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News from JAMA Asia-Pacific Edition

JAPAN AUTOMOBILE MANUFACTURERS ASSOCIATION, INC. Asia - Pacific Edition052003 JAN

V o l u m e

C o n t e n t s

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Turning AFTA AspirationsInto Practical Realities

Pages 2-3 Adoption of International Harmonization a Key Step in ASEAN’s ManufacturingFuture

Top NewsTurning AFTA AspirationsInto Practical Realities

In 2002 ASEAN’s auto market kept up its recovery, regaining the level it had achieved prior to the 1997 Asian financial crisis and promising continued growth. AFTA implementation will impact in vitally important ways the ongoing development of this market and its auto industry, particularly in view of the key role to be played by the economies of scale.

Japanese automakers launched their first production activities in ASEAN countries over forty years ago. Since then, these firms and their local affiliates have contributed significantly to the region’s economies and the livelihood of its people, giving rise to greater expectations in their regard from both the Japanese and ASEAN perspective. For such expectations to become reality, the creation of a genuine free-trade area in the ASEAN region is seen as highly desirable.

This is now coming to pass. As of January 1 this year, five ASEAN nations (Brunei, Indonesia, the Philippines, Singapore and Thailand) reduced their import duties on autos and auto parts from within the region to under 5 percent - a critical step in reaching AFTA’s goals. Furthermore, Brunei, Indonesia and Singapore have announced the reduction of their AICO (ASEAN Industrial Cooperation scheme) tariff rates to zero to expedite that process, as have been adopted by Cambodia, Laos and Malaysia, while the Philippines and Thailand are acting to reduce theirs to below 1 and 3 percent, respectively. (continued on page 4)

by Hiroyuki NakamuraChief Representative, JAMA Singapore Office

EU

JapanU.S.A

UN / ECEWP29

APEC/RTHP

ASEAN

The scope of worldwide harmonization activities, centered on the UN/ECE WP29

Along with the commencement in earnest of the AFTA, JAMA considers such developments as the Mutual Recognition Agreement (MRA) towards certification, and the ongoing efforts toward international harmonization of regulations to be highly welcome. The automobile industry hopes to take maximum advantage of the merits of AFTA. In order to achieve economies of scale and by so doing realize smoother distribution of automobiles and automobile parts within the region, it will be crucial not only to eliminate tariff and non-tariff barriers, but also to promote harmonization of technical regulations and mutual recognition of certification.

For automobile manufacturers, harmonization offers a number of advantages. For one thing, considerable savings in development and implementation costs can be realized by not having to meet each country’s separate regulations for safety and environmental controls, thereby leading to improved productivity. Another advantage is that the governments are able to avoid duplication of tests and examinations on their side.

The promotion of standardization within ASEAN has been ongoing, but to realize the fullest benefits from this process, it is also desirable to consider currents occurring outside the region and follow general world trends.

Here, we would like to provide an outline of the current status of worldwide harmonization, which we would like to see given consideration by ASEAN industries and governments.

Worldwide efforts toward adoption of harmonization under WP29

WP29, the World Forum for the Harmonization of Vehicle Regulations, is a forum operated under the auspices of the UN Economic Commission for Europe. At present, in addition to Japan, the U.S., the EU and others, 32 European countries, Australia, Canada, China, South Africa, South Korea and other. Such industry organizations as the Paris-based OICA (International Organization of Motor Vehicle Manufacturers), the IMMA (International Motorcycle Manufacturers Association) and others also participate as observers.

News from JAMA Asia-Pacific Edition

Adoption of International HarmonizationA Key Step in ASEAN’s Manufacturing Future

Overview of the 1958 and 1998 Agreements1958 Agreement

Name1998 Agreement

Agreement for mutual recognition of approvals for automotive parts Agreement concerning the establishing of global technical regulations for wheeled vehicles, equipment and parts

Outline Harmonization of regulations and mutual recognition• Set unified regulations (under ECE regulations) for vehicle bodies and parts related to safety and the environment• Promoted mutual recognition between member countries

Based on the 1958 Agreement covering ECE regulations and separate national regulations, Global Technical Regulations (GTR) has been established with the aim of achieving international harmonization.

Mainpoints

• Mutual recognition for auto components (such as brakes, headlamps, etc.), not for the entire vehicle

• A mechanism to reinforce the 1958 agreement• Does not include the type of mutual recognition provided for in the 1958 agreement

Merits Overlapping examinations are eliminated, avoiding unnecessary time and costs to gain approval.

Standardization of parts under GTR enables the reduction in development and manufacturing costs.

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WP29’s main activities encompass the formulating and revising of unified standards in accordance with the 1958 Agreement; the setting of regulations based on the 1998 Agreement; and the management and overseeing of implementation of the respective agreements.

