Transatlantic Team

Automakers Lobby for Free Trade Deal

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Carmakers keen to pick up the pace.
  • Why it matters

    Why it matters

    A transatlantic trade pact with the United States could help German automakers significantly cut their production costs, by engineering the same vehicles for both markets.

  • Facts

    Facts

    • North America is the second-most important market after China for German carmakers.
    • The CEOs of Germany’s top car companies will hold a joint press conference Wednesday to support for transatlantic trade pact.
    • There is significant resistance to the pact among segments of the German public who fear a dilution of local standards.
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    Audio

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Shortly before Christmas, German Economics Minister Sigmar Gabriel received practical training on the potential impact of a transatlantic free trade deal between Europe and the United States while visiting an Opel factory in Germany.

Engineers at the General Motors subsidiary slapped red arrows on everything that must be changed on a compact car to export it to the United States: the front of the vehicle, the rear, the roof, the rear lights, the windshield wipers and much more. The message was clear: Common U.S.-E.U. standards would be good for Germany’s auto industry and let it produce more cars at more affordable prices.

Less than two months later, the German automobile industry is raising pressure on its own government to back the deal, which faces an uphill battle in Germany where a coalition of data privacy advocates and domestic industry protectionists have organized opponents.

On Wednesday, the automotive industry will pull out the stops to lobby for the pact, which advocates claim would lead to economic growth and the creation of hundreds of thousands of jobs on both sides of the Atlantic, especially in Germany, Europe’s largest economy.

An unprecedented joint press conference in Berlin will bring together the A-list of German automotive executives: Chief executives Dieter Zetsche of Daimler, Martin Winterkorn of Volkswagen, Norbert Reithofer of BMW, Rupert Stadler of Audi, Matthias Müller of Porsche, Bernhard Mattes of Ford Germany, Volkmar Denner of Bosch and Arndt Kirchhoff of Kirchoff Automotive, a parts maker.

The managers hope to brake growing resistance in Germany to the proposed Transatlantic Trade and Investment Partnership.

The automobile executives have never delivered such a visible, collective message before.

The top managers had planned a low-key meeting in Berlin of the German industry’s lobby association, VDA. But growing opposition to TTIP has forced them to go public, extolling the benefits of a free trade zone of 800 million in the European Union and United States.

“We can save production and storage costs if we no longer need to produce different blinkers, side mirrors and headlights for the USA and Europe.”

Bernhard Mattes, Ford Germany

For German car makers, North America is a growth market again after years of crisis, and is the second-most important after China.

More than 16 million cars were sold in North America in 2014, up 4 percent from a year before.

The German luxury car makers Daimler, BMW and Audi contributed almost 1 million alone in North America. While the European car market stagnates, the demand for new cars in the United States keeps growing. That isn’t just because of the low cost of oil – a liter of gasoline costs the equivalent of €0.50. But population is also growing, and with it the number of people able to drive.

“Altogether billions of duties in the industry would be eliminated,” said the BMW chief executive, Mr. Reithofer, who has long campaigned for the free trade agreement.

The Daimler chief executive, Mr. Zetsche, calls the pact “an historic chance for the two largest economic areas in the world.”

Without the agreement, Mr. Zetsche said Daimler would keep having to duplicate research, development, processing, registration and certification of its cars for both markets. And the head of U.S. carmaker Ford in Germany, Bernhard Mattes, said: “We can save production and storage costs if we no longer need to produce different blinkers, side mirrors and headlights for the USA and Europe.”

“Time is running out for its completion,” said Matthias Wissman, the president of the VDA German auto industry group. He said the goal must be “to make great progress with the Transatlantic Trade and Investment Partnership during President Obama’s remaining time in office.”

 

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U.S. President Barack Obama has two more years in the White House, but his party lacks control of both houses of Congress.

And while the European Commission members are new to their offices after last year’s elections, in Germany there is less than two years to make headway before local election campaigns in states such as Baden-Württemberg.

For political timing reasons, the German car industry would like to have the agreement wrapped up this year.

 

Free trade means fewer red arrows. Source: Opel
Free trade means fewer red arrows. Source: Opel

 

German Chancellor Angela Merkel is on their side. She sees the trade pact as being a “unique opportunity.” At the World Economic Forum in Davos, Ms. Merkel last week urged: “We cannot shut ourselves off in this world, and therefore I would like to make a major plea for the European Union being open to free trade agreements.”

The trick will be making progress in transatlantic negotiations that have bogged down since they started in 2013.

“The treaty must be worth it in the end for the Germans and Europeans, then we can convince the skeptics of its benefit,” said Peter Tauber, the general secretary of Ms. Merkel’s Christian Democratic Party. Opponents warn against selling out of European health and privacy standards and undermining of rule of E.U. law, through proposed courts of arbitration to settle trade disputes.

Treaty proponents say European standards will not be undermined and local arbitration panels will not be able to invalidate E.U. law.

As the leader of Germany’s Social Democrats, Mr. Gabriel, the economics minister, is having to deal with the left wing of his party, which is skeptical of the free trade deal. The head of the party’s parliamentary group, Thomas Oppermann, has appealed to all sides. “We must take the legitimate concerns seriously and try to find reasonable solutions through negotiation,” he said.

The automobile industry is prepared to compromise.

“The transatlantic economic zone is an opportunity of the century,” the VW boss, Mr. Winterkorn, said last year. It is not only important that companies are satisfied, “but also the people, and on both sides of the Atlantic.”

 

Daniel Delhaes and Christian Schnell are correspondents for Handelsblatt in Berlin and Frankfurt. To contact them: delhaes@handelsblatt.com and schnell@handelsblatt.com

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