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The European Parliament formally adopted today the first-ever EU Regulation on CO2 emission standards for heavy-duty vehicles. Manufacturers will have to reduce average carbon emissions by 15% by 2025 and by 30% by 2030, compared to 2019. The Parliament confirmed the targets set forward by the Commission in its legislative proposal, which will be challenging for the industry to achieve. Much will depend on the Commission quickly updating the VECTO simulation tool to account for innovative emission-reduction technologies.

in CLEPA, 18-04-2019


Sigrid de Vries, Secretary General of CLEPA, the association of automotive suppliers, commented on the vote: “Automotive suppliers are contributing actively to meet the objectives of the Paris agreement. CLEPA supports the setting of clear emission targets by the EU, although it will be challenging to achieve them for all actors involved. European trucks are already the most efficient in the world. While transport of goods has increased by over a third since 1995, emissions have barely risen. This shows how much pressure the market already exerts towards more efficient vehicles.”

The regulation on CO2 standards for heavy-duty vehicles is linked to VECTO, the tool for the simulation and certification of heavy-duty vehicles’ emissions. Only the efficiency gains that can be certified by VECTO are taken into account in the simulation of a vehicle’s emissions. Currently, the scope of VECTO only covers the tractor and a limited number of drivetrain technologies. Only once the tool will have been upgraded to take into account efficiency gains from new technologies — such as hybridisation and or trailer components — will the associated potential to reduce emissions will be unlocked. “For the regulation to efficiently achieve emission reductions, an approach is necessary which looks not only at the efficiency of the vehicle tractors but also the trailers, as well as facilitating the deployment of low carbon synthetic fuel,” explained de Vries, adding: “A comprehensive, swift, and regular upgrade of VECTO will be a key criterion for success and bring the ambitious targets of the regulation closer within reach. The Commission is tasked to deliver.”

The Regulation also includes, until 2025, a “super credit” system as a positive incentive for the deployment of zero- and low-emission vehicles, rewarding manufacturers starting from the very first zero- or low-emission vehicle placed on the market. From 2025 onwards, a minimum sales quota of 2% for zero- and low-emission vehicles will replace of the super credit. De Vries commented: “Automotive suppliers support the principle choice for a positive incentive system to pull new technologies into the market.” The Parliament was also instrumental in introducing a differentiation of the definition of low-emission vehicles per vehicle sub-group. This is expected to facilitate the development of low-emission vehicles across the entire fleet, says de Vries: “It is important to push for the development of low-emission vehicles in long-haul transport. Given the high mileage in this segment, the potential for reduction of emissions is substantial.”

Similar to the Regulation for cars and vans, the Commission is required to assess the feasibility of developing a methodology to assess heavy-duty vehicle emissions over the entire life-cycle. De Vries: “Automotive suppliers have always supported the step forward to well-to-wheel or life-cycle analysis, which should help levelling the playing field for different drivetrain technologies and take into account emissions embedded in energy production.”
The Council is also expected to formally adopt the Regulation shortly.

 

 

Parliament formally adopts important update of vehicle safety standards

The European Parliament today adopted the revision of the General Safety Regulation (GSR) during its final plenary session. The GSR will make mandatory a set of safety measures for vehicles over the coming years. The agreement should soon be approved by the Council, paving the way to a quick implementation of life-saving technologies. The Parliament will also vote tomorrow on the implementation of Cooperative Intelligent Transport Systems (C-ITS), another important text for road safety.

in CLEPA, 16-04-2019


“Today’s vote is excellent news. The EU demonstrates a strong commitment towards improving safety on Europe’s roads. After essential technologies such as seatbelts and airbags, the GSR will represent the next big leap, with solutions that help avoiding accidents in the first place,” said Sigrid de Vries, Secretary General of CLEPA, the association of automotive suppliers. The Parliament supports all the safety technologies put forward by the European Commission in its legislative proposal. “We salute that the Parliament decided to move the final vote ahead of the elections, allowing for a swift implementation,” added de Vries.

