JEI's Spin on the News

EU Economic Upswing Lifts Japanese Car Export Quota

Thursday, September 30, 1999

In light of the expected strong performance of the continental economies for the remainder of this year, Japan and the European Union have agreed to boost the maximum number of passenger cars Japanese automakers can export to the EU by 5.2 percent or 61,000 units. The two sides set an export cap of 1,184,000 vehicles in April, but decided September 18 to raise the ceiling to 1,245,000. As for the five countries with individual import limits, Japan's quota to France was raised to 114,700 from 100,000; that to Italy increased to 129,500 from 117,300; that to Spain boosted to 92,700 from 83,700; that to Portugal lifted to 50,000 from 47,000; and that to Great Britain left unchanged at 190,000.

1999 is the last year that Japanese car makers will suffer from export limits to the European Union under a 1991 accord that settled this acrimonious bilateral issue. After several years of anxiously watching car imports from Japan skyrocket, European authorities insisted that their domestic automakers needed protection from more efficient Japanese competitors until January 1, 2000. The annual quota, which was to range from 1.2 million to 1.4 million vehicles, would be adjusted each year in light of projected total EU automobile sales. The five EU members which individually had imposed quotas would be allowed to keep them, but these limits would be adjusted annually when the overall cap was set. In addition, these five members and the EU as a whole agreed to end quantitative import restrictions on car imports by the end of 1999.

The pact has succeeded in reducing the issue of car imports to a minor irritant in bilateral relations. It also has encouraged Japanese car companies to build more production facilities within the European bloc. Another unforeseen development is the alliance between France's Renault S.A. and Nissan Motor Co., Ltd. The fact that an European car maker has come to the rescue of an ailing Japanese competitor shows the vast changes in the global marketplace. Since the 1991 accord was inked, European vehicle producers have restructured and raised both quality and productivity. Whether EU car makers are now able to compete without the benefit of import restrictions on their home turf against Japanese peers will be tested shortly.

"JEI's Spin on the News" are the opinions of one of more members of JEI's staff and do not necessarily represent the views of the organization.

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