European autos eye lower tariffs

The Trade Department is closely studying a position paper authored by the European automotive brands in the Philippines that proposes the inclusion of  tariff lines in the ongoing Philippine-European Union Free Trade Agreement talks.

“Since their intended market is a niche market of high-end automobile, we will review their position,” Trade Secretary Ramon Lopez said over the weekend, as he underscored the need to allow the local automotive program to prosper.

He said the Philippine government was bent on increasing the local content of domestically-produced vehicles through an incentives program that would encourage local manufacturers to produce at least 200,000 units of vehicles within six years.

The group of European automotive brands led by Volkswagen Philippines met with the European Commission on September 16, 2016 to address the lukewarm response of the Trade Department

Volkswagen president John Philip Orbeta said the commission had sought updates and recommendations for the next round of negotiations in the third quarter in Manila.

“In terms of actions in the past, there was no encouragement (from the government). We want to put this on record that we are placing this as a policy issue,” he said.

The group submitted a month ago a position paper to the Board of Investments, the investment arm of the Trade Department, seeking lower tariff for European automotive units.

It said European brands were at a gross disadvantage compared with Japanese and Asian brands whose tariff were effectively slashed to zero percent. European cars are still subject to 30 percent duties.

“There should be more options for consumers, that’s the argument we’re working on. All we want is a level playing field. Give us the same treatment that you give the Japanese and other countries,” said Orbeta.

He cited the observation of several quarters that the Philippine government’s lack of interest to assist the European automotive sector could be “grounds for filing complaints with the World Trade Organization.”

The European group sees the current situation as anti-competitive and expects to bring up the topic during consultations with the EC.

The Philippine government is currently stepping up a series of consultations with stakeholders in preparation for the next round of talks.

Sales of European cars were nearly flat 2015 because of the prohibitive price of any given model due to the imposition of the 30 percent tariff.

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