Automotive suppliers are providing active and passive safety systems with technically and economically mature innovations for all vehicle categories. However, the current EU vehicle safety standards were last updated almost a decade ago. The agreement confirmed the inclusion into the revised Regulation of all proposed technologies, including tyre-pressure monitoring systems, intelligent speed assistance, accident data recorders, and direct vision standards for trucks, which will be progressively made mandatory for new vehicles over several years.

According to the impact assessment accompanying the proposed legislation, over 16 years, the revised GSR is expected to reduce the number of road casualties by 24,794, avoid 140,740 serious injuries, and provide an overall net benefit for society of €15.4 bn, considering lives saved and additional costs. The Regulation will accelerate the deployment of effective and cost-efficient safety measures, which are already available on the market, and will boost the competitiveness and global leadership of the European automotive industry in this sector. De Vries: “Most safety systems are developed and supplied in Europe. New safety requirements will therefore push forward European research and innovation, contributing to generate growth, jobs, and investment in the EU. They will also pave the way towards connected and automated driving, by increasing the market penetration of technologies that will be required for automated vehicles in the future.”

The next milestone for road safety: the C-ITS Directive

In addition, the European Parliament will decide tomorrow on another essential piece of legislation paving the way towards connected and automated driving, which could also have an important impact on road safety. MEPs are considering whether to reject a delegated act related to the Directive on Cooperative Intelligent Transport Systems (C-ITS). The delegated act allows for the immediate deployment of applications and systems based on the internationally recognised ITS-G5 standard, a mature technology tested in large fleets and infrastructure projects. Many of its applications are related to safety, and could significantly improve upon the GSR’s mandatory technologies. For example, emergency braking and intelligent speed assistance would greatly benefit from connectivity. Rejecting the delegated act may lead to an implementation delay of two to three years at minimum, according to the European Commission. “CLEPA encourages MEPS to vote against the resolution rejecting the delegated act and in favour of a pragmatic approach to technological progress,” said de Vries.

Next steps

The Council of the European Union is now expected to formally adopt the GSR soon. Member States already confirmed their support for the text at COREPER level on 29 March.

 

Electrification and connectivity reshape the business into a service over the entire lifetime of the vehicle

CLEPA 10th Aftermarket Conference

in CLEPA, 28-03-2019


  • New business models are gaining ground, transforming the traditionally very stable automotive aftermarket 
  • New automotive services require the fair, undistorted, unmonitored and competitive access to in-vehicle data

More than 300 participants gathered at the 10th edition of the CLEPA Aftermarket Conference, today in Brussels, to discuss the latest trends and opportunities for the automotive aftermarket at a crucial time for industry.

In her keynote speech, Sigrid de Vries, Secretary General of CLEPA, highlighted:

“Driven by electrification, digitalisation and connectivity, new business models are gaining ground, reshaping the traditionally very stable automotive aftermarket from a repair and maintenance business into a services business over the entire lifetime of the vehicle. This will fundamentally change the face of this key part of the automotive suppliers’ activities. The CLEPA Aftermarket Conference is the leading event in this field in Europe and the place to meet for automotive suppliers, policy makers and other stakeholders. The opportunity to exchange views and learn about the latest legislative and technological developments in the sector is more relevant than ever. ”

As expressed by multiple speakers from industry and market analysts, the connectivity of vehicles and the utilisation of vehicle-generated data will trigger new services and business. Driven by the mandatory eCall regulation, connectivity in new vehicles has now become standard. A fundamental prerequisite to participate in this new emerging mobility market is the fair, undistorted, unmonitored and competitive access to in-vehicle data, of course with the consumer’s consent.

Frank Schlehuber, CLEPA Senior consultant Market Affairs commented:

Both connectivity and the expected substantial increase of electrified vehicles will disrupt the traditional aftermarket value chain. The way in which connectivity or, more specifically, the communication from and to a vehicle is realised, has a major impact on the competitiveness of market participants and the speed of development and implementation of innovative mobility services.”

“Especially the strong growth of BEVs will lead to a stagnating or even declining market for traditional wear and tear parts in mature markets. In combination with the ongoing consolidation of the wholesale distribution and the initiatives of vehicle manufacturers to either invest in the independent aftermarket or to increase significantly their share in the services market, adds further cost pressure on suppliers.”

