The European Commission has formally rejected a bid submitted by Chinese electric vehicle (EV) makers to reduce the price gap between them and EU rivals, a gap which Brussels claims is a direct result of the huge subsidies Beijing pumps into the lucrative sector. , reports "Euronews". 

Price commitments are a trade tool that companies can use to raise the price and control the volume of their exports to avoid anti-subsidy tariffs. These are exactly the kinds of duties Chinese-made EVs could soon face when they hit the block.

"I can confirm that the Commission has thoroughly reviewed these offers based on World Trade Organization and EU anti-subsidy rules," a Commission spokesman said.

"Our review focused on whether these offers would eliminate the harmful effects of subsidies identified in our investigations and whether these price commitments could be effectively monitored and enforced." The commission concluded that none of the bids met these requirements.

At the end of a months-long investigation, the Commission found public money spread throughout the supply chain of China's electric vehicle sector, putting European firms at risk of suffering unsustainable economic losses.

Subsequently, the executive proposed additional charges, ranging from 7,8% to 35,3%, depending on the brand and their level of cooperation with the investigation, which would be on top of the existing rate of 10%. The top-up should ensure fairer competition and close the price gap between EU and Chinese producers.

BYD, Geely and SAIC are among those facing tougher tariffs. The price commitments they submitted were supposed to allay the Commission's concerns and prevent the measures. The rejection of the offer shows how embedded and extensive subsidization is in China and suggests that the solution, if any, will be found at the political level.

Negotiations between the two sides have entered the final stretch ahead of a make-or-break vote by member states to make the tariffs permanent for five years. The date for the vote has not yet been announced, but it could happen as early as this month.

Valdis Dombrovskis, the Commission's executive vice-president in charge of trade relations, is due to meet his counterpart, Wang Wentao, China's commerce minister, on September 19 in Brussels, a sign of intensifying talks.

The executive's behind-the-scenes efforts suffered a blow this week after Spanish Prime Minister Pedro Sanchez publicly called on the Commission and member states to "reconsider" proposed tariffs on electric vehicles from China.

The remarks took Brussels completely by surprise: until then, Spain was seen as supporting the anti-subsidy measures, having voted in favor during non-binding consultations in July.

"All of us, not only the member states but also the Commission, need to reconsider our position towards this movement," Sanchez said in Shanghai, the last stop of his four-day official visit to China.

"As I said before, we don't need another war, in this case, a trade war. We need to build bridges between the European Union and China," he continued.

"And from Spain, what we will do is to be constructive and try to find a solution, a compromise, between China and the European Commission. If you ask me, I will answer that we are reconsidering our position."

Hours later, a German government spokesman welcomed Sanchez's turnaround, saying "the direction of travel is one we share." Germany, the world's leading carmaker, is under pressure from its domestic industry to fend off additional tariffs.

Sanchez's explicit reservations, expressed in Shanghai after signing a 1 billion euro deal with a Chinese company to build an electrolyser plant in Spain, immediately made headlines and raised fears that Beijing would step up its political meddling.

Last year, European Commission President Ursula von der Leyen issued a stark warning about China's "divide-and-conquer tactics" and called on member states to close ranks, maintain unity and face together the multiple challenges it poses. The Communist Party.

Asked whether Sanchez's eye represents the result of these divide-and-conquer tactics, the Commission declined to comment and said talks were a priority.

"The European Commission's focus, at this time, is on completing the next procedural steps in our investigation (and) remaining open to finding a negotiated solution with the Chinese authorities," the spokesman said.

"Any such solution must adequately address the harmful effects of the illegal subsidies we identified in our anti-subsidy investigation."

Stopping the tariffs from becoming permanent would require a qualified majority against the proposal, which is 15 countries representing at least 65 percent of the bloc's population. Given Spain's weight, Sanchez's change of heart could rebalance the equation.