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Canberra blasted over dud trade deals

Not-so-free trade: Canberra has been urged to lift its game on free-trade deals in future agreements, including South Korea

FCAI urges federal government not to repeat trade mistakes with South Korea deal

General News logo6 Jan 2014

AUSTRALIA'S peak body for the motor industry has blasted successive federal governments for failing to negotiate trade agreements conducive to Australian car exports, leading to the collapse of local car manufacturing.

Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber said local car-makers needed exports to get manufacturing scale because the fragmented and highly competitive local market could not provide it alone.

“I have to say that one area in which the government has failed over the past 25 years is in opening up markets right around the world, either through the removal of tariffs or non tariff barriers, for exports, and that has hindered the domestic car industry,” he said today when announcing the 2013 car industry sales figures.

“Volume is the main issue. You need to get scale and that is why exports are such an important issue in Australia.”

Mr Weber pointed to the free trade agreement with Thailand as being the classic case of non-tarrif barriers working against Australian vehicle exports.

He said the FCAI was urging the federal government to address this issue in the new free-trade agreement with South Korea, although he conceded the chances of Australia's surviving car-maker, Toyota, exporting to that country were slim.

Japanese-brand car sales are almost non-existent in South Korea. Likewise, Korean car sales in Japan are minimal.

80 center imageLeft: FCAI CEO Tony Weber.

The Korean agreement was signed late last year, but the details are still being bashed out behind closed doors. Mr Weber expects the final agreement to be signed later this year.

He said the FCAI was in discussions with trade officials to try to avoid the pitfalls of previous agreements.

Mr Weber said he believed the current government had a good understanding of the trade issues affecting the car and auto parts export industries.

South Korea is the third biggest source of motor vehicles sold in Australia, accounting for 134,953 vehicles last year.

The biggest beneficiaries of a South Korean deal would be the two main Korean manufacturers, Hyundai and Kia, as well as Holden, which imports a large slice of its volume from the republic.

Boosted by the free-trade deal, Thailand is now the second biggest car exporter to Australia behind Japan, with 228,479 Thai-built vehicles sold here in a market of 1.13 million, amounting to almost a quarter of all sales. That compares with just 118,510 vehicles from Australian manufacturers, down 15.2 per cent on 2012.

Free trade agreements have also been mooted with Japan and China.

Toyota Australia executive director of sales and marketing Tony Cramb said such an agreement with Japan was not being factored into discussions within Toyota regarding the future of its Australian manufacturing plant at Altona.

He said the main factor was reducing local manufacturing costs for the Camry range.

Toyota imports more than half of its vehicles from Japan – including Australia's new top-selling car, the Corolla - with many more coming from Thailand, including the HiLux ute that was ranked third on Australia's best-selling car list in 2013.

Mr Cramb said he expected a decision on Altona to come about mid year.

He said he also expected Toyota Australia's Federal Court appeal against a court decision to block negotiations with its Altona workforce on parts of its work place agreement to he heardbeforfe that, in the third quarter of this year.

Toyota is Australia's largest car exporter, exporting 70 per cent of the 106,000 cars made in Australia last year, mainly to the middle east.

Mr Cramb said the export deals for Camry were in integral part of the discussions within Toyota for continued manufacturing operations in Australia.

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