The European Commission presented on the latest regulatory developments. With the new type approval requirements published in 2018, EU legislators have strengthened the independent aftermarket by securing access to electronically processable vehicle equipment information as well as securing the on-board-diagnostics functionality. With the upcoming revision of the motor vehicle bloc exemption regulation (MVBER) beyond 2023 and the revision of the repair clause, the European Commission has opened discussions that will be crucial for the future of the independent aftermarket.

The Conference also debated how to find and keep the right talent to participate in this dynamic part of the automotive business. After an introduction by recruitment consultancy Korn Ferry on the dimensions of leadership, a lively panel followed suit with representatives from suppliers, distributors and participants from other industries.

In an exhibition, open to all participants of the CLEPA Aftermarket Conference, the companies Schaeffler, Continental and Caruso Dataplace, jointly demonstrated a fully digitalised process to allow fast and efficient repair and maintenance of vehicles in the independent aftermarket. The exhibition also included a display showcasing the future of repair workshops in a connected world, presenting how the share of vehicles’ telematic data through a digital marketplace enables optimised logistics & repair processes, as well as higher consumer satisfaction.

CLEPA Innovation Awards 2019: Call for applications now open

CLEPA Innovation Awards recognises the excellence of the automotive supplier’s industry in the fields of Environment, Safety, Cooperation and Connectivity & Automation

Innovative applications can enter the contest until 29th March 2019

in CLEPA, 30-01-2019


The 4th edition of the “Innovation Awards” will be an important milestone in the 60th anniversary of CLEPA, acknowledging the important contributions from the automotive supplier´s sector in making mobility sustainable, safe and smart.

Automotive suppliers play a key role in innovating and adapting the automotive industry to meet new global societal challenges and regulatory requirements. Only in 2018, European automotive suppliers have invested more than 22€ billion in R&D, contributing to new technologies and systems for an ever-higher performance in terms of safety, sustainability, connectivity and seamless mobility.
Innovation is key to support the competitiveness of the European industry, and automotive suppliers are committed to remain the global leader in the development of emerging technologies, services and mobility solutions.

CLEPA would like to recognise the excellence of the industry, awarding the innovative achievements on the fields of Environment, Safety, Cooperation and Connectivity & Automation. Deloitte, the management consultancy partners up with CLEPA again to stress the achievements of the sector.
CLEPA now invites automotive suppliers from the whole value chain, from large corporations, SMEs and also start-ups to submit their contributions to the 4 different categories.

The call for applications will be open until the end of March, and the applications received will be assessed, by an excellent jury of international experts on the different fields, that will evaluate the ambition, market relevance, impact and quality of the applications. The selected candidates will be exemplary for the solutions provided today by automotive suppliers for tomorrow’s mobility challenges.
The awarded innovations and companies will be revealed during the CLEPA Innovation Awards 2019 ceremony, that will take place in Brussels, on the evening of 13th June.

The deadline for applications is the 29th of March 2019.

 

https://clepa.eu/events/clepa-innovation-awards-2019/

 

 

CLEPA | Outlook on 2019 – Watch this space

The year 2019 promises to be a challenging year for many European automotive suppliers. The global economy is slowing down, most pertinently in China and Europe. Global trade tensions are aggravating matters. And the new EU CO2 emission targets, which are causing dramatic shifts in the vehicle manufacturers’ new-car portfolios, are beginning to bite hard at many a supplier’s side too.

in CLEPA, by Sigrid de Vries, CLEPA Secretary General, 31-01-2019


 

Certainly: alternative powertrain solutions offer chances for new business as well – there is a lot of European technology in a Tesla. But the volumes aren’t yet there to match the drawback in other areas. A similar story can be told of the, in itself highly-promising and increasingly sought-after, new-mobility solutions for connected and automated driving. The march is definitely on, but investment precedes revenue as volumes are still developing.

 

This doesn’t mean sentiment is bad. Automotive suppliers are champions in adjusting to new product- and market opportunities. They are at the forefront of new technology and mobility developments, and dealing with cyclical economic developments as well as ‘uncertainty’ is ingrained in their DNA. Automotive suppliers always strive for new openings and opportiunities.

