Lop-sided Asian free trade deals hurt Oz car-makers, says Bracks

[Brazen]

Article about how Australia fares in the FTAs, and comments on the industry in general.

http://www.goauto.com.au/mellor/mell...257A0D00060A2A

Australian motor industry ‘disadvantaged by poor Thai, Malaysian trade deals’
29 May 2012
By IAN PORTER
AUSTRALIAN automotive envoy Steve Bracks has criticised the federal government’s free-trade agreements (FTAs) with Thailand and Malaysia.

The former Victorian premier said Australia’s negotiators had failed to realise the importance of the automotive industry to Australia, resulting in lop-sided trade deals that disadvantaged Australian manufacturers.

“I want to see the automotive industry in lights when we are doing FTAs in future,” Mr Bracks said.

“We need to pursue FTAs, but we need to pursue them with our eyes open, knowing that automotive is one of our most significant manufacturing exports.

“We need to have that enshrined as one of the key opportunities for Australia in any FTAS in the future.”

Since the Thailand FTA was signed, vehicle imports from that country have soared from almost nothing to 158,469 units last year, second only to Japan and surpassing even Korea.

But almost as soon as the FTA was signed, Thailand introduced a punitive sales tax on vehicles with engines over three litres and, as a result, compromised several prospective vehicle export opportunities for Australia.

“We should never have signed that agreement without knowing what the Thais could do to prevent the export of our manufactured motor vehicles into that country,” Mr Bracks said.

Along with former Toyota Australia president John Conomos, Mr Bracks was appointed an auto industry ambassador by the federal government in 2009 under the Automotive Market Access Program, which forms part of the $6.2 billion New Car Plan for A Greener Future.

Mr Bracks was also responsible for a major review of the industry and the government’s assistance programs.

Speaking in Melbourne this week after addressing participants in an imminent automotive trade mission to the United States, Mr Bracks said he was disappointed with the FTA with Thailand.

“Before the ink was dry on that, they brought in a volumetric (engine capacity) tax – which was legal under WTO (World Trade Organisation) rules – equivalent to something close to the total cost of the Ford Territory,” he said.

“That effectively locked out what was going to be one of the great export opportunities for the Ford Territory, to Thailand. Yes, I am very disappointed with that.”

The surprise Thai tax basically doubled the cost of the Territory and priced it out of the Thai market, although Ford has indicated it is toying with the idea of re-launching it now that it has a 2.7-litre diesel engine variant, which reduces the impost to 50 per cent.

Mr Bracks also criticised the recently announced FTA with Malaysia, because of its one-sided treatment of the automotive trade in favor of Malaysia.

The deal gives Malaysia an extra four years to reduce its tariffs, while Australia immediately goes to zero.

Malaysia also gets to impose a tariff of 15 per cent on any car under 1800cc and all SUVs next year, decreasing to zero by 2016. Australia drops its five per cent tariff on cars immediately.

“I would not accept that,” Mr Bracks said. “I think we should hold out on that because, again, Malaysia (FTA) is another good example of the Territory, a good vehicle, being denied access.

“A diesel Territory, very good car. Sure it’s good on import replacement in Australia – we like that – but the hope was we would get some export sales out of it.”

Despite his dismay at the continued failure of Australia’s negotiators to look out for the Australian automotive industry, Mr Bracks stopped short of calling for a tit-for-tat response from Australia.

“No, I don’t (support reciprocity),” he said. “I think we need to have our eyes open. We should never have signed that (Thailand) agreement without knowing what could have been done to prevent some of the exports of our manufactured motor vehicles into that country.”

Mr Bracks, who was appointed by former industry minister Kim Carr to hold an inquiry into the automotive industry and the federal Government’s assistance policies, said Australia’s FTA negotiators did not know the value of the Australian automotive industry.

“When I was doing the review of the automotive industry, Rick Wagoner (then chief of General Motors) told me that the biggest advantage Australia had in automotive was that it did have an automotive industry,” he said.

“Other countries want an automotive industry, for example, Saudi Arabia.

“I was there recently. They want to start one from afresh. That’s almost impossible.

“And, if you look at it the other way, if you gave it away, it would be almost impossible to get it back.

“The fact is that we are one of the 13 countries in the world that can go from research to a car on the factory floor. That’s a great advantage. The fact that we have a car industry is a great advantage.

“The fact that we even have an industry post the global financial crisis, when a lot of plants and subsidiaries were closed around the world, is a great advantage.

“We need to capitalise on that advantage, and not make any assumptions about the future.”

Mr Bracks said he was confident about the trade mission he will lead to the US soon.

He said the fact that it was barely a year after the last one was one of its strengths.

“Persistence is the key,” he said. “You have to be there. The first rule is being there. The second is following up and the third is being there again

“This is quite essential. Our presence this time will be even better because we are following up on the mission we had last year.”

The trade mission will have meetings with General Motors, Ford, Chrysler and Toyota in Detroit and will then travel to San Francisco.

