Press Releases

Increase competiveness of German industry – TTIP offers huge opportunities

Berlin, 21 November 2014

VDA General Assembly – new balance required between industrial policy and climate policy

“In recent years Germany has caught up again through the enormous joint efforts of collective bargaining partners coupled with smart economic-policy decisions. Yet competiveness does not keep itself going. We have to work for it every day. At present we can hardly say that politicians in Germany have taken this to heart. They are correct to consistently reduce new public debt, but the many good social-policy deeds will be a heavy burden in the future. This critical conclusion is also reached by the German Council of Economic Experts in their latest report: first of all the efficiency of economic processes must be guaranteed, and then distribution can be changed via the taxation and transfer system – and not the other way round. The experts’ criticism of the German Government’s economic policy should not be casually disregarded. It is justified. We are convinced that a new course is required, one which avoids additional burdens for industry and restores Germany’s attractiveness as an industrial location. What is more, the new European Commission has to take action – on the Transatlantic Trade and Investment Partnership (TTIP), and by finding a new balance between industrial policy and climate policy,” stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at the General Assembly of VDA members in Berlin.

Wissmann drew attention to the “current slowdown” of the economy. Western Europe had, he said, indeed made progress after the euro-zone crisis, but despite this the economy was losing speed – both in Germany and in the large neighbouring countries. To add to this there was the tense economic situation in Russia, which was exacerbated by the crisis in Ukraine and had led to a sharp fall in German industrial exports to this region. Wissmann added that the conflicts in the Middle East were increasing the political and economic uncertainty. However, the global passenger car market was going to continue expanding in the year 2014 to reach a total of almost 75 million new vehicles, since the markets in the USA and China were continuing their positive development. In 2014 the Western European passenger car market would again show a rise – of 4 per cent – for the first time after years of shrinkage, although there were wide variations between major European countries.

Wissmann underlined that “in order to better balance out the fluctuations of individual markets, the companies in the German automotive industry are adopting an increasingly international position. Local production is expanding, and especially in regions with a high demand – such as NAFTA and China.” Assembly abroad also supported the plants at home, as shown by the high level of employment in Germany, at 783,700. Yet the market success in Asia and the USA created a “false sense of security” for Germany as a production location, as the demand in these two growth regions was being satisfied to an ever greater extent by local assembly: “In future our sites in Europe will largely supply the European market, which remains weak. That will be an increasing challenge for value creation in Europe,” the VDA president emphasised.

He went to say that therefore, in addition to national governments also the new European Commission needed to take action. “We expect the European Commission to come up with an industrial policy that deserves the name and makes Europe more competitive. The industrial heartlands of Europe must be revitalised,” Wissmann stated, adding that the industrial share of gross added value was just under 22 per cent In Germany, but the EU average was only 15 per cent. “Revitalising industry will be possible only if the European institutions and national governments all pull together,” the VDA president stressed.

“To improve industry’s competiveness, we need accessible markets,” Wissmann explained. And this was the reason why the planned transatlantic free trade agreement between the USA and the EU (TTIP) was so important. “Our companies are especially dependent upon open markets because of their global situation. That affects exports and imports just as it does investments. We therefore support the negotiations of the EU on trade agreements with other states. This applies in particular to the TTIP. The German automotive firms alone would save around one billion euro in customs duties a year through TTIP. That is something which consumers would also feel. According to studies by the European Commission, removing non-tariff trade barriers could additionally save the automotive sector alone more than 11 billion euro annually,” Wissmann emphasised.

“But the TTIP is under constant attack. Critics dominate public debate – which we must not leave to them. The debate needs a new objectivity. There is a great deal at stake here – not only for Germany, but for the whole of European industry,” the VDA president underlined. TTIP is not about relaxing social, product-related or environmental standards, but about mutual recognition of equivalent rules thus avoiding costly regulatory duplication: “The usual practice to date does not help anyone – except bureaucrats and regulators. Comprehensive removal of import duties, easier exchange of goods, and mutual recognition of technical regulations – all of this will save time and money. And create jobs,” Wissmann said.

