On June 8, local time, the Turkish government unilaterally announced that it would impose an additional 40% import tariff on fuel and hybrid passenger cars originating in the mainland.
Considering that Turkey has imposed punitive tariffs on electric vehicles exported from the mainland in the same way, this move can be regarded as a "closed-loop operation" of imposing tariffs on the mainland's automotive industry.
It is worth noting that just before the Turkish official announced the imposition of tariffs on Chinese car exports, the new Turkish foreign minister had just completed his visit to China for less than 72 hours.
From a firm commitment to safeguard China's development interests in Turkey and an expectation to strengthen bilateral economic and trade cooperation between China and Turkey, to a reversal of the face and denial of account.
What are the practical considerations behind the Turkish government's insistence on expanding the coverage of trade restrictions against China? How should the mainland deal with Turkey's backsliding?
1. The China policy has made a 180-degree turn
On June 3~5, Beijing time, the new Turkish Foreign Minister Fedan was invited to China for a state visit.
During the visit, representatives of the two sides reached a high degree of agreement on issues of mutual concern on core interests.
The two sides also maintained a positive and open attitude towards continuing to deepen the effective connection between the Belt and Road Initiative and the Middle Corridor initiative.
However, less than 72 hours after Fedan returned home from his visit to China, the Turkish government announced that it would impose an additional 40% tariff on gasoline and hybrid passenger cars originating in the mainland.
In response to speculation and doubts about the relevant restrictions, Turkey said that the move is aimed at protecting the development of the local automotive industry and alleviating the competitive pressure it is suffering from on a global scale.
However, imposing punitive tariffs on cars manufactured in China in order to protect the development of local enterprises is clearly a targeted act of trade discrimination.
And the additional tariff rate of 40% is also significantly beyond the reasonable tariff range stipulated by the WTO.
In fact, the Turkish government can't wait to officially announce the auto trade restriction policy against China at this time, which mainly has the following three considerations:
First, taking into account that the United States and the European Union have announced some time ago that they will impose punitive tariffs on Chinese auto products, the official announcement of relevant policies at this time is like a "letter of investment" indicating that it will be inclined to the United States and European countries, and its ultimate purpose is to attract investment from American and European countries;
Second, Turkey has always coveted the mainland's development position in the global automobile manufacturing chain.
It is expected that by joining the camp of the United States and Western countries restricting China, domestic enterprises will be able to increase domestic enterprises to undertake production and manufacturing orders from external car companies, or attract international car companies to choose to set up automobile factories in Turkey.
Third, it is trying to increase its bargaining chips with the mainland in follow-up trade negotiations by imposing punitive tariffs, but this unilateral imposition of punitive tariffs will obviously not bring the mainland a compromise in bilateral relations.
2. Advance advice from the Chinese side
In fact, as early as during Faydan's visit to China, mainland Foreign Minister Wang Yi pointed out that equality and respect are the political foundation for the development of China-Turkey relations, and mutual benefit and win-win results are the driving force for China and Turkey to expand bilateral cooperation.
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In recent years, the relevant departments of the mainland have repeatedly mentioned that China firmly opposes the so-called "decoupling and chain breaking theory" or "overcapacity theory" to carry out large-scale trade protectionist measures, and the choice of de-globalization development trend will only end up in a lose-lose situation.
Recently, it has been reported that in response to the frequent actions of the United States and Western countries in the trade restriction policy against China, the relevant departments of the mainland plan to increase the tax rate on imported cars with engine displacement greater than 2.5L to 25%.
On the one hand, this is to give a policy warning to Western countries within the rules of the WTO, and on the other hand, it is to show the outside world the mainland's determination to promote the development of "carbon peak and carbon neutrality" out of the requirements for the environmental performance of imported cars.
Since the mainland has solemnly stated its position during the bilateral meeting between China and Turkey, we will inevitably take countermeasures against the restrictive measures taken by the Turkish side when it is determined to infringe on the development interests of Chinese enterprises.
At present, the Ministry of Commerce of the mainland has characterized Turkey's bad behavior as discrimination against Chinese products, and this behavior has seriously violated the principle of most-favored-nation treatment under the WTO framework.
In response to Turkey's "backstabbing" on the mainland, the first thing we should do is to re-examine the current economic and trade cooperation between the mainland and Turkey.
Given the Turkish government's ongoing rhetoric in state-level interactions, the country's real business environment may be enough to discourage Western investors.
Far from being able to reap benefits from Western countries, Turkey's current imposition of tariffs on China will only be self-defeating and will be used as a gun.
III. The "Battlefield" of Fierce Competition
Since the U.S. government unilaterally raised tariffs on the mainland's exports of electric vehicles to 100%, the global game for the development of the new energy vehicle industry has become more and more intense.
Under the coercion of the US government, the European Commission recently announced that it intends to impose additional tariffs of up to 38.1% on electric vehicles exported from mainland China to the EU.
