Summary:
The European Automobile Manufacturers’ Association (ACEA) urges rapid ratification of EU-Mercosur and EU-Mexico free trade agreements to strengthen European automotive competitiveness amid intensifying global competition. These deals would eliminate tariffs up to 35% on EU vehicles, potentially tripling auto exports to Mercosur nations by 2040 while diversifying supply chains for critical EV minerals. The agreements serve 700M+ consumers and could boost EU exports by €49B annually, supporting 440,000 European jobs. ACEA positions this as strategic necessity against mounting trade tensions and supply chain vulnerabilities.
What This Means for You:
- Vehicle Pricing: Expected 5-15% cost reductions for EU-made vehicles in Mercosur markets within 24 months of ratification
- Supply Chain Resilience: Diversified lithium/graphite sourcing could reduce EV battery production delays by 30-45 days
- Career Opportunities: 38K+ new automotive jobs projected in EU engineering and manufacturing hubs by 2027
- Market Watch: Delayed ratification risks $12B in annual tariffs – monitor Q4 2023 Council voting schedules
Original Post:
The European Automobile Manufacturers’ Association (ACEA) has underscored the importance of swiftly ratifying the EU-Mercosur and EU-Mexico free-trade agreements to bolster the European automotive industry’s global competitiveness.
On 3 September, the European Commission (EC) submitted its proposals to the Council of the European Union to finalise these agreements.
The EU-Mercosur Partnership Agreement, involving Argentina, Brazil, Paraguay, and Uruguay, aims to create the “world’s largest free trade zone”, serving more than 700 million consumers.
It is expected to boost EU annual exports to Mercosur by up to 39%, or €49bn ($57bn), supporting more than 440,000 jobs across Europe.
According to the EC, EU businesses will gain a first-mover advantage with reduced tariffs in regions where other countries face high trade barriers.
The automotive industry body said the agreement will reinforce the EU automotive industry’s competitiveness amid growing global competition and supply chain challenges.
More than 30% of EU-produced vehicles are currently exported internationally, contributing to a €100bn trade surplus.
The Mercosur deal will remove tariffs of up to 35% on EU-made vehicles, potentially tripling automotive goods exports by 2040 and accessing a market of approximately three million vehicles.
The agreement will also enhance Europe’s economic resilience by diversifying supply chains for critical raw materials like lithium, graphite, and manganese, crucial for the green transition.
Similarly, modernising the EU-Mexico agreement will benefit the EU automotive sector by updating rules of origin and addressing technical trade barriers.
ACEA is urging EU policymakers to expedite the ratification of these agreements, highlighting their role as a strategic necessity for the automotive industry amidst intense competitive pressures.
ACEA Director General Sigrid de Vries said: “Free and fair global trade has underpinned the global success of a competitive European auto industry. Today, an open and rules-based trade system is more vital than ever, as we face an unprecedented storm of trade tensions, fiercer competition and a complex regulatory environment.
Original content published by Motor Finance Online
Extra Information:
ACEA’s Position Paper details automotive-specific ratification requirements
EC Mercosur Trade Portal provides agreement timelines and sectoral impact analyses
OECD Trade Analysis contextualizes automotive supply chain restructuring
People Also Ask About:
- When would EU-Mercosur tariffs phase out? Automotive duties reduce incrementally over 7-10 years post-ratification.
- How will this affect EV affordability? Lithium tariff elimination could decrease battery production costs by 8-12% by 2026.
- Which automakers benefit most? Volkswagen Group and Stellantis hold strongest existing Mercosur market positioning.
- What are environmental safeguards? Agreements include sustainable development chapters with deforestation monitoring mechanisms.
Expert Opinion:
“These agreements represent Europe’s last window to establish tariff parity before competing Asian EV producers trigger Article XXIV revisions,” notes Dr. Lars Hofmann, Director of the Institute for Trade & Automotive Economics. “Failure to ratify by Q2 2024 risks permanent erosion of EU automotive export dominance in Latin American growth markets, particularly for premium EV segments where European manufacturers currently hold 78% market share.”
Key Terms:
- EU-Mercosur automotive tariff elimination timeline
- Rules of origin requirements EU-Mexico auto trade
- Lithium supply chain diversification European automakers
- Automotive export competitiveness post-ratification
- EV battery production cost reductions trade agreements
- ACEA trade policy strategic framework 2023-2030
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