Europe on verge of creating 400,000 jobs in free trade agreement with Japan to allow EU-built cars to ‘compete on an equal footing’ in the Far East

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Europe on verge of creating 400,000 jobs in free trade agreement with Japan to allow EU-built cars to ‘compete on an equal footing’ in the Far East

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Published: 26 March 2013

Europe’s automotive industry is calling for Japan to bring a halt to the drawn-out process of selling EU-built cars in the Far Eastern country, with the European Union (EU) launching a free trade agreement yesterday.

Currently, European manufacturers struggle to sell their cars in Japan due to the country’s strict national requirements and desire for Japanese citizens to drive only home-built vehicles.

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Some of the world’s leading manufacturers and brands are based in Japan, yet production volumes of homebuilt cars have reduced significantly over the last few years, with more Japanese men and women being lured by the stylish European alternatives.

Toyota leads the Japanese field, with Honda, Nissan, Suzuki and Mazda all producing a similar number of cars. This is followed by Daihatsu, Mitsubishi and Suburu.

"We are strongly in favour of free trade agreements that are balanced and that provide real opportunities for export," explained Ivan Hodac, European Automobile Manufacturers’ Association’s (ACEA) Secretary General. "However we still have some reservations about an FTA with Japan. We question its potential to create sufficient opportunities for European exporters to counterbalance the greater access to the EU which Japanese manufacturers will gain as a result of tariff reductions."

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Japan currently retains unique national requirements which add to the cost of imports, without bringing benefits to the consumer. ACEA stresses the need for Japan to accelerate the harmonisation of its vehicle standards with UN Regulations.

"Our industry requests that an EU type-approved vehicle can be sold in Japan without the need for further certification or costly modification. This is not the case today," he added. "European cars are amongst the safest and cleanest in the world, so there is no reason why a car that is suitable for EU consumers should not be suitable for Japanese consumers."

ACEA is also calling for Japan to revise the fiscal and other privileges enjoyed by ‘kei-cars’ (super-mini cars which are a creation of the Japanese regulatory system), so that European sub-compact cars can compete on an equal footing.

Nissan Production Line

"ACEA urges for the real and effective elimination of non-tariff barriers in the car sector. We welcome the fact that in twelve months the European Commission will assess whether Japan’s progress in this regard is fully satisfactory," stated Hodac. If this is not the case, the Commission has indicated that it will ''pull the plug'' on the negotiations.

It has suggested to the Commission to set challenging, but realistic, targets for the first year of the negotiations. It will work constructively with the Commission and other relevant stakeholders to ensure that Japan fulfils its commitments to eliminate non-tariff barriers in the automotive sector. The Council of the European Union last year gave the Commission a mandate to open trade negotiations with Japan.