 

Yet, some of the forces currently at play, do cause concern. Take the global trade disputes and Brexit: here’s a marked disruption of the integrated value-chain that has helped the automotive supply industry be the innovators and technology leaders they are today. The effects are potentially long-lasting. Many of the relocation and investment decisions taken by customers and suppliers in recent time will be irreversible, no matter the actual outcomes on the global stage.

 

Or, take the new CO2 emissions reduction targets set for cars and vans. It’s not that the direction wasn’t clear, or the technology unavailable. Automotive suppliers have in fact been advocating ambitious reform. But the timing, volumes and preferences that shape a new market were unclear – and still are, to a large extent, in the absence of charging infrastructure and knowledge of how consumers will respond.

 

Now, however, the suppliers’ first and foremost customers (read: car manufacturers) are responding. And they do not merely ‘shift’ their production plans; it’s in many cases more like a rupture: sudden and vast. The ‘disruption’ that this signifies, might be applauded from a need-for-change perspective – leaving aside the admittedly rhetoric question if ‘electric’ truly is the only solution to decarbonising transport and mobility.

 

But the disruption this causes, is painful at economic and societal level, exactly because of the fact that a rupture in demand for one and the dramatic ramp-up of production of another solution is an enormous challenge to manage without any damage: a negative impact in terms of costs, job losses, skills shortages and investment write-offs that would be avoided by going the more harmonious path of a transformation, without necessarily giving up on ambition.

 

So what does this mean for 2019? Adjustments by and in the industry. Close coordination with customers and societal stakeholders. Competition for new markets, both in Europe and in other geographies. Beating the macro trends with targeted strategy; building on key competencies, innovative power and a deep understanding of the longer-term direction that mobility of people and goods will take.

 

In Brussels, it’s going to be a transition year moving from one Commission and Parliament to another. Industry still hopes to make as much progress as possible with pending files – General Safety regulation, Heavy-duty CO2 emissions, Multi-annual Financial Framework, to name just a few – before the European elections in May. At so-called working level, the shaping of policies for pollutant emissions reduction and access to data will surely continue. In Geneva, UN-ECE will progress its important work on highly-automated vehicles.

 

CLEPA, the association, celebrates its 60st anniversary in 2019, and will launch a ‘white book’ on the future of mobility to mark that feat. Sixty years of shaping our automotive landscape and now driving the transformation to new mobility. What bright future is in stock? What does the automotive supply community have on offer? Watch this space!

 

 

Innovation is key to preserve Europe´s leadership in the mobility sector

CLEPA, together with the European Forum for Manufacturing, hosted a dinner debate at the European Parliament yesterday, focusing on the importance of innovation for preserving and boosting European leadership in the mobility sector.

in CLEPA, 06-12-2018


The dinner-debate “Driving innovation forward” hosted by Members of the Parliament John Procter and Andor Deli, was attended by several other MEPs, European Commission officials and industry representatives, among others. The two winners of the CLEPA 2018 Innovation Awards – Plastic Omnium in the category Environment and Bosch in the category for Safety — were among the speakers that highlighted the benefits of continuous investment in research and development.

 

Innovation is crucial in the mobility sector as it contributes to sustainable and efficient transport and supports European competitiveness. Over the last years, European automotive suppliers have invested more than €22 billion per annum in innovative technologies putting them at the forefront of developments.

 

Innovation is closing the gap to achieve society’s 2050 environmental and safety targets. Automotive suppliers support a holistic approach that rewards innovation and efficiency and brings synergies between technologies, policies, infrastructures and sectors. Safety innovations are an equally essential and rich avenue for development, contributing to support Europe´s industrial competitiveness.

 

CLEPA organises the yearly Innovation Awards competition, that recognises the accomplishments made by European automotive system and component manufacturers in the areas of Environment, Safety, Connectivity, Automation and Cooperation.

