Submission to the Review of Australia’s Automotive Industry 2008
A introduction of Australia'a automotive industry, Include the trade of Australia's automotive products, the competiveness of its auto industry, the oversea investment of Australia's auto industry, and the international trade of automobile products.....
Executive Summary
• The Government’s trade policy is based on two pillars: opening up new markets through international trade negotiations; and improving productivity and competitiveness behind the border. The automotive industry is relevant to both of these dimensions of trade policy.
• The automotive industry is highly important in Australia’s trade, with exports at around $5.1 billion in 2007, and imports around $27.9 billion. Exports now account for around 40 per cent of domestic motor vehicle production. Exports of parts and manufacturing services are also significant.
• The industry has adjusted well to very substantial cuts in industry assistance which have seen the effective rate of assistance decline from around 140 per cent in 1984-85 to around 12 per cent now. Even so, the industry remains one of the most highly assisted sectors in the Australian economy.
• In spite of the reduction in assistance, the industry remains a very substantial one, with industry value added $5.6 billion in 2005-06 (up from $4.6 billion in 2001-02). Domestic vehicle production for the industry (at 336,000 vehicles in 2007) is higher than it was in many years in the late 1980s and early 1990s. The industry has adapted to change by focussing on medium and larger vehicles and by developing export markets.
• Successful adjustment to declining levels of assistance is consistent with the experience of other industries (both in Australia and elsewhere), which have responded to cuts in protection by significantly improving productivity.
• Growth in the Australian dollar (A$) value of automotive exports was rapid up to 2001, but has slowed considerably since then. Since 2001, the industry has been affected adversely by the appreciation of the A$ against the US dollar. Currencies in many of the major Middle East markets are linked to the US dollar.
• Sustainable improvements in competitiveness for the Australian industry are likely to come only through improvements in productivity. Achieving higher levels of exports would help the industry to boost competitiveness by realising economies of scale. Innovation will also be critical.
• Continued progress toward a more open trading environment and lower levels of protection will be critical to the Australian industry if it is to continue to produce higher quality and better value for money products for Australian consumers and business. This will also be important for the future export success of the Australian industry, in a context in which the industry is becoming increasingly global in nature, with highly specialised trade in vehicles and components.
• Under free trade agreements (FTAs) negotiated with New Zealand and Singapore, all Australian tariffs on new passenger motor vehicles (PMVs) and auto parts are already at zero. Under the free trade agreement with the United States, tariffs on new PMVs have already been reduced to 3 per cent and will reach zero in 2010. Under the free trade agreement with Thailand, tariffs on passenger motor vehicles,off-road vehicles, goods vehicles, other commercial vehicles and many automotive components were removed when the agreement entered into force in 2005. Remaining tariffs on auto parts lines fell to 5 per cent on entry into force and will stay at that level until they are eliminated in 2010.
Australia is not permitted under these FTAs to raise new tariffs or freeze these tariff reductions.
• The WTO Doha Round negotiations will have implications for the automotive industry, though specific details are still under discussion. Australia is pushing for the Round to be concluded this year, with the period between now and end July critical to attempts to agree on the key elements for agriculture and industrial products. Under the latest tariff reduction proposal for industrial products, Australia would be obliged to reduce the tariff bindings on new passenger motor vehicles which are currently applied at 10 per cent (and scheduled to be reduced to 5 per cent under the current industry plan) to between 6.0 and 7.3 per cent. Auto parts tariff bindings would be reduced to between 4.1 and 7.6 per cent.
• Australia’s existing international trade obligations (including under the World Trade Organization Agreement on Subsidies and Countervailing Measures, the General Agreement on Tariffs and Trade, and the Australia-United States Free Trade Agreement) contain disciplines on industry assistance policies. They will need to be taken into account by the Review. Assistance policies will be carefully scrutinised by trading partners.
• Comprehensive free trade agreements provide a useful means of improving access, as well as promoting liberalisation or cooperation in such areas as standards, customs procedures, services, protection of investments and intellectual property.
• Among agreements currently under negotiation, the free trade agreement being negotiated with the Gulf Cooperation Council (GCC) is very important for the industry given the size of the GCC market for passenger motor vehicles. The ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) is also very important for the industry. Other possible free trade agreements could also have a significant impact on the industry.
• Asia Pacific Economic Cooperation’s (APEC’s) broad agenda, encompassing trade liberalisation, trade facilitation and economic cooperation has worked to free up trade in the region. The Bogor Goals of free and open trade and investment by 2010 for industrialised economies and 2020 for developing economies remain commitments by APEC Leaders.
