CARS 21 WG 2 TRADE AND INTERNATIONAL

HARMONISATION-

TRADE ISSUES-

MEETING

14 FEBRUARY 2011

Importance of Trade for the EU Automobile Industry 1/12

International trade is of major importance for our industry as the ACEA members are global players exporting to various countries with numerous factories around the world.

The main strategy of the EU industrial and trade policies should be to maintain in the EU an important industrial base covering all vehicle - truck and bus - segments, as well as competitive car parts and compononent production.

Any trade agreement concluded by the EU should benefit to all segments of our industry and favor both exports and foreign direct investments.

Importance of Trade for the EU Automobile Industry 2/12

Cars sales in 2010 hit their lowest volumes in the EU since 1997, at 13.4 mio units. In 2007, before the crisis, they reached 15.6 mio.

NB: figures reported for 1990-2002 cover the EU15, figures reported for 2003-2005 cover the EU25figures reported for 2006-2010 cover the EU27

Importance of Trade for the EU Automobile Industry 3/12

Car production in 2010 was at a low (15.1 mio) not reached since 1997. In 2007, 17.1 mio cars were produced.

NB: figures reported for 1990-1995 cover the EU15, figures reported for 1996-2010 cover the EU27

Importance of Trade for the EU Automobile Industry 4/12

The EU auto industry is recovering from the crisis…

Importance of Trade for the EU Automobile Industry 5/12

Importance of Trade for the EU Automobile Industry 6/12

… but growth in the coming years is forecast to remain subdued in the triad markets (EU, Japan, US) while increasing in main emerging countries (BRIC, ASEAN…).

Vital importance for EU production and jobs to obtain real market access to such economies

Source: IHS Global Insight

Importance of Trade for the EU Automobile Industry 7/12

Source: DG ECFIN

Importance of trade for the EU Automobile industry 8/12

Growth of our industry is directly linked to net trade flows

Source: Global Trade Atlas

Importance of trade for the EU Automobile industry 9/12

Source: Global Trade AtlasNB: Commercial Vehicles = above 5 tons

Importance of trade for the EU Automobile industry 10/12

On the export side,The main current and future export markets are the emerging economies: BRIC and ASEAN countries.

The EU is a very open automobile market, despite the 10% import duties on cars and 6.5% duties for Generalized System of Preferences countries (GSP).

EU car imports in 2010 mainly came from Japan, South Korea, Turkey, India, China and the US.

Importance of Trade for the EU Automobile Industry 11/12

Fast growing economies such as the BRIC and ASEAN countries apply auto peak tariffs that, in many cases, considerably hamper EU auto exports:

China: 25% India: 60%Russia: 30% Thailand: 80%Malaysia: 30% Vietnam: 83%Brazil: 35%

Our industry is very concerned that these import duties - will neither be eliminated in the context of bilateral trade

negotiations - nor be significantly reduced in the framework of the

multilateral trade negociations of the Doha Round (DDA), if and when concluded.

Our industry therefore supports the conclusion of the FTA negotiations with major emerging economies with the view of achieving a real market access for EU exports, which is not currently provided by NAMA.

Many emerging markets have very competitive auto production, incl. R&D, and do not need further protection

Importance of Trade for the EU Automobile Industry 12/12

The current DDA NAMA text, the Swiss formula and the exceptions provided for - authorise the main emerging economies

to shelter their auto peak tariffs and to avoid any relevant reductions,

- while the EU auto duties will be reduced from 10% to 4.4% => unbalanced negotiations results = negative consequences on : - EU production

- EU employmentOur industry supports a DDA that will provide it with real market access to the main developing countries. Today, this seems unlikely.

Balanced FTAs with India, MERCOSUR and ASEAN countries could result in real export opportunities for our industry, for all car, truck and bus segments.

ACEA Priorities and Recommendations on the Future EU Trade Policy (FTP) 1/4

FTAs should: Help increase import penetration rates for EU automotive goods in a context of reciprocity and “win-win”

Eliminate all automotive tariffs (incl. for parts and components)Any compromise on elimination of automotive tariffs should be based on transition periods onlyFTAs should only be concluded with countries of

economic interestStrengthen auto industrial base and employment

Be subject to impact assessments on EU employment, notably before negotiation, prior to conclusion and ex-post

Avoid that in the negotiation our industry becomes a bargaining chip or a trade-off sectorCreate a level-playing field

ACEA Priorities and Recommendations on the Future EU Trade Policy (FTP) 2/4

Create a level-playing fieldProhibition of the Duty Draw Back (trade distorting)Uniform application of high Rules of Origin (RoO) thresholds on a general basisEfficient dispute settlementSafeguard mechanisms with an effective monitoring system

Include provisions to eliminate all Non-Tariff Barriers (NTBs) and to protect our industry from any future ones

Promote the recognition and deployment of UNECE Regulations (1958 and 1998 Agreements)

Categories ExamplesTechnical Regulations

Homologation Procedures

Customs Procedures

Customs Valuation

Tax Structure

Luxury Taxes

Intellectual PropertyRights

Investment Regulations

Japan, Korea, Taiwan, India

Japan, China, Russia, Korea, Thailand

Indonesia, Malaysia, India

India, Malaysia, Russia, Thailand,Taiwan

Japan, China, Korea, Russia, India,Ecuador, Pakistan, Columbia, Malaysia

Australia, Indonesia, Philippines

China, Near East, Indonesia, Thailand,Russia, India

China, India, Malaysia

Often, and apart from TBT’s, NTBs of various categorieshamper market access for EU exports.

ACEA Priorities and Recommendations on the Future EU Trade Policy (FTP) 3/4

ACEA Priorities and Recommendations on the Future EU Trade Policy (FTP) 4/4

Besides TBTs, other categories of NTBs hamper EU exports. Each FTA should:

Provide for reciprocal investment policies (i.e protection against expropriation or discriminatory measures) and access to public procurement.

Eliminate any restrictions on exports and supplies of raw materials, notably unreasonable (quantitative) quotas.

Promotion of “green products” should be based on objective criteria, and not create trade distortion.

Prohibit any form of discriminatory taxes and customs procedures, including the removal of investment restrictions.

Trade Relations with Other Third Countries

Turkey:Whenever the EU negotiates an FTA with a third country/region, the EU should use its best endeavour to support Turkey (Customs Union) in its effort to conclude a similar FTA.

China, Japan, Russia and the US:Our industry fully supports ambitious regulatory cooperation with those strategic partners.Negotiations with them should create a favourable framework for business and:- Establish internationally recognised standards and

certifications, using the WP29 regulatory work as a basis (UNECE 1958 and 1998 Agreements)

- Promote a favourable regulatory framework, also with regard to new technologies and mobility approaches

- Promote reciprocal investment policies- Improve access to public procurement markets- Improve the protection of IPRs and their enforcement- Promote secure access to raw materials

European Automobile Manufacturers Associationwww.acea.be

Thank you!