Automobile industry calls for balanced outcome in EU-Japan FTA

As the EU and Japan get closer to entering into a comprehensive free trade agreement, though it seems that it is being presented as a finished project despite there being a lot of loose ends to tie up, ACEA has drawn attention to some particular aspects important to the motor industry, according to this press release. The removal of tariffs on imports into the EU from Japan (currently 10 per cent on cars, and up to 22 per cent on commercial vehicles) must be balanced by a reduction in non-tariff barriers in the opposite direction, says ACEA. While opening the Japanese market to EU dairy products promises benefits to European producers, in the automotive sector - the other area in which the free trade agreement will be important - the benefits are likely to flow the other way. By drawing attention to the fact that under a free trade agreement with South Korea that has been in operation for nearly six years there are still outstanding problems with non-tariff barriers, the organisation emphasises the importance of having procedures to deal with disputes as well as encouraging collaboration in regulatory matters.



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EU set to scrap tariffs on Japanese car parts

The European Union is ready to propose immediately scrapping import tariffs on most Japanese car parts in trade negotiations now under way, according to the Nikkei daily quoted by Reuters on 15 June. In return the EU will press Japan to reduce or abolish tariffs on agricultural products - a step which would face considerable opposition in Japan, demonstrating rather nicely the sort of thing that goes on in international trade negotiations. A tempting offer, with a difficult quid pro quo in return - there's going to be a lot of this going in as Brexit talks get under way, starting on Monday 19th.

The Nikkei goes on to say that Japanese and European negotiators are continuing talks, which began in 2013, in Tokyo to reach a broad deal on signing an economic partnership agreement in early July. Such a deal is one of the key goals of premier Shinzo Abe's "Abenomics" stimulus programs and growth strategy to revive the country's stagnant economy. The EU accounts for about a tenth of Japan's foreign trade, and at present the EU imposes a tariff around 3 to 4 per cent on parts and 10 per cent on cars imported from Japan.

EU looks into Slovak aid for Land Rover factory

The legality of Slovakia's plan to grant €125 million to Jaguar Land Rover to support a new factory in the country is being investigated by the European Commission. The plant will build up to 300,000 cars annually and is due to open next year. The European Commission's press release is here.

Unlawful to require conversion to LHD

Commission v Lithuania (Judgment of the Court) [2014] EUECJ C-61/12 (20 March 2014) and Commission v Poland (Judgment of the Court) [2014] EUECJ C-639/11 (20 March 2014) both establish that it is unlawful under EU rules to require right-hand-drive cars to be converted before they can be registered in the two Member States concerned, which follow the Napoleonic rule of the road.

The relevant legislation is Article 2a of Council Directive 70/311/EEC of 8 June 1970 on the approximation of the laws of the Member States relating to the steering equipment for motor vehicles and their trailers (OJ 1970 L 133, p. 10), Article 4(3) of Directive 2007/46/EC of the European Parliament and of the Council of 5 September 2007 establishing a framework for the approval of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles (Framework Directive) (OJ 2007 L 263, p. 1), and Article 34 TFEU.

Emissions: supercredits out of favour, Germany wants long transition

Yesterday, the Environment Council discussed CO2 emissions from cars. The press release of the meeting says:

CO2 emissions from cars
The Council examined the final compromise text of a draft regulation amending regulation
443/2099 to define the modalities for reaching the 2020 target to reduce CO2 emissions from new passenger cars. The text was negotiated in informal trilogues with the European Parliament last June.
The Council confirmed its willingness to reach, at the earliest opportunity, a first reading agreement with the European Parliament on this file, and maintain a high level of ambition.
The Council agreed to support the presidency in seeking, together with the Commission, further
contacts with the European Parliament in order to explore the possibility of finding some limited
flexibility, while maintaining the overall balance of the compromise agreed in June and reach a
solution satisfactory to all.
The Commission presented its proposal in July 2012 (12733/12).

Which seems to mean that the Germans have kicked the issue into some longish grass: the 95g/km limit would not be fully operational until 2024 under the new proposals. Although this is a legal topic, it has has little to do with law, and everything to do with political horse-trading, at which the European Union and its predecessors have always excelled. Germany wants to protect its car industry, which on average produces cars that emit rather more carbon dioxide than most (especially when driven at Autobahn speeds, but that isn't up for discussion in this forum). The rest of the EU supposedly kept quiet over the summer, to avoid rocking the boat and interfering with the German general election, although presumably there are plenty of governments in EU countries which would be pleased to have seen someone other than Mrs Merkel win. France took an opportunity to remind the Germans of the importance of respect for Union legislation, banning sales of Mercedes cars with illegal refrigerant in their air-conditioning systems, as I reported at some length at the time (and that did have an interesting legal dimension).

So has everything changed after the election result? Not a bit of it. Now it seems that Britain (and Poland) are supporting Germany in its efforts to push back the lower emissions limits - reportedly because the British government wants German support against French proposals to cap bankers' bonuses. At least, they appear to be prepared to help Germany delay matters. The German government now proposes a solution that relies not on 'supercredits', which is what it has argued for (and secured agreement on) in the past, but on delaying the introduction of the lower limits. Exactly the uncertainty that the European motor industry does not want. And the delay could be considerable, as dumping the supercredits approach means restarting negotiations with the Parliament - this could go on for ever!