It is now expected that, at the 131st meeting of WP 29 in November 2003, an agreement will be reached on proposals for standardization of automobile category and vehicle weight and dimensions. If it turns into reality, this agreement will bring forth the first fruit of the Global Technical Regulations on the basis of the 1998 Agreement.

JAMA, working in tandem with the government of Japan, is promoting the participation of Asian governments in WP29, as well as the joining of the 1958 and 1998 Agreements. In the cases where Asian nations lack the budget or human resources to enable the participation in WP29, Japan provides assistance in the promotion of harmonization.

Below, the main activities in Asia concerning actions by governments and the private sector are introduced.

Adoption in Asia

The APEC Transportation Working Group/Road Transport Harmonization Project (RTHP)

•Formed in 1994 with the aim of promoting the harmonization of road vehicle requirements for safety.

•The Road Harmonization Transport Project (RTHP), organized in 1994 under the auspices of the APEC, is positioned as a project to review and implement international harmonization standards such as those covered in WP29. RTHP proceeding according to a two-step process involving 5 phases, as shown below:

STEP 1Phase 1:

Phase 2:Phase 3:

Phase 4:

STEP 2Phase 5:

Asian Government and Industry Meeting (G/I Meeting)

•Coordinated by the Japan Automobile Standards Internationalization Center (JASIC), this gathering of Asian government officials and automotive industry executives meets once annually.

•Specifically, support and assistance is enacted (1) to adopt ECE regulations in countries desiring to enter WP29; (2) to achieve understanding between government and the private sector; and (3) to lay the groundwork for an action plan to effect entry into WP29.

Asian Regulations and Certification Experts Meeting (RACE Meeting)

•JAMA serves as coordinator of this annual event, in which Automotive Industry Associations in participating countries seek to improve mutual understanding and develop regulations from within the automotive industry.

Agreements and Action in the Private Sector

Global meetingsThe chief executive officers of automobile manufacturers belonging to the manufacturers associations in Japan, North America and Europe take part in periodic meetings to conduct exchanges of viewpoints. Harmonization of technical regulations is one of the topics raised at such meetings. (continued on page 4)

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News from JAMA Asia-Pacific Edition

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Identification of technical regulations in the APEC region.Analysis of 9 important regulation itemsAnalysis of 71 major regulation items, and study of functional equivalence

Survey of certification systems in the APEC region.

Determination of requirements for achieving harmonization.

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JAPAN AUTOMOBILE M A N U F A C T U R E R S ASSOCIATION, INC.

News from JAMA Asia-Pacific Edition

AFTA Aspirations(continued from page 1) However, problems with AICO, including complex application procedures and a long approval delay, persist. Governments clearly need to hasten the adoption of measures to improve their inspection and approval procedures and to act effectively in resolving the specific problems concerned.

Voicing his hopes for the realization of AFTA, AAF President Vicente T. Mills, Jr. has remarked, “By adopting a system of mutual supply, the ASEAN countries can boost their manufacturing efficiency, making it possible to supply high-quality, lower-cost and more competitive products to an integrated market.”

The reduction of tariffs will serve to remove one of the biggest barriers to trade. Yet it remains to be seen if this initiative alone will have any measurable effect. Other action must

be taken, from promoting harmonized technical regulations, to the ensuring of transparency in, and the simplification of, customs procedures in all ASEAN countries. Safety and environmental concerns will also need to be addressed. When economies succeed in laying the groundwork for the free movement of goods on a wide scale, our industry will have the opportunity to contribute to sound economic growth in a manner that brings significant benefits to the people of the region as a whole.

Of course, market integration such as we hope to see will be difficult, if not impossible, to realize without assuring the free distribution of products. We therefore look forward to real progress being made in a number of areas, including regulatory harmonization and the standardization of customs documentation and procedures, in order to help the ASEAN market achieve its desired level of integration.

Global Harmonization Ongoing(continued from page 3) Harmonization encompasses a huge range of issues to be dealt with, but the participants are in agreement that expedition of Global Technical Regulations will make most significant contri-bution to these objectives.

AAF-JAMA meetings AAF and JAMA work in tandem, such as through periodic meetings held with the aim of discussing the desirable process, from the perspective of the private sector, for promoting harmonization of technical regulations, including MRA in the auto industry within ASEAN.

As can be seen from the above, then, the increased level of activities related to harmonization reflect widening currents in worldwide distribution of automobiles, as well as heightened awareness toward such issues as safety and environmental preservation. Among ASEAN, not only from the perspective of AFTA, but also as partners in worldwide automobile manufacturing, these efforts toward harmonization are ongoing. JAMA of course intends to continue to support this process. We also look forward to receiving the positive collaboration from the governments and industries within ASEAN.