The future of the EU-Japan Free Trade Agreement

Erik Jonnaert, Secretary General ACEA

European Economic and Social Committee

15 January 2014

EU-Japan Auto Trade Figures

JAPAN HS 8703, excl. 870310 and 870390 Annual Annual Annual % chg Jan-Sep Jan-Sep % chg

EUROSTAT 2010 2011 2012 12/11 2012 2013 13/12

in units Imports from JP 604,151 429,803 392,625 -9% 307,497 250,270 -19%

in units Exports to JP 148,082 175,242 206,714 18% 153,155 172,556 13%

in euro Imports from JP 7,671,883,330 6,503,578,050 5,975,355,530 -8% 4,615,022,110 3,872,724,350 -16%

in euro Exports to JP 3,843,380,270 5,088,515,560 6,304,082,590 24% 4,739,832,440 4,597,777,410 -3%

source: eurostat

EU-Japan Auto Trade Figures

EU-Japan Auto Trade Figures

Potential risks of an EU – Japan FTA for the EU automobile sector

Findings of the Deloitte study of 2012 :

The elimination of the EU tariff of 10% would represent an average additional profit of €1,500 per vehicle imported from Japan to the EU.

This financial windfall would significantly enhance the competitiveness of Japanese players in the EU.

Combined with a depreciation of the Yen versus the Euro, this poses significant challenges to the growth and sustainability of the local auto industry in the EU.

The impact on EU employment could be significant, estimated at between 34,500 – 72,760 job losses in the sector.

ACEA Objectives for the FTA

Balanced FTA that creates a level playing field for European exporters

To reduce the negative impact of the FTA as much as possible by NTB dismantling so that market access to Japan to become a reality

Procedure to avoid new NTBs

Strict parallelism between tariff elimination by the EU and NTB dismantling by Japan

ACEA Requests for the FTA

Japanese NTBs identified in the Scoping Exercise to be eliminated.

ACEA’s Priorities for the FTA:

1. Harmonization with UNECE requirements:

Any vehicle certificated for use in the EU in accordance with UN Regulations should be accepted in Japan without the need for modification or further testing.

2. Creating a level playing field with kei cars:

European compact cars should be able to compete on equal terms in the 40% of the Japanese market taken by so-called kei-cars, sub-compact cars unique to Japan, protected by fiscal and other regulatory privileges.

Next StepsNext Steps

Review of progress in April 2014

– The Commission will carry out a review of progress in eliminating NTBs, particularly in the automotive sector, 12 months after the start of the negotiations

Status of progress

– From ACEA’s perspective, progress has been mixed.

– Japan’s adoption of UN Regulations to achieve technical harmonisation remains unsatisfactory

– The decision to raise Kei-Car Tax from April 2015 is a step in the right direction