] of central importance for China's export industry” - providing a solid window of opportunity for Europe to engage in strategic economic ties with the country, it said. Meanwhile, the German car association VDA openly hailed the German government’s change of heart – influenced in no small part by the group’s own staunch lobbying efforts – and praised Scholz and the liberal FDP ministers for “prioritising the foundation for growth and prosperity", which it said represented global demand for its exports. Achim Post, deputy chair of the Socialist SPD party in the German Bundestag, confirmed after the vote that the shift to a stronger country stance was “at the instigation of Chancellor Scholz”. “In these economically challenging times, tariffs against China harbour a high risk, especially for industry in our country," he added. “We must now use the remaining time until the tariffs are introduced with all our might to reach an agreement with China after all. The EU Commission is still called upon to do this," Post added. Michael Link, vice chair of the FDP parliamentary group, said the Germans had adopted the right “realpolitik approach” to a key crucial trade issue. “Of course, our industry should wisely become significantly less dependent on the Chinese market, as China is taking an increasingly aggressive stance on foreign and trade policy and is arbitrarily restricting the room for manoeuvre of foreign investors," he added. “However [...] reducing our risky dependencies on the Chinese market will not happen overnight,” Link said. “Precisely because of our high exposure to the Chinese market [...] it would be better to negotiate hard with China, diversify our economic policy and reduce security risks instead of entering into an open trade conflict.” But the (newly redacted) harmonious messaging from SPD and FDP opened up fresh internal fractures in the governing coalition and angered the third ruling party, the Greens, whose speaker for economic affairs, Sandra Detzer, condemned Scholz’s orders. “The Chancellor's vote is counterproductive. Europe must represent its interests as one,” Detzer told Euractiv after the vote. “That is difficult when the German Chancellor is travelling solo.” She also doubled down on her support for a tougher trade stance from the Commission, reiterating the urgency of imposing definitive measures on Chinese imports: “They are not protectionism, but a measure against distortions of competition through subsidies. With today's decision, the EU is taking a new approach in its dealings with China - this is urgently needed." “The EU wants to enforce nothing else with its tariffs within the framework of the WTO agreements,” said Detzer, warning that “German car manufacturers should not resist the enforcement of WTO rules either.” Stuck between a rock and a hard place, the EU executive signalled on Friday morning that talks with China are far from over: “The EU and China continue to work hard to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidization established by the Commission's investigation.” However, with its final decision due on 30 October, the least desirable outcome would be a repeat of the German government's last-minute scrambling and split positions. | 