The European Union is currently engaging in talks with China to manage the surge in imported goods, especially in the automotive sector. Over the past two years, the number of hybrid vehicles entering the EU has increased tenfold, reaching more than 50,000 units in July. In response, the EU is urging China to voluntarily cap its exports of hybrid vehicles to 15% of the European market, with the possibility of higher customs duties if China refuses. European carmakers are worried about the competition from Chinese vehicles, which are not only cheaper but also often of equal or better quality.
The EU is looking to past agreements with Japan in the 1980s for guidance. At that time, Japanese automakers like Toyota agreed to build factories in Europe, notably in France. Today, Toyota operates the largest car factory in France, located in Valenciennes. However, it remains unclear whether China will agree to export limits by 2026, especially since its domestic market is highly competitive, and manufacturers are seeking to expand their presence abroad to gain better profit margins.
Some European industrial leaders are pushing for stronger measures to encourage Chinese automakers to set up manufacturing in Europe. Christophe Périllat, head of the French automotive supplier Valeo, has called for stricter protections on the BFM Business channel. He supports the "Industrial Accelerator Act," a proposed EU regulation aimed at promoting "Made in Europe" products. This legislation would require companies in key sectors, such as automotive and renewable energy, to source components from Europe or specific partner countries if they receive public funding.
A central issue in the debate is the percentage of a car's components that must be produced in Europe. Périllat pointed out that currently, 75% of the value of a car made in Europe comes from European production. He explained that increasing this threshold would mean reindustrializing, while lowering it could lead to deindustrialization. The European Commission has proposed a 70% threshold, but many in the European Parliament, including France, favor 75%.
Another key question is whether the "Made in Europe" preference should apply only to EU member states or also include other countries. The European Commission has suggested a broad framework that could include nearly 90 countries with which the EU has trade agreements or customs unions. However, some lawmakers, like eurodeputy Pierre Jouvet, argue this would be too expansive. They prefer a system limited to the 27 EU countries, with potential inclusion of others based on "strict reciprocity," meaning other countries would need to offer similar benefits in return.
EU Considers Measures to Protect Automotive Industry from Chinese Imports
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