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 JAPANHS 8703, excl and Annual % chgJan-Sep % chg EUROSTAT / /12 in unitsImports from JP 604,151429,803392,625-9%307,497250,270-19% in unitsExports to JP 148,082175,242206,71418%153,155172,55613% in euroImports from JP 7,671,883,3306,503,578,0505,975,355,530-8%4,615,022,1103,872,724,350-16% in euroExports to JP 3,843,380,2705,088,515,5606,304,082,59024%4,739,832,4404,597,777,410-3% source: eurostat

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 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