In the latest talks, regulators discussed mutual recognition of EU and U.S. automotive standards, notably on braking systems, and harmonization of rules, such as for seatbelt anchorages. Tariff-reduction proposals are being exchanged as well.
The agreement includes tariff-elimination schedules and rules of origin for the automotive sector. It also details what proportion of an automobile or a part must be made in a partnership member country for duty reductions to apply.
While American automakers may cheer the agreement’s provisions for gradual lifting of Japanese tariffs on U.S. autos, they are quick to point out these free-trade benefits risk being outweighed by currency manipulation.
The Ukraine government grumbles the WTO panel had found fault with alleged failings by Kiev over how it had justified levying the duties, which are supposed to give local industries time to react to an import boom and become competitive.
Critically, the agreement provides for the continued use of super-credits within the emissions measurement formula for green vehicles such as EVs and hybrids. These can bring down the average CO2 emissions level assessed for auto makers.
The Commision since 2008 has given EU countries more leeway to offer tax breaks, low-interest loans and grants for making and buying energy-efficient vehicles, but is concerned that member states are using these rights in conflicting ways.
The U.S., EU and Japan also charge that the country is asking importers to make certain commitments such as limiting their imports, balancing them with exports and making or increasing investment in local production facilities.
The European Union is protesting Brazil’s hike in taxation of foreign-made components and Argentina’s requirement that auto-parts importers file a sworn declaration, including production information, to the country’s customs authority.