ABSTRACT
In the EU automotive trade policy is dominated by the issue of reciprocal trade with Japan in terms of both trade flows and market access. The elimination of national import restrictions on Japanese cars is one of the most controversial aspects of the completion of a single market in automobiles. In the 1970s and 1980s the use of Voluntary Export Restraints (VERs) and import tariffs to limit the free flow of finished vehicles from Japan was viewed as a ‘legitimate’ policy instrument. The restrictions placed on the French and Italian markets had the effect of limiting Japanese imports to a trickle. Even the UK government, which has been a net gainer of international automotive investment, gave tacit support to a VER agreed between the British national trade association and its Japanese counterpart. Thus in 1988, when the European Commission announced its intention to develop a European automotive trade policy, it started an ambitious and daunting effort to harmonize national trade policies in a highly sensitive area. The requirement that all member states remove restrictions on the movement of goods within the EU after 1992 had the potential to undermine the existing informal agreements aimed at protecting some national markets from Japanese imports. After 1992 Japanese cars could enter the EU via a hitherto unprotected national market and then be redirected to a heavily protected market. The scope for disruption and the possibility of national governments adopting unilateral measures encouraged the Commission to act. In late 1988 the Directorate-General I (DGI) Commissioner Willy de Clercq established a committee to work out an EU policy position. The Commission seized the initiative during de Clercq’s tenure at DGI, questioning the efficacy of national
policies to restrict Japanese imports. It persuaded member states that the time had come for a European response to Japanese import penetration. There had been little evidence to suggest that protectionism had enabled national industries to acquire the requisite competitiveness to match the Japanese. As one Commission official put it, these policies ‘protected the market for protection’s sake’. The Commission’ s argument was further strengthened by the emerging Japanese production base in the UK which would soon be used to circumvent national import restraints.