“I am very optimistic,” he said. “On the last occasion we went we were able to use the leverage of the mission to assist in new contracts for Futuris with Tesla and Fisker, and these were multi-million-dollar contracts

Futuris now has a seat-making facility inside Tesla’s plant, which the trade mission will visit, about the same time Tesla releases its Model S sedan.

Mr Bracks said it was vital that Australian component makers forced their way into the global supply chains used by the multinational car-makers because any business overseas would help make Australian parts producers more competitive at home.

“Our component suppliers have to be integrated with supply chains at Ford, GM, Chrysler, Nissan and others around the world so they can be more competitive back here in Australia.

“That’s the aim in the Automotive Plan, the aim of the mission.

“We have to be there because the survival of the auto industry rests with being fully integrated with the global supply chain.”

[Paxton]

You don't say?

[Road_Warrior]

About time someone 'official' came out and said something about it.

[prydey]

hardly rocket science.

[Bossxr8]

God our Government is so weak.

[Dr Smith]

Thanks for the post Brazen...and as Road Warrior stated, it's about time the issue was raised in by someone with a higher profile then small internal industry meetings.

[Dr Smith]

Originally Posted by Bossxr8

God our Government is so weak.

Actually Thailand and US FTA's were under Howard Governmnet control. At least the Malaysian FTA gets some form of equality of tarrifs in a few years.

It's quite ironic that Ford Australia is becoming a bigger importer from Thailand and yet it got burned first with the Territory.

[prydey]

Originally Posted by Dr Smith

It's quite ironic that Ford Australia is becoming a bigger importer from Thailand and yet it got burned first with the Territory.

you'd think that might work in their favour. bring focus and ranger here and send territory and ecoboost falcon there. everyone wins

[Dr Smith]

Originally Posted by prydey

you'd think that might work in their favour. bring focus and ranger here and send territory and ecoboost falcon there. everyone wins

You'd like to hope so, because when you think about it a few hundred cars a month of both to say 5 new countries becomes 1000-2000 cars a month to Campbellfield, while 500 each country is 2500 more per month.

[Bossxr8]

Originally Posted by Dr Smith

Actually Thailand and US FTA's were under Howard Governmnet control. At least the Malaysian FTA gets some form of equality of tarrifs in a few years.

It's quite ironic that Ford Australia is becoming a bigger importer from Thailand and yet it got burned first with the Territory.

But its the current government who does nothing about it while our industry dies by the day, amid a sea of Thai imports.

[b0son]

But even without tarriffs on our cars, would anyone buy them? Noone wants big cars anymore.

[HUNTER8]

Originally Posted by Bossxr8

But its the current government who does nothing about it while our industry dies by the day, amid a sea of Thai imports.

And we continue to vote for the idiots.......
And that's both parties.

[Dr Smith]

Originally Posted by b0son

But even without tarriffs on our cars, would anyone buy them? Noone wants big cars anymore.

Not in big numbers but I think incremental sales to several rhd countries would be least expensive and have quick return, particularly with global powertrains like the v6 diesel and ecoboost 4.

[Road_Warrior]

Originally Posted by b0son

But even without tarriffs on our cars, would anyone buy them? Noone wants big cars anymore.

Camry and Aurion (badged as a premium Camry over there) seem to do ok so I'd imagine the ecoboost Falcon would do the same.

[Franco Cozzo]

Is this FTA the reason why every manufacturer and his dog now sells cars made in Thailand in Australia now? Like Honda and its "premium" Thailand cars, or the Hilux and Thailand.

Is the Mazda 3 made in Thailand too or just the 2?

[bobthebilda]

Originally Posted by prydey

hardly rocket science.

Well apparantly it is. For when Steve Bracks is not getting taxpayer funded australian cars, he too prefers to purchase foreign made cars.

http://www.theage.com.au/news/nation...833733525.html

Just like the senior executives of cigarrette companies earning $300,000 plus per year thinking everyone should smoke, I think Steve Bracks thinks everyone but himself should buy australian made cars. But it is good to know that he is delaying his mission to the U.S. until he can hop on an australian made plane!!!!!! Oh wait, this is the do as I say, not as I do thread.

[Wretched]

Originally Posted by bobthebilda

Well apparantly it is. For when Steve Bracks is not getting taxpayer funded australian cars, he too prefers to purchase foreign made cars.

http://www.theage.com.au/news/nation...833733525.html

Just like the senior executives of cigarrette companies earning $300,000 plus per year thinking everyone should smoke, I think Steve Bracks thinks everyone but himself should buy australian made cars. But it is good to know that he is delaying his mission to the U.S. until he can hop on an australian made plane!!!!!! Oh wait, this is the do as I say, not as I do thread.

What does it matter what he drives (nice quoting a 5 year old article too)?
The article is in reference to potential exports vs imports and the FTA between Australia and other countries and not about anyone suggesting what locals should buy.

