ACEA published a Position Paper on EU-Australia trade negotiations
Currenly, the trade negotiations between the EU and Australia which started on 22 May 2018 are ongoing.
So far the EU and Australia have been conducting their trade and economic relations under the 2008 EU-Australian Partnership Framework. The new Free Trade Agreement will aim to facilitate trade in industrial products between the EU and Australia by reducing technical barriers and improve trade in services and investment even more.
One of the important topics in the negotiatons is the trade in vehicle and their parts.
Therefore, the European Automobile Manufacturers’ Association (ACEA) recently published a position paper on the negitiations. It covers:
- Tariff barriers to trade
- Rules of origin
- Non-tariff barriers to trade
- Taxation
Regarding tariff barriers to trade, ACEA notices that Australia currently applies a uniform 5% tariff to imports of passenger cars, light, medium and heavy-duty trucks, coaches and buses. ACEA suggests these tariffs be eliminated completely upon entry into force of the FTA. All tariff lines for motor vehicles (headings 8701 to 8705) must be treated equally.
In terms of rules of origin, ACEA requests a threshold of 45-50% non-originating material (NOM) for all motor vehicles and 50% NOM and CTH for engines.
As for non-tariff barriers to trade, Australia already widely recognises and accepts international automotive standards and certificates of the United Nations Economic Commission for Europe (UNECE). It is a member of the WP.29 – World Forum for Harmonization of Vehicle Regulations since 25 April 2000. Therefore, European OEMs do not face many non-tariff/regulatory issues in Australia. Nevertheless, ACEA draws attention to three points:
- Fuel quality standards: Australian fuel quality standards are a critical issue, restricting a range of European motor vehicles with higher standard engines accessing the local market.
- Trucks – maximum width: Currently, the maximum vehicle width permitted in Australia is 2.50m. Several ACEA members who export trucks have to substantially modify their European 2.55m models to meet Australia’s width limit. This entails millions of euros in costs to our members and significantly hinders trade in this type of vehicles.
- Trucks – front axle weight: In Australia, heavy-duty vehicles have a very low permitted front axle weight. This discriminates against several efficient truck configurations produced by EU vehicle manufacturers and prevents exports. Front axle weight can be increased in a safe manner on certain truck configurations and should increase both productivity and energy efficiency in the Australian road haulage industry.
Regarding taxation, ACEA recommends eliminating Australia’s Luxury Car Tax (LCT). The LCT is currently the country’s main non-tariff barrier for ACEA members. This 33% luxury tax is applied above the value of AU$67,525 (approximately €40,000) for regular cars and AU$75,526 (approximately €46,000) for fuel efficient vehicles.