EU will start free trade talks with Japan despite carmaker fears
Lobby group warns of increased imports, job losses
EU trade ministers today agreed to start negotiations toward a free-trade agreement with Japan despite resistance from European carmakers.
The ACEA lobby group said a free trade agreement with Japan will have a negative impact on the European auto industry and potentially lead to tens of thousands of job losses.
It said research by the consultants Deloitte showed that the potential for increased car exports to Japan from Europe would not offset higher imports into Europe from the Asian nation.
A deal with Japan would be "a one-way street" as far as the automobile industry is concerned, said Ivan Hodac, ACEA secretary general.
The Deloitte study said EU car exports to Japan could increase by 7,800 units by 2020 if a deal was agreed, compared with additional Japanese exports to the EU amounting to 443,000 units, ACEA says, adding that the consequent fall in EU car production could lead to between 35,000 and 73,000 job losses.
ACEA, based in Brussels, represents all major automakers that sell cars in Europe, including Toyota and Hyundai.
ACEA said it will closely watch the evolution of the negotiations to ensure the European automobile industry's two principal requests are met. These are:
Vehicles manufactured and type-approved in the EU are accepted in Japan without further testing or modification.
European small cars are given the opportunity to compete on equal terms with Japan's category of kei-cars, which in effect excludes imports from 35 percent of the domestic market.
On the surface, the EU car market has more barriers than Japan's, with a 10 percent tariff on imported Japanese cars and 22 percent on trucks, compared to Japan's zero import tariffs.
But EU carmakers say numerous barriers hinder exports, such as the kei cars category. These cars benefit from tax breaks, but most small European cars do not fit the category's demanding criteria on size and power.
Such rules particularly annoy France and Italy, whose automakers specialize in smaller cars.
France and Italy have been worried about the impact on their auto industries, and the agreement to start talks was only reached after Paris was given safeguards to defend French carmakers against potentially strengthened competition from Japan, an EU official said.
An EU-Japan agreement would bring together two trading partners responsible for a third of global economic output. But the complexity of the negotiations means it could take several years to reach a deal.
The plan is part of an EU ambition to make up for stagnant European demand with potential free-trade pacts with major economies, including Canada and the United States. It comes a year after a free-trade agreement with South Korea.
France recently requested the European Commission monitor the import of South Korean cars, after the trade deal with Seoul was accompanied by a surge in European sales for Korean car brands.
Still, France agreed to negotiations after the Commission's assurances that EU tariffs would only be lowered if Japan's non-tariff barriers were removed.
French Trade Minister Nicole Bricq said the safeguards against excessive Japanese car imports were tougher than those in the South Korea accord, though she did not specify how they would be implemented.
"The Commission must take into account the needs of sensitive sectors - carmakers," she told reporters in Brussels, warning that Paris would fight to defend its industry during negotiations.
Japan is the EU's third-largest trading partner after the United States and China, accounting for 150 billion euros a year in trade in goods and services.
Reuters contributed to this report