[JG34JA]

Finally someone "official" has admitted it. The Thai deal in particular was a shocker, and was quickly followed by high tax on motors over 3.0L! Which is what we were best at when the deal was brokered. However, the alternative to attempting free trade is 1930's style tariff wars, so at least Australia tried, although I get the impression we don't have much clout in negotiating favourable outcomes (scale of economy thing, or just idiots?).
The FTA's have accompanied an era of mercantilism and currency manipulation from our near-neighbours, as well, who have sucked up the industry of the West.
I have a great pic in a book at home of Holdens going off to Thailand on the Holden ship (yes, they had a ship) in the late 1960's...

[XRtowcar]

Finally some acknowledgement that were getting the rough end of the pineapple.
If the government had some balls it would put an equalising tax to compensate the Aussie manufacturers for an uneven playing field.
Not a wonder why the Aussie made market is shrinking.

[aussie muscle]

Originally Posted by Bossxr8

God our Government is so weak.

yes, too afraid to rock the boat.

[Uncle Niceguy]

i agree with all the above sentiments but now it makes alot more sense why ecoboost was brought out in not just the XT but also in the luxury models G6E and G6ET so now they can export the crap out of falcon ecoboost with out copping a massive tax. plus combine th hopeful sales in thailand with what will predominantly be fleet sales in australia and boom all the journalist will be righting about th falcons great return to strong sale in the asia pacific region. so yeah on one side the thai deal was a pile of **** but on the other side you now have a large car market where falcon only has to battle with camry and aurion.

just my 2c.

[Bossxr8]

Originally Posted by Mr.NiceGuy

i agree with all the above sentiments but now it makes alot more sense why ecoboost was brought out in not just the XT but also in the luxury models G6E and G6ET so now they can export the crap out of falcon ecoboost with out copping a massive tax. plus combine th hopeful sales in thailand with what will predominantly be fleet sales in australia and boom all the journalist will be righting about th falcons great return to strong sale in the asia pacific region. so yeah on one side the thai deal was a pile of **** but on the other side you now have a large car market where falcon only has to battle with camry and aurion.

just my 2c.

That might be ok if Ford had any plans to export the Falcon to asia, but they don't.

[Rockape]

Originally Posted by Bossxr8

That might be ok if Ford had any plans to export the Falcon to asia, but they don't.

I cant work out why they don't.

[Terry Turbo]

They don't because the FG platform is way better than any of the RWD platforms they have in the US.

Send over a few FPV's and they wouldn't buy a mustang!

[chevypower]

Originally Posted by Terry Turbo

They don't because the FG platform is way better than any of the RWD platforms they have in the US.
Send over a few FPV's and they wouldn't buy a mustang!

Way off topic, but for the 5.084^10th time, most Mustang buyers aren't turned on by the three-letter acronym "IRS." Though Ford should offer some Falcons here, but only an XR6 with 3.5 EcoBoost, XR8, and a GT with 5.0 EcoBoost to go after the V8 turbo BMWs and Mercs.

[music189]

No wonder Victoria was in the ----- when Bracks was premier what a genius, talk about stating the bleeding obvious


Imagine if we did tit for tat tax on utes Hi luxs etc would double in price overnight, be good for Ford and Holden utes!

In ten years time when we import all our vegetables etc the government will work out that they should have helped our farmers out and be pro active and stop foriegn counties buying all the farmland for their own food security cause now (in ten years time) all our food production is being sent OS and we have to buy it back

[smciner1]

Too true! So much for the Button Plans "Level Playing Field". Tarrifs should be the same on a Car coming in from another country as it would be if we sent one there.

There is nothing level about it, we in Australia just bend over and take it. The Over 3 Litre Tax is just a prime example.

Does anyone know how much Tarrif would be on an Australian Car sold in say Japan, Korea or Thailand?

[Bearman]

We've been copping it since the early '80's when the Hawke government started on this misguided ideal of equality in global trade. Almost every FTA we've ever been a part of gives us the rough end of the stick. In a generation we have traded away almost every trading advantage we've ever had.

Pretty much every sector of Australian industry has suffered and we are fast becoming a nation that won't even be able to feed and clothe itself.

The Thai automotive FTA is a prime example. The punitive capacity tax the Thai's so graciously hit us with is typical of the treatment we get. The gool 'ole USA hit Aussie steel with a 22% tariff at one point and I believe it is still in force.

World trade is a farce.

[turbodewd]

Well our unemployment rate is around 5% so clearly its not a total disaster. I think losing the clothing/footwear/textiles industry (mostly) is bearable. Losing the auto industry...not so much. Its the 4th biggest area of imports after petrol and crude and something. Or maybe its 3rd.

Keeping a chunk of that domestic is very valuable.

[TMC]

This countries had it. Want to know what we'll look like in a few years. Look at the UK. But then they have an automotive industry, so maybe look at Poland instead. :(