EU and China reach preliminary deal to curb Chinese hybrid car exports

China and the European Union have reached a preliminary understanding that could reduce Chinese exports of hybrid and plug-in hybrid vehicles to the bloc by more than half over four years, EU Trade Commissioner Maroš Šefčovič said Friday.

Šefčovič announced the agreement after two days of talks in Beijing with Chinese Commerce Minister Wang Wentao. He said the projected reduction would prevent several million Chinese-made cars from entering the EU, but did not provide details about how the limits would be implemented.

The arrangement still requires approval in Brussels. Šefčovič is expected to brief EU diplomats before the bloc’s leaders discuss the outcome at an upcoming summit.

China’s Commerce Ministry described the negotiations as pragmatic and productive and listed 16 areas of consensus. The two sides agreed to continue discussions involving vehicles, Chinese export controls on rare earths and permanent magnets, and access to China’s market for European products. According to Šefčovič, Beijing also agreed to lower tariffs on about €4 billion of EU goods, including car parts, olive oil and footwear, and to simplify export licensing for rare earths and permanent magnets.

The negotiations followed growing EU concern over its trade deficit with China and rising Chinese vehicle exports. Both sides said they would manage disputes under World Trade Organization rules and pursue a more balanced trade relationship. They plan to hold a video conference in January and meet again in March.