The EU Fights Chinese Automobiles Alongside Its Allies

The European Union (EU) plans to extend its “Buy European” rules to vehicles made in the United Kingdom, Japan and South Korea in an effort to protect the European car industry from the threat of new Chinese brands. It is a dramatic change in policy and a tacit recognition that the EU cannot stand up to China alone without the help of external partners.

The “Buy European” initiative, within the Industrial Acceleration Act known as “Made in the EU”, mandates that government subsidies can only be granted to vehicles produced within the region. According to the original plan, this benefit was reserved exclusively for European car manufacturers. Now the provisions could be extended to so-called “trusted partners”, which include the United Kingdom, Japan and South Korea.

The “Made in EU” framework is aimed at official and corporate fleet vehicles, which is logical given that companies buy approximately 60 percent of all newly registered vehicles in the region. According to these rules, eligible vehicles will be entitled to tax benefits, including tax relief for official vehicles.

The potential change is great news for carmakers in the UK, Japan and South Korea, as it gives them a key tool in the fight against China and its overcapacity policies. It could also prove to be a lifeline for Britain’s car industry, which has been on shaky ground since Brexit.

Nissan recently warned British Prime Minister Keir Starmer that it would have to close its Sunderland factory because of the “Buy European” initiative. The inclusion of partner countries in these measures could be enough to convince Nissan to remain in the UK after all.

As Handelsblatt reports, major car manufacturers have convinced European Commission President Ursula von der Leyen that it is not in the EU’s best interest to jeopardize the integrated supply chains that exist between the four regions. Strict implementation of the “Made in the EU” initiative would harm, namely, European brands themselves, which rely on suppliers from outside the EU.

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