The European Auto Industry Doubts Benefits of EU-Japan Free Trade Agreement image

The European car manufacturers continue to express their disagreement concerning the free trade agreement between the EU and Japan.

The European Automobile Manufacturers’ Association (ACEA) said that the terms of the free trade agreement have not been analyzed enough and that this does not create the right conditions for launching bilateral negotiations. The free trade agreement requires EU to eliminate the 10% customs duties, which will bring Japanese manufacturers a saving of €1.2 billion annually and €1,500 for every Japanese car imported.

“This would trigger a higher flow of cars into the EU. Car production could go down by some 160,000 units as a result, leading to job losses. If Europe cuts tariffs, Japan must remove non-tariff barriers. Otherwise we don’t have a level playing field. Reducing tariffs is easy; removing non-tariff barriers is far more time-consuming and complicated,” stated Ivan Hodac, Secretary General of ACEA.

Another important issue would be the ‘kei’ cars, the very small cars specific to the Japanese auto market. As this type of cars are very appreciated in Japan and hold over 35% of the market share, the EU manufacturers are locked out of a huge chunk of the Japanese market. There are to solutions to this problem: remove these cars or allow European small cars to have the same advantages.