Taking a Geoeconomic Turn in Trade Defence? The EU’s Countervailing Duties on Chinese Battery-electric Vehicles

In light of rapidly rising imports of battery-electric vehicles (BEVs) produced in China, massive state support for the industry, and the build-up of overcapacities, the European Commission launched an investigation into Chinese subsidization practices. In July 2024, it imposed provisional countervailing duties on imports of BEVs from China, which became definitive in October 2024. This paper seeks to explain this bold move, which carries the risk of Chinese retaliation and a lasting trade conflict. Liberal interest group approaches are useful for understanding national preferences but fall short of explaining European decision-making outcomes. By contrast, state-centric realism helps to clarify the rationale behind the Commission’s turn towards a more assertive trade defence policy vis-à-vis China. In addition, principal-agent theory sheds light on the Commission’s autonomy in pursuing its geoeconomic agenda. It highlights how the Commission benefited from preference heterogeneity among its multiple principals and from decision-making rules that make it difficult for the principals to rein in the agent.