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backEUROtalk April, 2012

International Trade: A Strategic Interest for Europe

The European Automobile industry firmly supports the EU in its trade negotiation programme, and encourages international trade deals that provide mutual benefits and shared rewards for the industry at home and for partners abroad.

A global player, the European automobile industry is among the biggest exporters in the EU, exporting 4.9 million motor vehicles 2010 which highlights the significance of the industry. The contribution to the trade balance is sizable, and the numbers of vehicles exported is equivalent to a quarter of all the vehicles produced in the EU in 2010. These exports are key to sustaining millions of jobs in the automotive industry and range of other sectors. They help ‘fly the flag’ for Europe, and give the bloc’s industry a standard-setting role in foreign markets.

The European automotive industry is in favour of further trade liberalisation. Trade agreements can foster innovation, growth and prosperity for the EU and for partner countries. The principles of trade theory generally posit that international trade liberalisation results in a net increase in aggregate income for both sides. The European Automotive industry’s position as a major European employer, exporter and R&D investor makes it an important structural component of the European economy. In order to reinforce competitiveness, bi- and multi-lateral trade agreements should be reciprocal, to offset potentially negative effects on EU employment levels.

Multilateral Trade Agreements:
The Automotive industry is in favour of multilateral trade frameworks in the context of the WTO and supports the conclusion of the Doha Development Round, provided that changes are introduced in the current Non-Agricultural Market Access (NAMA) text, which would offer the EU real access to the main emerging economies’ markets. Further, agreements should prevent such emerging economies from using the NAMA flexibilities to shelter their industry from key EU sectors, including the automotive industry, by high tariff or non-tariff walls. For ACEA, the conclusion of the Doha Round, rather than the conclusion of a ‘spaghetti bowl’ of FTAs is preferable.

In the event that the DDA were to be concluded without such amendments to the NAMA text, the effect would be to open up the EU market to third-market producers that do not face comparable competitive pressures, and to deprive domestic automotive manufacturers of reciprocal beneficial access to the competing emerging markets. The effects of unreciprocated market access would have potentially strongly negative economic effects in Europe. Accordingly, the industry asserts that the EU should push for balanced agreements in all trade deals.

Bilateral Talks: Free-Trade Agreements (FTAs)
The increasing difficulty of concluding multilateral agreements has led to the renewed significance for bilateral direct country-to-country trade deals. The automobile industry supports the EU’s conclusion of bi-lateral agreements as complements to the preferred multilateral option. FTAs will improve export opportunities in countries of economic interest, which will help increase export penetration rates for EU goods, notably automobiles.

ACEA Guidelines for Free Trade Agreements:

- The EU’s trade balance should not be adversely affected by FTA provisions, and the sustainability and long-term prosperity of European companies should be secured.

- FTAs should eliminate all automotive tariffs (including for parts and components). In specific and limited cases, asymmetrical tariff dismantling periods can be permitted.

- The agreement should maintain duty drawback prohibitions and apply uniform Rules of Origin thresholds on a general basis.

- The FTAs should dismantle all non-tariff barriers (NTBs), and in particular, promote the recognition and deployment of the UN/ECE Regulations (1958 and 1998 Agreements).

- FTAs should include reciprocal investment policies (i.e. protection against expropriation or discriminatory measures), and access to public procurement.

- Any restrictions on exports and supplies of raw materials, notably unreasonable (quantitative) quotas should be eliminated.

- “Green protectionism” and trade distortion should be avoided and an efficient dispute settlement and safeguard mechanism with an effective monitoring system should be included.

Current FTA negotiations
The EU is currently engaged in a number of Free Trade Agreement negotiations. Some agreements have already been concluded, while others are still being discussed. European industry follows each of these negotiations with interest.

To read entire article, please click here.

Source: ACEA - GAI

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