EU deal with China limits imports of hybrid electric vehicles

The European Commission has announced a new deal with China that will limit the import of hybrid electric vehicles to 350,000 per year, a move aimed at reducing China's market share in the EU. Currently, China holds a 6% share of the market, but this is expected to halve to 3% under the new agreement. The quota, which will take effect in December, will be implemented under World Trade Organization safeguard measures, allowing for swift enforcement without the lengthy investigations required for anti-dumping measures.

Chinese-made hybrids, as well as those assembled within the EU, will be exempt from the quota. However, EU companies manufacturing cars in China will still be subject to the quota. In exchange for the quota, China has agreed to reduce certain tariffs on auto parts and cut duties by half on products such as footwear, olive oil, and ice-cream from the EU.

Chinese officials confirmed their support for the quota and stated that further dialogue on various goods, including chemicals, renewable energy, and furniture, would continue. The EU is closely monitoring its £1bn (€1.18bn) daily trade deficit with China, which has prompted a shift in strategy from increasing imports to curtailing them to prevent deindustrialization and job losses in the industrial heartlands.