logo logo

Ford upset EU wants Japan free-trade talks

The Detroit News | July 19, 2012

Ford upset EU wants Japan free-trade talks

By Karl Henkel

Ford Motor Co. on Wednesday was the first automaker to voice displeasure after the European Union announced it wants to start free-trade negotiations with Japan.

Automakers fear the European Union, which currently imposes a 10 percent tariff on Japanese car imports, could lift that tariff as part of negotiations. The EU also charges a 10 percent tariff on autos imported from the United States.

"At a time when vehicle sales in Europe are their lowest point in nearly two decades, a one-sided trade agreement that brings a wave of imports into the market without a corresponding outflow of exports could further damage the European economy and imperil the close to 12 million jobs supported by the automotive sector in Europe," Ford said in a statement.

Japan imposes no tariffs on cars imported from the European Union. But officials say Japan has regulatory barriers to imports.

Both Ford and General Motors Co. are already dealing with chaos in Europe, where there is continued concern regarding the European debt crisis, high unemployment and low consumer confidence.

The EU thinks liberalizing trade will boost the economy, but automakers say any trade agreements need to be "truly fair," in Ford’s words, and offer reciprocal import-export liberalization by trading nations.

"Experience tells us that the free-trade theories espoused in official agreements are not always matched by the practice of real-world fair trade implementation," said Stephen Odell, Ford of Europe chairman and CEO, in a two-page article outlining the company’s concerns.

Automakers have pointed to a free-trade agreement with South Korea implemented last year that’s led to increased imports of cars from South Korea. Sergio Marchionne, chief executive at Fiat SpA and president of the European Automobile Manufacturers Association, has called the South Korea deal a "warning sign" about a potential deal with Japan.

The EU executive branch is asking member countries to give consent on talks with Japan; the EU is expected to OK the talks, which then could start next year.

EU Trade Commissioner Karel De Gucht said Wednesday an agreement would generate up to 400,000 jobs, as the EU would export more goods. "If growth in the next 20 years is likely to come from Asia, then overlooking Japan would a serious mistake in our strategy," he said.

 source: The Detroit News