ACEA

International Trade - Mutual benefits in opening markets

The European automotive industry has a reputation for delivering quality products around the globe. Opportunities to develop trade abroad should be pursued and manufacturers support steps to remove barriers such as unreasonable import tariffs and non-tariff barriers (NTB).

The industry supports WTO and multilateral trade and seeks a balanced and fair Doha round (DDA) that will deliver real market access to main developing economies.

The current draft text on modalities for Non- Agricultural Market Access (NAMA) remains a concern. If a DDA agreement is later reached on such basis, it would give a green light to developing countries to keep peak import tariffs on European automotive products, while opening up opportunities for imports to Europe. This must be reviewed when talks recommence.

The collapse of the Doha Round in July 2008 was disappointing, but reinforces the need to develop bilateral and regional agreements with major trading partners. These have the potential to deliver benefits for European auto makers and importers, improving access to these markets.

However, thorough impact assessments must be undertaken before any deal is signed. One-sided agreements that bring opportunities to third-country importers but little benefit to the EU and its industry must be rejected, and consequently, only balanced agreements should be signed.

The European automobile industry is dynamic, competitive and operates on a global scale. High-quality products, significant investment and a highly skilled workforce deliver exports with a €42.8 billion net trade contribution to the economy.

The global framework in which vehicle manufacturers do business is increasingly important. Export growth in emerging markets like China and Russia, investment in resources abroad and the economic downturn at home reinforce the goal of trade without barriers.

Global trade agreements that deliver free markets are most beneficial. The automotive sector fully supports the gradual dismantling of EU import duties, but this concession must be accompanied by equivalent opportunities abroad for European manufacturers.

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Multilateral agreements

The latest round of DDA negotiations collapsed in July 2008. Overall disappointment was accompanied by auto makers’ concerns about the content of a pending compromise on non-agricultural market access (NAMA). This must be reviewed when talks recommence.

Under the text, some countries would be allowed to exclude whole sectors, including automotive, from lowering peak import tariffs. The effect would be to open-up the EU market for non-European producers, while offering domestic auto makers no beneficial access to emerging markets abroad.

This contradicts original DDA goals, undermining industry competitiveness, threatening investment and employment in the EU.

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Bilateral trade agreements

In the absence of global trade agreements, it is important that the EU pursues bilateral and regional agreements. In 2005, the final report on CARS 21 recommended the European Union to complement its multilateral trade policy with a bilateral approach, helping deliver much needed improvements in export opportunities for manufacturers.

The report argued the urgency of the case, given the multitude of bilateral agreements between other regions and growth markets, particularly those in Asia. These have the potential to exclude European manufacturers.

In April 2007, the Council gave a mandate to the Commission to negotiate FTAs (Free Trade Agreements) with several countries and regions. The priorities for the European automotive industry are India and ASEAN countries, but also MERCOSUR for which negotiations started eight years ago. Low level of results and lack of perspective to conclude effective FTAs in a foreseeable future are disappointing.

The industry will continue to emphasise the importance of reciprocal trade advantages for European manufacturers in regional and bilateral FTAs. Consideration must be given to the size of the market, market access and levels of tariff and non-tariff barriers, as well as a thorough assessment of the impact on the EU sector. These criteria were included by the European Commission in the 2006 policy paper Global Europe: Competing Against the World.

In the current economic climate, it should be imperative for the EU to negotiate agreements that do not weaken the competitiveness of the European auto industry.

South Korea – a case study

In 2007, South Korea exported around 700,000 vehicles to the EU, nearly 20% of all vehicles imported into Europe. Yet, EU exports were limited to around 28,000 vehicles in a South Korean market of 1 million.

Mutual benefit and fair market access have to be the bedrock of any bilateral trade agreement. It is therefore a concern that FTA negotiations with South Korea have not followed these principles. Auto makers have urged a thorough impact assessment.

Barriers, like Korean technical standards, changes to rules of origin and duty drawback clause concessions, as well as the inappropriately short lead-time for tariff dismantling, must be addressed. The industry is also concerned that the terms proposed could set an undesirable precedent in future negotiations with other Asian countries.

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last updated 19/05/2009

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