He also stressed that in the event that a negotiated solution cannot be found with the mainland, the temporary tariff measures will officially take effect on July 4 this year.
Knowing that the imposition of tariffs on China would harm the development interests of both sides, the decision made by the European Commission this time is in line with the "right-leaning" trend that emerged in the recent European Parliament elections.
However, its attempts to disguise its misguided trade protectionism by threatening benefits in exchange or exaggerating so-called "equal negotiations" will ultimately be futile.
After all, from the moment the additional tariffs on China were announced, the so-called negotiated solution that it was preaching to the outside world would not exist at all.
Of course, considering the current close relationship between China and the EU in terms of trade cooperation, the European Commission's restrictive policy against China is also quite controversial within the EU.
A number of countries, including Germany, France, Hungary and Sweden, have clearly opposed the EU's imposition of additional tariffs on Chinese EV imports.
On the one hand, the reason why these countries oppose the EU's restrictive policy on China is that they are worried that the relevant policies will harm the development interests of EU enterprises.
On the other hand, there are fears that the mainland will take countermeasures against the EU in other sectors, such as trade in agricultural products, meat and dairy products.
Unlike the United States and the European Union, which have successively decided to impose additional tariffs on Chinese electric vehicles, Japan has taken a cautious approach on related matters.
There are two reasons for this: First, China's electric vehicles account for only about 2% of Japan's new car sales market, which will not have much impact on Japan's domestic automotive industry.
Second, the Japanese government does not want friction with the mainland in the automotive industry, which will affect the sales of Japanese cars in the Chinese market.
Unlike Japan, which is cautious about imposing additional tariffs on Chinese electric vehicles, South Korean automakers and domestic suppliers believe that the restrictive policies adopted by the United States and Western countries on China will help South Korea's new energy vehicle industry chain seize market share in the short term.
However, this does not mean that the fierce competition in the global new energy vehicle industry will weaken in the future.
Fourth, the "shackles" of short-term interests
From a practical point of view, the additional tariffs imposed by the United States and Europe on Chinese electric vehicles can indeed reduce the share of mainland electric vehicles in the regional auto market simply and crudely.
However, this so-called "competitive advantage" is based on disrupting the layout of the industrial chain of the industry, infringing on the rights and interests of consumers, and may hinder the normal operation of other industries.
Judging from Turkey's restrictive policy against China at the expense of damaging its own international image, it is likely that it has received a promise of benefits from some countries.
Is it really cost-effective to just trade the credibility of the country for these immediate benefits?
In the process of transforming the old and new drivers between emerging industries and traditional industries in the world, the direct conflict of interests between relevant countries is one of the important factors leading to the popularity of unilateralism and trade protectionist measures on a global scale.
There are also some marginal countries that are constantly pushing the bottom line of international exchanges in exchange for short-term benefits.
Of course, the competition in the new energy vehicle industry is only a microcosm of the fierce competition between various forces in emerging industries.
Emerging technology industries, including AI chips, big data, and bioengineering technology, have now become the focus of a new round of global industrial revolution competition.
In fact, the unilateral imposition of punitive tariffs on a country can also have a discouragement effect on technological innovation in related industries.
Considering that mainland electric vehicle companies have certain technical advantages in the industry, it is obviously unwise and unrealistic for the United States and Western countries to try to "decouple and break the chain" with mainland electric vehicles.
The price disadvantage can indeed be found by erecting tariff barriers, but the technological gap will not be bridged in the short term.
summary
Less than 72 hours after the foreign minister's visit to China, Turkey announced that it would impose additional tariffs of 40% on gasoline and hybrid passenger cars originating in the mainland.
Regardless of Turkey's justification, this act is a clear violation of WTO rules and constitutes serious discrimination against Chinese products.
After the United States and Europe successively adopted restrictive policies on China's auto industry, the Turkish government, which hopes to gain a place in the global auto industry chain, has chosen to pursue short-term economic interests regardless of its national credibility.
Of course, no matter what kind of benefits Turkey has received, ignoring the mainland's advice and unilaterally imposing tariffs on China will be severely countered by the mainland, and it is believed that countries around the world have a new understanding of Turkey's domestic business environment on this incident.
In the process of transformation and upgrading of the global industrial structure, trade protectionism will inevitably become a serious obstacle to the development of new forces, but under the impetus of the wave of economic globalization, this kind of protective behavior in pursuit of short-term interests is difficult to sustain.
References:
"Turkey imposes additional tariffs of 40% on China's fuel and hybrid passenger vehicles, the Ministry of Commerce responds" 2024.6.14 Observer.com
"EU Announced: Up to 38.1% Tariffs on Chinese Electric Vehicles, Effective July 4" 2024.6.12 Observer.com
"The United States and the European Union announced tariffs on China's electric vehicles, Japan is cautious" 2024.6.17 The Paper