CLEPA CEO Lars Holmqvist

CLEPA CEO Lars Holmqvist

Europe's Association of Automotive Suppliers (CLEPA) CEO, Lars Holmqvist, has returned from Indonesia where he led a European Commission (EC) automotive delegation negotiating a free trade deal with ASEAN countries.

The suppliers body chief updated just-auto business editor Simon Warburton on the talks and what challenges face European components companies in their bid to break into the lucrative Asian market.

j-a: What was the key thrust of your discussions and how seriously was the summit taken by senior politicians?

LH: It was attended by the president of Indonesia and the commissioner of trade for the EU [while] each of the ASEAN industry ministers came and spoke. I pointed out from our side that we, as usual, needed a level playing field. Obviously, we see quite clearly a very interesting market in ASEAN, [with] growing economies, almost 600m people.

Some countries are also very interesting of course, such as Indonesia where you have a 250m population. I believe a lot of our members would be interested - it is a much more open country than China.

j-a: What were the tariff issues you discussed at the summit?

LH: They understand and I added we have an understanding, that some countries still need a certain period of time to adjust. We would accept for a period to reduce import duties in order to protect their growth. That we do accept, but we need to have a final deadline. We are saying: 'If we take away our tariffs you have to do the same, but not tomorrow.'

j-a: Do you feel you made much progress in putting the suppliers' side?

LH: It was a good start - a bit of getting to know each other - the automotive industry had a breakout group and we discussed our requirements. We are of course more than interested in our components sectors, we want to sell to local manufacturers as well. For example, a Japanese manufacturer in Indonesia, we are very happy to be a supplier to them.

We might produce a certain part in Indonesia, but then we need to import other components to build a system because you can't put all your production into Indonesia. Our members [have] complicated systems which might be 100 components - if you bar entry it would mean investing in a factory only for Indonesia, which could never, ever be profitable.

We need to have open borders on both sides - you might re-export those parts from Indonesia to Germany. We are totally dependent on free trade.

j-a: Can you explain how that free trade environment works?

LH: If you have a system with 100 parts, 10 might come from Mexico [for example] and 10 from Indonesia. Take a front bumper; it might contain road sensors, infra-red cameras, lights and normal cameras - a lot of components.

The infra-red camera comes from Taiwan, the sensors for parking from Germany and the lights from Spain. We have to import those parts and if you also have to pay import duties, you can't do it, if you understand the realities of the world. Indonesia knows it can produce them quite well and wants to avoid those parts being imported. It is part of the negotiations, but in the long run it has to be a level playing field.

Following the EC-ASEAN summit the commission will now start negotiations concerning a free trade agreement, with Holmqvist saying talks are "already under way."