What do control levers on the steering wheel, exterior mirrors, seat belts and braking systems have in common?
They all have to be produced and tested in duplicate for export to the US. That is very costly and holds back innovation.
High standards, lower costs, more trade, wider product choice, and more innovation due to greater competition – this is what we will achieve with the Transatlantic Trade and Investment Partnership.
The German automotive industry is therefore in favour of a comprehensive and ambitious free trade and investment agreement with the US.
Yes to TTIP - What TTIP will achieve
- TTIP will eliminate barriers. If customs barriers are removed, the German automotive industry will be able to invest over one billion euro usefully. The effect will be equal to that of an economic stimulation programme.
- TTIP will benefit consumers. Removing trade barriers will promote competition between the two sides of the Atlantic. This will increase the speed of innovation at the companies: the range of products will grow, and consumers will get more car for their money.
- TTIP will save resources. Comprehensive elimination of import duties, easier exchange of goods, mutual recognition of technical regulations – all of this will save time and money. Vehicle manufacturers will be able to expand more rapidly, and create new jobs or safeguard existing ones.
- TTIP will remove bureaucracy and duplicated work. That will reduce costs. The US market will thus also open up to many European medium-sized companies that often cannot afford to make two versions of one and the same product.
Yes to TTIP - Integrating markets, stimulating business
The American economic area is of considerable relevance to the German automotive industry: Europe and the US account for 40 per cent of the global automotive market.
As the recipient of 14 per cent of all German exports of passenger cars, the United States is the second most important destination country for the German automotive manufacturers. The figure comes to around 620,000 cars per year – as many as are registered in Belgium, Luxembourg and Ireland taken together. If one considers the financial volume and not only the number of vehicles exported, the US comes in first place for our OEMs.
Every year, vehicles with a total value of around 20 billion euro are exported from Germany to the US.
Despite the major importance of the markets, there are still considerable tariff barriers (import duties) and non-tariff trade barriers to market access between Europe and the United States. By supporting the Transatlantic Trade and Investment Partnership (TTIP), the German automotive industry – manufacturers and suppliers alike – is pushing for greater convergence and deeper integration of the two markets.
Yes to TTIP - Using the opportunity
The automotive industry calls on the stakeholders to actively use the opportunity now available for such an ambitious project. Its focus is on advantages that will benefit every citizen and every consumer in Germany.
In many cases regulatory authorities on both sides of the Atlantic have basically the same aims (e.g. vehicle safety, environmental requirements, climate legislation, etc.), but take different approaches. Consequently, wherever comparable levels of safety and protection can be identified, each party should recognise the other’s standards and procedures.
In addition to the abolition of import duties and non-tariff trade barriers, the German automotive industry is working in particular towards comprehensive investment protection as a major component in TTIP. This will guarantee investment security for companies. The objective must be to establish jointly with the US a modern, effective and simultaneously fair investment protection and promotion treaty as a global model.
Voices for the Transatlantic Trade and Investment Partnership
Dr. Stefan Wolf, ElringKlinger AG
Arnd G. Kirchhoff, KIRCHHOFF Automotive GmbH
Yes to TTIP - Accessing growth potentials
The import duties amount to considerable sums for the automotive industry, with its large trade volume. For example, the US imposes 25 per cent duty on light trucks from the EU. And the EU imposes import duty of 10 per cent on passenger cars from the US. Overall, removal of the import duties in the German vehicle industry alone could save more than one billion euro. These savings would benefit not only the economy, but also consumers.
Alongside the duties that impede trade, the non-tariff trade barriers are extraordinarily important. In cases where regulations differ between the EU and the US, this currently means that both European and American makers have to adapt their vehicles to the respective other market. But why is it not possible to license in the US a car that is licensed in Europe? Are the people in the US so different that they need completely different cars? Of course not.
Yes to TTIP - Abolishing parallel development
Numerous examples exist where the mutual recognition of standards and regulations makes sense and is unproblematic. The protection mechanisms applicable in Europe and the safety and environmental standards are not being abandoned or diluted. Differing regulatory requirements for components such as mirrors and flashers are just as superfluous as different tests of braking performance or different requirements for labelling the control levers on the steering wheel.
According to a study by the research institute Ecorys (2009) from the Netherlands on behalf of the European Commission, these and other trade barriers add up to a tariff equivalent of around 26 per cent. This means that the existing regulatory differences act like an additional import duty of 26 per cent for the automotive industry. CEPR calculated in an ambitious scenario that exports of the European automotive industry to the US could rise up to 150 percent by 2027. Even for a less ambitious reduction of trade barriers the institute predicts an increase in exports of around 70 percent. "The most significant relative increases in exports are shown to occur in […] motor vehicles (71.00 and 148.70 percent)." (page 68)
Adapting vehicles to the differing market requirements consumes an unnecessary amount of resources in the national economy. Parallel development triggers costs that could be avoided and the money could be much better invested in new technologies and jobs.
The Transatlantic Trade an Investment Partnership will relieve the burdens on small and medium-sized enterprises (SMEs) in particular, because in contrast to large companies, SMEs frequently cannot afford the bureaucracy and the administrative costs. The elaborate duplicated procedures represent barriers to market entry for SMEs. TTIP will finally eliminate these hurdles.
Yes to TTIP - Improving arbitration procedures
Direct investments are a key factor in the success of an industry that depends on exports. This is evidenced by the high levels of foreign investment by the German automotive industry, with its constantly growing production in other countries.
These direct investments run into billions, and in many countries they need protecting. That is why investment protection is so important in TTIP: it will send out a signal to all the other countries whose legal system is not as well developed as in the US or here in Germany.
There are already rules governing investment protection, and the Investor-State Dispute Settlement (ISDS) system also already exists, but they need to be improved. For instance, the appointment of arbitration judges should be transparent. Neutrality and independence must be assured. And ISDS must not disproportionately limit the state’s scope for taking action.
The Transatlantic Trade and Investment Partnership has the potential to become the global yardstick for fair and secure investment protection.
If we do not use the opportunity now to define a “gold standard” for future investment protection world-wide with our transatlantic partner, probably others will make the rules in the future. Will they then be better? Most likely not. But it is necessary to have protection against arbitrary action and discrimination, without having to go through lengthy and expensive court proceedings.
Yes to TTIP - Shaping globalization
In addition to removing trade barriers, the Transatlantic Trade and Investment Partnership has outstanding geostrategic importance. Access to world-wide sales markets is of fundamental significance to Germany as an exporting nation. More than 75 per cent of all vehicles produced in Germany go to destinations abroad. And most of the growth is occurring outside Europe.
Figures from the passenger car markets provide a clear illustration of this development. During recent years sales of new cars in China have more than doubled, and the US market is also growing. By contrast, sales in Western Europe are stagnating. These development potentials in Asia will bring about a shift in the existing economic centres. Today the future competitive strength of the locations is already being discussed in the sense of “redrawing the geopolitical world map”.
Close transatlantic cooperation is more important than ever. The EU and the US comprise only about 12% of the world population. But both economies still generate almost 50 percent of the overall world production. TTIP offers the chance to actively shape globalization according to our values.