 

Sigrid de Vries, CLEPA Secretary General commented: “It is increasingly important to develop new technologies and systems for an ever-higher performance in terms of safety, sustainability, connectivity and seamless mobility. Companies largely carry these investments themselves, injecting substantial revenues back into their product development. However, support from funding programmes remains highly important to boost pre-competitive and collaborative research involving universities, research organisations, industry, SMEs, and other actors research. Here, Europe can continue to play an important role in support of global leadership.”

 

On his opening speech, MEP John Procter highlighted “There is clear need for supporting R&D In Europe. The development of research, supply, processing and production strategies into light-weight component construction developments is crucial for advancement in a low-carbon transition in the automotive sector”. Also, MEP Andor Deli commented “technology neutrality must prevail, based on a ?well-to-wheel? approach on vehicle emissions. There is a request to the European Commission to propose a methodology for this by the end of 2022” also, he subscribed the importance of having an innovation strategy on the CEE countries that “aims to attract the research and development teams of the automotive OEMs for not just traditional but also autonomous driving”

 

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More information about CLEPA Innovation Awards here

2018 Awarded innovations brochure 

Videos from the winners in our YouTube channel

 

The policy papers and pictures from the event will be available next week at the European Forum for Manufacturing website   http://www.euromanuforum.com/

 

 

 

CO2 targets – Automotive suppliers urge co-legislators to take into account the risk for employment

Member States in the Council have adopted their position (‘general approach’) on the regulation for CO2 targets for cars and vans. Environment ministers decided to raise the target for cars for 2030 by 5 percentage points to 35%, raise the threshold of the mechanism to incentivise zero and low emission vehicles by 5 percentage points to 35% whilst better weighting low emission vehicles in the mechanism.

 

in CLEPA, 10-10-2018


 

“Both the European Parliament and the governments in the Council have now opted to increase the level of ambition. Automotive suppliers see the targets that have been proposed by the European Commission as challenging yet balanced. Going strongly beyond the Commission proposal carries risks to the industrial footprint of the automotive suppliers industry in Europe, putting high-value jobs in the balance”, says Sigrid de Vries, Secretary General of the association of the automotive suppliers industry (CLEPA). “Automotive suppliers advocate an ambitious transformation rather than negative disruption.”

 

“It will be crucial to not set the targets too high and provide the right boundary conditions through a positive incentive mechanism for low and zero emission vehicles. Specifically, a ‘malus’ as requested by the Parliament will have a negative effect. Better weighting of low emission vehicles, such as plug-in hybrids, is positive”, says de Vries.

 

“Only a technology neutral regulation will ensure that emissions will be reduced efficiently. However, there is strong pressure towards favouring battery-electric vehicles at the expense of other solutions, such as hybridisation and alternative fuels, which have a major potential to contribute to decarbonisation. Furthermore, it will be important to confirm that the step forward to well-to-wheel or life-cycle analysis will be done in future legislation.”

 

“Automotive suppliers fully support the goal of decarbonising mobility and produce a wealth of technologies to achieve this. It is a declared aim to remain globally competitive with a large variety of smart, safe and green mobility-related technologies, supporting the jobs of five million people in Europe today. Competitive regulation supporting both the environment as well as employment is a key to Europe’s success.”

 

Tripartite negotiations between Council, European Parliament and Commission are scheduled to begin today.

Automotive suppliers urge co-legislators to stay with CO2 targets proposed by European Commission

“The European Commission proposal of a 30% reduction is a challenging yet realistic target, based on a thorough evaluation of the various elements at stake, environmental priorities prevailing”, comments Roberto Vavassori, President of CLEPA, the association of the automotive suppliers’ industry. “We call on the co-legislators not to go beyond the original proposal. Any target above 30% is exposing our industry to a concrete risk of disruption.”

 

Member States are expected to take a decision on their position on October 9 at the Environment Council. Once both institutions have adopted their respective positions, tripartite negotiations will resume with the aim of agreeing and adopting the legislation.

 

“Automotive suppliers fully support the goal of decarbonising mobility and produce a wealth of technologies to achieve this. Technology neutrality is an important compass which regulators should not abandon, as it enables the deployment of the broadest spectrum of solutions. Today´s vote, however, favours Battery Electric Vehicles (BEVs) at the expense of other solutions, such as hybridisation and alternative fuels, which have a major potential to contribute to decarbonisation as well,” adds Vavassori.

