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The European Commission has given the green light for trade talks with the United States to begin, but the real difficulties are yet to come. The European Commission’s consultation on the EU-US Trade talks called for proposals for regulatory cooperation activities and asked for comments from all interested stakeholder groups on potential areas for regulatory co-operation with the United States. Today’s publication comes as a follow-up to that request.

CLEPA, the European Association of Automotive Suppliers, submitted its response to the consultation  calling on the EU and US governments to ensure a strong and sustained political commitment, at the highest levels, with their respective regulatory authorities, allowing for the automotive industry facilitated and increased trade flows through a reduction of the costs of conformity assessment, in a reciprocal and balanced manner.

Increased autoregulatory convergence will increase trade, lower costs, create jobs, and improve the international competitiveness of the industry, strengthening the automotive industry and its economic contribution in both regions. Automotive regulations add an average cost of 26.5% to US and EU trade. The EU and U.S. automotive industries face regulatory costs in the region of $12.8b.

The following key core objectives need to be met:

• Existing regulations, where CLEPA supports Functional Equivalency, provided that the current high standards of vehicle safety and environmental performance are not lowered and that consumers added-value and innovation are encouraged. Where this cannot be achieved, CLEPA supports regulatory convergence, on the basis of harmonisation. Both options shall aim to significantly reduce the burden of regulatory compliance;

• Future regulations, CLEPA promotes a strong, worldwide system of future harmonised regulations, building upon the efficacy and functionality of the existing Global Technical Regulation (GTR) process under the UN 1998 Agreement. Together the U.S. and the EU represent a significant market for motor vehicles. A focus on the harmonization of future regulations will eliminate unnecessary regulatory burdens worldwide.

• No net increase in regulatory requirements nor additional certification requirements in the U.S. or EU.

CLEPA strongly opposes the EU’s introduced definitive safeguard duties against imports of 26 categories of steel, under Regulation 2019/ 159, 31 Jan 2019. The move was made in response to the US import restrictions on steel under Section 232 in 2018, aiming to avoid the EU market from being inundated by metal diverted away from North America. Of particular concern is the very swift exhaustion of the TRQs. These insufficient quotas are of very high concern for CLEPA members, as quotas are being exhausted very quickly. CLEPA supports ongoing talks but stresses the need to avoid the application of the US Section 232 duties on vehicles and car parts.

On the new approach on Origin Verification in EU Free Trade Agreements, CLEPA reiterates the immensely negative effects that the new approach has on the claiming of FTA benefits and therefore on the entire global supply chain of businesses.

The new approach on origin verification constitutes a change in responsibility for verification from the exporting customs authority to the importing customs authority, and consequently, from the exporting party to the importing party. CLEPA is concerned that this poses a risk of disclosing confidential business information of the exporting party towards the importing party.

CLEPA urges the European Commission and the Member States to refrain from introducing the new approach of origin verification as a new general standard in EU FTA.

Instead, the transfer of commercially sensitive information must stop at the border. Only the result of origin verification should be transmitted by the customs authority of the exporting party to the customs authority of the importing party. To achieve this with the required legal certainty it is mandatory not to introduce the new approach into the negotiations of new FTA; the implementation of respective guidance to “soften” the effects of such a new standard would not be sufficient.