However, the point is not only lower costs and more jobs, but also values shared by the European Union and the United States, which would be strengthened by the transatlantic partnership: “These include high environmental and safety standards that are not watered down by an agreement, but instead should be harmonised or at least recognised. Together with the USA, Europe can assume the leadership in global standards. If this opportunity is not grasped now, it will become more and more difficult to realise our environmental, safety and quality standards as we envisage,” the VDA president emphasised. This is because time is running out for successful conclusion of the agreement. Wissmann said, “Parallel to the TTIP, the United States is currently also negotiating the Trans-Pacific Partnership (TPP). If the Pacific countries reach an agreement while the TTIP fails, it will be the worse for Europe. Therefore, it is necessary for politicians to keep to the existing course – on both sides of the Atlantic.”

Furthermore, Wissmann called on Brussels to strike a “new balance between industrial policy and climate policy.” The German automotive industry, he said, recognised the efforts undertaken by politicians to bring down CO2 emissions. “However, proposed regulations must be assessed not only in terms of environmental policy, but equally in terms of industrial policy,” Wissmann explained. He added that this applied most of all if the regulations were passed by Europeans going it alone. That would distort international competition.

“It is clear that the German automotive industry takes its responsibility seriously. To reach the goal of environmentally friendly mobility, we are backing alternative drive trains, the further optimisation of internal combustion engines and alternative fuels. This ‘broad-based strategy’ is complex and demands the maximum input in research and development work from our companies. The German automotive industry accounts for more than one third of all industrial research activity. And it is successful: since 1995 CO2 output has fallen by 32 per cent,” Wissmann stressed.

Looking ahead to possible CO2 regulations for the period beyond 2020, Wissmann said, “We are of the opinion that we have to move away from the direct continuation of today’s limit value regulation. The conventional technologies are coming up against the physical and technological limits of their efficiency. Even the 2020 target can be attained only with a considerable share of alternative propulsion. However, is not yet clear how the market will develop in this area up to the end of the decade. In the future we want to continue making a tangible contribution to the action on climate – but we must also stay competitive. And the new cars have to remain affordable for the customers. Even the most efficient vehicle will not benefit the climate if the customers don’t buy it.” For this reason, Wissmann continued, new ways had to be found to reduce CO2 emissions. And these included measures for replacing the fleet, fiscal measures, alternative fuels, and the infrastructure. “A smart policy can create incentives to stimulate innovation instead of strangling it,” Wissmann underlined.

“In recent years Germany has caught up again through the enormous joint efforts of collective bargaining partners coupled with smart economic-policy decisions. Yet competiveness does not keep itself going. We have to work for it every day. At present we can hardly say that politicians in Germany have taken this to heart. They are correct to consistently reduce new public debt, but the many good social-policy deeds will be a heavy burden in the future. This critical conclusion is also reached by the German Council of Economic Experts in their latest report: first of all the efficiency of economic processes must be guaranteed, and then distribution can be changed via the taxation and transfer system – and not the other way round. The experts’ criticism of the German Government’s economic policy should not be casually disregarded. It is justified. We are convinced that a new course is required, one which avoids additional burdens for industry and restores Germany’s attractiveness as an industrial location. What is more, the new European Commission has to take action – on the Transatlantic Trade and Investment Partnership (TTIP), and by finding a new balance between industrial policy and climate policy,” stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at the General Assembly of VDA members in Berlin.

Wissmann drew attention to the “current slowdown” of the economy. Western Europe had, he said, indeed made progress after the euro-zone crisis, but despite this the economy was losing speed – both in Germany and in the large neighbouring countries. To add to this there was the tense economic situation in Russia, which was exacerbated by the crisis in Ukraine and had led to a sharp fall in German industrial exports to this region. Wissmann added that the conflicts in the Middle East were increasing the political and economic uncertainty. However, the global passenger car market was going to continue expanding in the year 2014 to reach a total of almost 75 million new vehicles, since the markets in the USA and China were continuing their positive development. In 2014 the Western European passenger car market would again show a rise – of 4 per cent – for the first time after years of shrinkage, although there were wide variations between major European countries.

Wissmann underlined that “in order to better balance out the fluctuations of individual markets, the companies in the German automotive industry are adopting an increasingly international position. Local production is expanding, and especially in regions with a high demand – such as NAFTA and China.” Assembly abroad also supported the plants at home, as shown by the high level of employment in Germany, at 783,700. Yet the market success in Asia and the USA created a “false sense of security” for Germany as a production location, as the demand in these two growth regions was being satisfied to an ever greater extent by local assembly: “In future our sites in Europe will largely supply the European market, which remains weak. That will be an increasing challenge for value creation in Europe,” the VDA president emphasised.