 

“It is our declared aim to remain globally competitive with a large variety of smart, safe and green mobility-related technologies, supporting the jobs of five million people in Europe today. Competitive regulation supporting both the environment as well as employment is a key to Europe’s success”, says Vavassori.

 

“It is crucial too that the boundary conditions for the regulation will be improved in the weeks to come”, says Sigrid de Vries, CLEPA Secretary General. “Today, MEPs not only voted for a stricter regime for ‘eco-innovations’, technology solutions which reduce emissions without being recognised by the test cycle. They also supported a ‘malus’, a penalty for vehicle manufacturers which fail to achieve a benchmark of mostly battery electric vehicles as a proportion of their overall sales. This amounts to a de facto prescription of technology. It is disappointing that proposals for a better recognition in the benchmark of hybrid technology have been rejected.”

 

The Parliament also calls on the Commission to develop a methodology for the life-cycle analysis of embedded emissions in fuel and energy production as well as in the manufacture of vehicles and parts. “This is important to level the playing field for combustion engines, electric vehicles and the many variants in between. Making the step towards well-to-wheel or life-cycle analysis is a welcome approach for future legislation”, says De Vries.

 

Members of the European Parliament approved the report 389 in favour, 239 against and 41 abstentions and adopted the mandate for the rapporteur to begin tripartite negotiations with the Council and the Commission.

 

 

Environment committee underestimates progress in decarbonisation of transport

The environment committee of the European Parliament calls for stricter CO2 targets for passenger cars and vans than proposed by the European Commission and a threshold in addition to incentives for sales of low and zero emission vehicles. These are key outcomes of a vote in the committee last night.

in CLEPA, 11-09-2018


“Automotive suppliers fully support the objective of reducing emissions and are proud to deliver the technology to achieve it. However, the sector calls for realistically ambitious targets to best support the transformation that is unmistakably underway”, says Sigrid de Vries, Secretary General of CLEPA, the association of the automotive supplier’s industry.

Yesterday’s vote stands in contrast to earlier votes in the committees for transport and industry, where majorities of members confirmed targets as proposed by the European Commission. “The position of the environment committee therefore does not reflect the entire spectrum of opinions in the European Parliament. We hope that the members of the Parliament will come to a more balanced position in the plenary session in October”, says De Vries.

“A key requirement is to reduce emissions in the most efficient, technology-open as well as least disruptive way when it comes to jobs and structural change”, she adds. “Electrification is a major part of the solution. Industry assesses that the 30% reduction target proposed by the Commission will trigger a share of electric and electrified vehicles including mild hybrids, plug-in hybrids, fuel cell and battery-electric solutions of at least 60%, and very possibly much higher than that as technologies will increasingly be combined to meet emission targets as well as serve a broad variety of transport needs in a tailored way. Today, this percentage remains in the low single digit range. Major investments are therefore being made and will continue at a fast pace.”

The environment committee voted in favour of compromise amendments proposed by the rapporteur, which call for a reduction of emissions by 20% and 45% respectively by 2025 and 2030 as opposed to 15% and 30% proposed by the Commission. The committee also calls for a “malus”, a penalty for manufacturers which fail to achieve a benchmark of electric vehicles as a proportion of their overall sales. “This is counter the principle of technology neutrality”, says De Vries.

Furthermore, the committee calls on the Commission to develop a methodology for the life-cycle analysis of embedded emissions in fuel and energy production as well as the construction of the vehicle and parts. “Making the step further towards well-to-wheel or life-cycle analysis is important to level the playing field between combustion engines and electric vehicles. Automotive suppliers have long been arguing in favour of a well-to-wheel approach”, says De Vries.

The next step is the vote in the Plenary, likely at the beginning of October. Members of the European Parliament will now have the opportunity to propose amendments to complement the position of the environment committee. Member States’ governments are expected to finalise their position in October as well. Once both institutions have adopted their respective positions, tripartite negotiations will resume with the aim of amending and adopting the legislation.