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A introduction of Australia'a automotive industry, Include the trade of Australia's automotive products, the competiveness of its auto industry, the oversea investment of Australia's auto industry, and the international trade of automobile products.....
Executive Summary
• The Government’s trade policy is based on two pillars: opening up new markets through international trade negotiations; and improving productivity and competitiveness behind the border. The automotive industry is relevant to both of these dimensions of trade policy.
• The automotive industry is highly important in Australia’s trade, with exports at around $5.1 billion in 2007, and imports around $27.9 billion. Exports now account for around 40 per cent of domestic motor vehicle production. Exports of parts and manufacturing services are also significant.
• The industry has adjusted well to very substantial cuts in industry assistance which have seen the effective rate of assistance decline from around 140 per cent in 1984-85 to around 12 per cent now. Even so, the industry remains one of the most highly assisted sectors in the Australian economy.
• In spite of the reduction in assistance, the industry remains a very substantial one, with industry value added $5.6 billion in 2005-06 (up from $4.6 billion in 2001-02). Domestic vehicle production for the industry (at 336,000 vehicles in 2007) is higher than it was in many years in the late 1980s and early 1990s. The industry has adapted to change by focussing on medium and larger vehicles and by developing export markets.
• Successful adjustment to declining levels of assistance is consistent with the experience of other industries (both in Australia and elsewhere), which have responded to cuts in protection by significantly improving productivity.
• Growth in the Australian dollar (A$) value of automotive exports was rapid up to 2001, but has slowed considerably since then. Since 2001, the industry has been affected adversely by the appreciation of the A$ against the US dollar. Currencies in many of the major Middle East markets are linked to the US dollar.
• Sustainable improvements in competitiveness for the Australian industry are likely to come only through improvements in productivity. Achieving higher levels of exports would help the industry to boost competitiveness by realising economies of scale. Innovation will also be critical.
• Continued progress toward a more open trading environment and lower levels of protection will be critical to the Australian industry if it is to continue to produce higher quality and better value for money products for Australian consumers and business. This will also be important for the future export success of the Australian industry, in a context in which the industry is becoming increasingly global in nature, with highly specialised trade in vehicles and components.
• Under free trade agreements (FTAs) negotiated with New Zealand and Singapore, all Australian tariffs on new passenger motor vehicles (PMVs) and auto parts are already at zero. Under the free trade agreement with the United States, tariffs on new PMVs have already been reduced to 3 per cent and will reach zero in 2010. Under the free trade agreement with Thailand, tariffs on passenger motor vehicles,off-road vehicles, goods vehicles, other commercial vehicles and many automotive components were removed when the agreement entered into force in 2005. Remaining tariffs on auto parts lines fell to 5 per cent on entry into force and will stay at that level until they are eliminated in 2010.
Australia is not permitted under these FTAs to raise new tariffs or freeze these tariff reductions.
• The WTO Doha Round negotiations will have implications for the automotive industry, though specific details are still under discussion. Australia is pushing for the Round to be concluded this year, with the period between now and end July critical to attempts to agree on the key elements for agriculture and industrial products. Under the latest tariff reduction proposal for industrial products, Australia would be obliged to reduce the tariff bindings on new passenger motor vehicles which are currently applied at 10 per cent (and scheduled to be reduced to 5 per cent under the current industry plan) to between 6.0 and 7.3 per cent. Auto parts tariff bindings would be reduced to between 4.1 and 7.6 per cent.
• Australia’s existing international trade obligations (including under the World Trade Organization Agreement on Subsidies and Countervailing Measures, the General Agreement on Tariffs and Trade, and the Australia-United States Free Trade Agreement) contain disciplines on industry assistance policies. They will need to be taken into account by the Review. Assistance policies will be carefully scrutinised by trading partners.
• Comprehensive free trade agreements provide a useful means of improving access, as well as promoting liberalisation or cooperation in such areas as standards, customs procedures, services, protection of investments and intellectual property.
• Among agreements currently under negotiation, the free trade agreement being negotiated with the Gulf Cooperation Council (GCC) is very important for the industry given the size of the GCC market for passenger motor vehicles. The ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) is also very important for the industry. Other possible free trade agreements could also have a significant impact on the industry.
• Asia Pacific Economic Cooperation’s (APEC’s) broad agenda, encompassing trade liberalisation, trade facilitation and economic cooperation has worked to free up trade in the region. The Bogor Goals of free and open trade and investment by 2010 for industrialised economies and 2020 for developing economies remain commitments by APEC Leaders.
Download file