More and more countries are protecting their auto industries with elaborate trade barriers. Matthias Wissmann, president of the German Auto Industry Association (VDA), counsels vigilance. Wissmann spoke with Guido Reinking, editor of Automotive News Europe sister publication Automobilwoche.
Do you see a sign of a new protectionism in the new fuel economy rules in the U.S., the scrapping bonus in Japan, which initially excluded importers, and the discriminatory fuel economy standards in South Korea?
Some countries are showing the first signs of conducting an industrial policy under the cover of environmental protection. For example, France has a CO2 tax system that clearly favors French vehicles with its bonus system. Research incentives in the U.S. are another example. They basically exclude foreigners to a great extent. So far, you can't say that it's a wildfire. But when it comes to protectionism, you have to be vigilant early.
Does this have something to do with the economic crisis?
Certainly. Tough economic times are precisely the period when you see a number of countries continually trying to seal off their markets and help their own industries with protectionist measures. We Germans have a highly innovative and modern auto industry that is extremely successful in world markets. That's why the federal government has always been largely immune to protectionist approaches. Other countries apparently believe they have to protect their auto industry from competition.
What could the German government and EU do to fight these efforts? What would they have to do?
Brussels has responsibility for trade agreements and thus must assure that barriers to market access such as duties, taxes and other so-called non-tariff trade obstacles are excluded. That is our issue with South Korea. We are telling the European Commission: Make sure that no agreement with South Korea is ratified before South Korea is precluded from tailoring environmental legislation and duty reimbursement to its own industry, at the expense of imported brands.
Is ACEA, the European Automobile Manufacturers Association, pulling along with you on the protectionism issue?
We have a common line with ACEA on matters relating to South Korea. We find it extraordinarily annoying that an unbalanced trade agreement could be reached. It gives the South Korean auto industry advantages that distort competition. This is not just due to non-tariff trade barriers, but also duty reimbursement for supplier components, which the South Koreans then source from other parts of Asia. The policy works at the expense of German and European automakers and endangers investment and jobs in our industry.
Brussels must have a better view of the European industry's own best interests.