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July 4, 2017

European auto industry cautious on EU-Japan trade deal

The European carmakers' association, ACEA, has sounded a warning note ahead of a possible bilateral EU-Japan summit later this week to conclude negotiations on a free trade agreement.

By David Leggett

The European carmakers’ association, ACEA, has sounded a warning note ahead of a possible bilateral EU-Japan summit later this week to conclude negotiations on a free trade agreement.

ACEA called on negotiators to ‘ensure a balanced outcome for the European automobile sector’ and resolve non-tariff barriers facing European vehicle exporters to Japan.

 “Concretely, this means that Japan should resolve the remaining non-tariff measures facing EU vehicle exports. This should at least partially offset the negative impact of increased Japanese imports on the competitiveness of the EU auto industry, caused by the elimination of EU tariffs,” said ACEA Secretary General, Erik Jonnaert.

ACEA said that EU import duties on passenger cars amount to 10% and duties on commercial vehicles are 10-22%. ACEA said it ‘requests that any schedule for the elimination of these tariffs should reflect the status of automobiles as sensitive products and should be a minimum of seven years’.

ACEA noted that ‘despite the South Korea free trade agreement being in force for almost six years, certain non-tariff measures have remained unresolved, resulting in significant costs for EU manufacturers’.

“It is therefore of vital importance that the EU negotiates a more robust automotive annex in the EU-Japan free trade agreement, which encourages regulatory collaboration, but also allows for issues to be addressed in case of non-compliance,” said Jonnaert.

ACEA also said in a statement that the agreement should provide rules of origin provisions that are consistent with other EU free trade agreements.

“Any relaxation in rules of origin could have a significant impact on the competitiveness of our industry, and thus on the overall balance of the agreement,” said Jonnaert.

ACEA noted that despite the current EU import duties, Japan already accounts for the highest import value for cars in the EU (worth 9 billion euros), and is the second highest importer in terms of volumes (representing over 20% of all imports).

The Japanese car market has long been considered hard work for foreign brands and importers and the import share is low. However, Volkswagen and the German premium brands do sell in significant volumes there.

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