 

 

US president announces revised trade deal between US and Mexico

On  27th August, U.S. President Donald Trump announced a common accord between the US and Mexico on key trade terms – a replacement  of the existing 25-year-old North American Free Trade Agreement, which Mr. Trump has   pointed towards  for a decline in US manufacturing jobs.

in CLEPA, 29-08-2018


Negotiators have been rewriting the NAFTA treaty over the past year, but in the past five weeks, Canada has not been part of the discussions.

 

The deal struck between the US and Mexico must be read in the global trading context and especially in light of the US import duties on steel (25%) and aluminum (10%), which the US has imposed on Canada, China, Turkey, (albeit EU is enjoying temporary tariff relief).

 

The specific requirements lay down stringent conditions for the import of products, (vehicles and automotive component parts, alike) from Mexico including:

  • Automotive manufacturing: to receive complete tariff free treatment or almost (possibly at around 2.5%), the new deal would require that 75% of the parts in any car sold in U.S. and Mexico would be produced in those countries. Currently, about 62.5% of parts are required to be produced in the US, Mexico and Canada. However, it is not known, at this stage, what the tariffs may amount to if the required local content of 75% is not reached.
  • Higher labour standards: the new deal would require that 40% to 45% of auto parts in cars sold in the U.S. and Mexico are made by workers earning at least 16 USD per hour (aimed at discouraging firms from locating in lower-wage Mexico).
  • Provisions to govern Intellectual Property, digital trade and investor disputes.
  • The pact will expire in 16 years’ time, it is to be reviewed every six years.

 

The 75% local content requirement is already considered as being challenging to fulfil, in particular because large parts of the automotive supply industry use metal resources in their production, sourced from elsewhere. The costs of metal products will increase and, ultimately, it will be the end-consumer who will pay the price.

 

CLEPA is looking more deeply into the full impact of the EU-Mexico deal, (as it currently stands), taking into account the increased costs, the revision of the EU-Mexico FTA and the provisions of the EU-Canada FTA.

 

MEMA, the North American Motor & Equipment Manufacturers Association, has been advocating for a positive renegotiation of the North American Free Trade Agreement. They highlight the importance on the progress made by the Trump Administration and the Mexican government, but they encourage a renewed focus on a three-party agreement that includes Canada.

They also warn that the potential cap of Mexican motor vehicle parts exports into the U.S. may serve to decrease American manufacturing jobs and exports and put U.S. businesses at a global disadvantage — all while increasing costs to consumers.

 

Casting doubt on Canada’s inclusion, Mr Trump said: “We will see whether or not we decide to put up Canada or just do a separate deal with Canada”. He also stated that he wanted to get rid of the name NAFTA, as it has “bad connotations”.

Canadian Prime Minister Justin Trudeau’s office published a note saying that both leaders  “had a constructive conversation” and “look forward to having their teams engage this week with a view to a successful conclusion of negotiations.”

The next steps foresee a deal to be taken before the newly elected Mexican President, Mr. Lopez Obrador, who takes office in December 2018. In order to meet that deadline, the Trump Administration must present the U.S. Congress with a deal at least 90 days in advance, i.e. Friday, 31 August.

Mr. Obrador has said that a two-way agreement with the US was just the first step in, expressing interest “in remaining a three-country deal”. In which case, all three legislatures would have the final say over the trade pacts.

 

Background:

  • The North American Free Trade Agreement covers more than $1tr (£780bn) in annual trade.
  • NB the U.S. has threatened to place tariffs on vehicles and automotive parts on cars imported from Europe, Canada and Asia. The outcome of the US Section 232 investigation is still pending.
  • The United States’s imposition of tariffs on metals, as mentioned above, has prompted global countermeasures, with retaliatory measures on US goods coming from Mexico, Canada, EU, China, India and Turkey.
  • The US has also imposed tariffs on $50 billion worth of Chinese imports, as punishment for alleged Chinese technology transfer. China is levying retaliatory tariffs on 50billion USD worth of US imports..

 

 

Source: CLEPA, MEMA