EUROPEAN TYRE & RUBBER manufacturers association

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2 EUROPEAN TYRE & RUBBER CARS 2020 Working Group on trade and international harmonisation 02 July

3 EU-India FTA EUROPEAN TYRE & RUBBER Objective: True reciprocity = same opportunities to enter the market. What is the potential of an AMBITIOUS FTA? - A growing production hub: the growing importance of India as a producer of tyres is testified by the consumption of Natural Rubber, which is estimated to surpass that of Europe (currently second largest consumer in the world) already in India remains an impermeable market for EU exports, which are about one third of Indian exports for the passenger car and light truck segment. This is despite the fact that India is one of the world s fastest growing passenger car markets and is expected to be the third largest passenger vehicles market (62m) in the world by Indian tyre manufacturing companies expect an annual growth of 20% per year for the next three years and amongst the enablers of such growth they include the fact that there is a relatively low automobile penetration level. ETRMA prefers no FTA to one that will not unlock this potential. 3

4 EU-India FTA Objective: True reciprocity = same opportunities to enter the market. FTA DIMENSION for ETRMA: Tyres need to be part of the FTA; Full tariff dismantling at both ends in 5 years (from 10% to 0%) or same level tariff. India is also part of the GSP system. Removing the existing barriers to trade (royalty fees, bank guarantee, indemnity bond, minimum marking fee, disproportionate length of certification process compared with validity of certification); A significant NTB chapter establishing the basis for regulatory convergence; Rules of Origin: tyres are very complex products and are made of around 100 different materials, the value of which can vary significantly due market fluctuations (eg. raw materials). It is for this reason that the the Value limit rule of foreign content (VL) cannot be applied to tyres. The Change of Tariff Heading (CTH) should be used instead. 4

5 EU-Korea FTA Objective: True reciprocity = same opportunities to enter the market. A strong and ambitious FTA was achieved, but two years on it still needs to be implemented in an undisputed manner. Great steps forward, but objective not yet fully achieved. Attitude of Korean authorities is confrontational, particularly with regard to the implementation of new tyre efficiency rules. List of equivalent requirements needs to be expanded: there is the need to avoid that legislation like tyre efficiency is adopted by Korea in the future. Current obstacles whether legislative or due to the way regulations are implemented should be removed. 5

6 EU-Korea FTA Given this context, our expectation is the following: Entry into Korean market of EU-made E-marked tyres: Tyres should enter the Korean market only presenting a certificate of origin. No other form. New Tyre Efficiency Regulation: - IMPLEMENTATION TIMELINE: Given the acceptance by Korean Authorities of the E marking, the implementation of the minimum requirements should follow that of UN ECE (and EU Reg. 661/2009). - Tyre testing: tyre testing should happen in European laboratories aligned with the Korean one for rolling resistance and compliant with the lab requirements of Korea for wet grip. No further check on testing facilities or tyres - should be performed. - Labelling values should not be published - The difficulties linked to this Regulation are increased by the way in which Korean authorities are implementing it. 6

7 EU-Japan FTA Both parties need to have the same level of procedures and costs from administrative procedures: it is of utmost importance to remove all existing non-tariff barriers before entering into the FTA as the Agreement could serve as incentive. Entering into the distribution system/dealer network of tyres is in practice made very difficult for foreign products and companies: the use of practices, like brand exclusivity and territorial exclusivity, is discriminatory as it narrows the possibilities for foreign brands to enter into the dealer networks. Succeeding in tendering in public procurement is in practice made very difficult for foreign companies. Public authorities easily refer to safety requirements for not choosing foreign products/companies. 7

8 KEY PRINCIPLES IN TRADE NEGOTIATIONS EUROPEAN TYRE & RUBBER True reciprocity = same opportunities to enter the market Full tariff dismantling at both ends or same level tariffs Rules of Origin based on Change of Tariff Heading and not Value limit rule of foreign content (VL). Chapter on NTBs both of technical and administrative nature Binding chapter against export restrictions of raw materials, including natural rubber 8