He went to say that therefore, in addition to national governments also the new European Commission needed to take action. “We expect the European Commission to come up with an industrial policy that deserves the name and makes Europe more competitive. The industrial heartlands of Europe must be revitalised,” Wissmann stated, adding that the industrial share of gross added value was just under 22 per cent In Germany, but the EU average was only 15 per cent. “Revitalising industry will be possible only if the European institutions and national governments all pull together,” the VDA president stressed.

“To improve industry’s competiveness, we need accessible markets,” Wissmann explained. And this was the reason why the planned transatlantic free trade agreement between the USA and the EU (TTIP) was so important. “Our companies are especially dependent upon open markets because of their global situation. That affects exports and imports just as it does investments. We therefore support the negotiations of the EU on trade agreements with other states. This applies in particular to the TTIP. The German automotive firms alone would save around one billion euro in customs duties a year through TTIP. That is something which consumers would also feel. According to studies by the European Commission, removing non-tariff trade barriers could additionally save the automotive sector alone more than 11 billion euro annually,” Wissmann emphasised.

“But the TTIP is under constant attack. Critics dominate public debate – which we must not leave to them. The debate needs a new objectivity. There is a great deal at stake here – not only for Germany, but for the whole of European industry,” the VDA president underlined. TTIP is not about relaxing social, product-related or environmental standards, but about mutual recognition of equivalent rules thus avoiding costly regulatory duplication: “The usual practice to date does not help anyone – except bureaucrats and regulators. Comprehensive removal of import duties, easier exchange of goods, and mutual recognition of technical regulations – all of this will save time and money. And create jobs,” Wissmann said.

However, the point is not only lower costs and more jobs, but also values shared by the European Union and the United States, which would be strengthened by the transatlantic partnership: “These include high environmental and safety standards that are not watered down by an agreement, but instead should be harmonised or at least recognised. Together with the USA, Europe can assume the leadership in global standards. If this opportunity is not grasped now, it will become more and more difficult to realise our environmental, safety and quality standards as we envisage,” the VDA president emphasised. This is because time is running out for successful conclusion of the agreement. Wissmann said, “Parallel to the TTIP, the United States is currently also negotiating the Trans-Pacific Partnership (TPP). If the Pacific countries reach an agreement while the TTIP fails, it will be the worse for Europe. Therefore, it is necessary for politicians to keep to the existing course – on both sides of the Atlantic.”

Furthermore, Wissmann called on Brussels to strike a “new balance between industrial policy and climate policy.” The German automotive industry, he said, recognised the efforts undertaken by politicians to bring down CO2 emissions. “However, proposed regulations must be assessed not only in terms of environmental policy, but equally in terms of industrial policy,” Wissmann explained. He added that this applied most of all if the regulations were passed by Europeans going it alone. That would distort international competition.

“It is clear that the German automotive industry takes its responsibility seriously. To reach the goal of environmentally friendly mobility, we are backing alternative drive trains, the further optimisation of internal combustion engines and alternative fuels. This ‘broad-based strategy’ is complex and demands the maximum input in research and development work from our companies. The German automotive industry accounts for more than one third of all industrial research activity. And it is successful: since 1995 CO2 output has fallen by 32 per cent,” Wissmann stressed.

Looking ahead to possible CO2 regulations for the period beyond 2020, Wissmann said, “We are of the opinion that we have to move away from the direct continuation of today’s limit value regulation. The conventional technologies are coming up against the physical and technological limits of their efficiency. Even the 2020 target can be attained only with a considerable share of alternative propulsion. However, is not yet clear how the market will develop in this area up to the end of the decade. In the future we want to continue making a tangible contribution to the action on climate – but we must also stay competitive. And the new cars have to remain affordable for the customers. Even the most efficient vehicle will not benefit the climate if the customers don’t buy it.” For this reason, Wissmann continued, new ways had to be found to reduce CO2 emissions. And these included measures for replacing the fleet, fiscal measures, alternative fuels, and the infrastructure. “A smart policy can create incentives to stimulate innovation instead of strangling it,” Wissmann underlined.

Eckehart Rotter
Eckehart Rotter Head of Department Press

Tel: +49 30 897842-120 Fax: +49 30 897842-603
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