Japan/EU free trade agreement: a 'one-way street' for EU automobile industry

29 November 2012
by ACEA -- last modified 29 November 2012

The European Automobile Manufacturers' Association (ACEA) takes note of the European Council's decision today to give the green light to the European Commission to open free trade negotiations with Japan.

ACEA has persistently argued that a free trade agreement (FTA) with Japan will have a negative impact on the European automobile industry. "Independent studies have shown that this deal is a one-way street as far as the automobile industry is concerned," said Ivan Hodac, Secretary General of ACEA. "This has already been our experience with the free trade agreement with South Korea which entered into force last year."

Indeed, according to an impact assessment conducted by Deloitte, an increase in EU imports from Japan will not be offset by an increase in European exports to Japan. This study demonstrates that EU car exports could go up by a mere 7,800 units by 2020, compared with additional Japanese exports to the EU amounting to 443,000 units. The consequent reduction in automobile production in the EU by the same amount would lead to between 35,000 and 73,000 job losses.

ACEA realises that there was political pressure on the Commission and Member States to open negotiations. However there is no justification for exposing the automobile industry - a major pillar of the EU economy - to an unbalanced FTA with a major competitor just a year after a similar deal with South Korea.

Trade policy and industrial policy need to be aligned to create the conditions for a strong industrial sector. Indeed, the European Commission's recent Communication on Industrial Policy identifies manufacturing as the backbone of European recovery. Furthermore, the CARS 2020 Action Plan for the automotive industry, launched earlier this month, states that decisions on whether to enter into new trade negotiations should be assessed in accordance with their impact on competitiveness. "Unfortunately this was not the case for this FTA," said Ivan Hodac. "It is now time that the EU starts moving from words to actions in order to defend its industry more strongly."

ACEA now awaits to see the final mandate document. It will closely watch the evolution of the negotiations in order to ensure the European automobile industry's two principal requests are met, ie that:

· Vehicles manufactured and type-approved in the EU are accepted in Japan without further testing or modification;

· European small cars are given the opportunity to compete on equal terms with Japanese kei-cars, small cars unique to Japan, which enjoy fiscal and other benefits, and in effect exclude imports from 35% of the domestic market.

"Without the effective elimination of key automotive non-tariff barriers and a mechanism to prevent the introduction of new ones, Europe should not proceed with the reduction of tariffs", concluded Hodac. "ACEA calls upon the European Commission, European Parliament and Member States to follow progress in these trade talks over the coming months and to halt the negotiations if measurable progress is not made to achieve the objectives set in the mandate."

ACEA members are BMW Group, DAF Trucks, Daimler, FIAT S.p.A., Ford of Europe, General Motors Europe, Hyundai Motor Europe, IVECO S.p.A., Jaguar Land Rover, Porsche, PSA Peugeot Citroën, Renault Group, Toyota Motor Europe, Volkswagen Group, Volvo Cars, Volvo Group.

European Automobile Manufacturers Association (ACEA)