Industrial Policy Updates

China Imposes Environmental Tax on Automobiles

The State Environmental Protection Administration (SEPA) in China will announce seven new environmental protection policies over the year, including an environmental tax on high emission automobiles. It will also reinforce regulations requiring green certification of automobiles.

SEPA Deputy Minister Pan Yue made the remark during the 12th Green China Forum held in September 2007. The move is widely expected to increase the production costs of most manufacturing industries in China.

According to Pan, China will increase the tax on companies whose products or production processes cause emissions or pollution. The environmental watchdog has shut down or suspended 649 firms and required dozens of others to clean up their production by a specific deadline. "Punishment is not our aim. We just want to push local industries to improve their operations," said Pan.

Britain adjusts policy in favor of autos fueled by alternative gas

The British government, which has levied a City Entry Fee on London drivers since 2003 to cut exhaust emissions and traffic congestion, raised the fee in 2007 to eight pounds per day. It also expanded the covered area to include wealthy neighborhoods such as Notting Hill, Kensington and Chelsea.

Automobiles fueled by alternative gas, along with fire fighters and ambulances, are the few exceptions exempt from the City Entry Fee, which is payable by all drivers entering the zone between 7:00 am and 6:00 pm from Monday to Friday.

"The move will cut traffic levels in the area by 25-35% and deliver improvements to air quality as well as improving the reliability of buses," said London Mayor Ken Livingstone, a Labor party member and self-described socialist.

This policy, however, is regarded by some residents of affected neighborhood as "ineffective" and "completely unnecessary." The fee income collected, as the government claims, will be used to improve the public transportation system.

Canada to renew anti-dumping duty on Taiwan-made bicycles

Canada will renew its anti-dumping duty on Taiwan-made bicycles for another five years after its current five-year anti-dumping duty due in December, according to a notice issued by the Canada Border Service Agency (CBSA) at the end of 2007.

"Taiwan-made bicycles shipped to Canada are priced at relatively too low levels and the European Union (EU) levies similar anti-dumping duty on Taiwan's bicycles," said the agency in justification for the move. Canada has imposed the duty on Taiwan-made bicycles for nearly 10 years, charging an additional 10-64% anti-dumping duty on Taiwan-made bicycles.

In fact, Taiwan's bicycles shipped to Canada are priced at US$420 per unit on average, with a price range of US$323 to US$435 per unit, during the past five years, compared to the minimum price of US$225 in Canada. Taiwan's market share in Canada dropped from 200,000 units in 2003 to 116,000 units in 2006, or from 21% to 10%. The average price of such bicycles also remained above the minimum price level set by Canada during the same period.

EU to apply Galileo Program to auto market in 2012

The Galileo satellite radio navigation system initiated by the European Union (EU) and the European Space Agency (ESA) will become standard equipment for all autos to be marketed on the European auto market in 2012. The Galileo system will reportedly complement the current GPS system in the U.S.

As the ESA describes the Galileo as a constellation of 30 satellites and ground stations providing information concerning the positioning of users in many sectors. In transportation, for example, it helps define vehicle location, search routes, control speed, provide guidance, and so on.

Japan extends BAA requirement to RV, race cars, and sport utility bicycles

The Bicycle Association Japan, which announced the Bicycle Association Approved (BAA) safety requirement for imported bicycles in September 2004. It also extended the existing requirement into a new package of safety rules called Sport-BAA (SBAA), for imported recreational vehicles (RVs), race cars, and sport utility bicycles in October 2007.

The association urges those subject to the new safety requirement to obtain the association's approval to make their products more attractive to Japanese consumers. The new requirement is expected to increase costs for foreign suppliers of affected leisure and transportation vehicles.

Several high-ranking officials of the association visited Taiwan to discuss this issue with sports utility bicycle makers with a considerable market share in Japan. In 2006, Taiwan shipped around 200,000 bicycles to Japan, mostly high-end models subject to the new safety requirement. Taiwanese makers generally expect to meet the new regulation without problems. They are concerned, however, about the extra cost of becoming certified to use the SBAA mark.

Since the BAA was put into practice in 2004, the Bicycle Association Japan has issued over 7.5 million BAA marks. It observed that most bicycle suppliers would like to apply for the mark and carry it as a symbol of product safety.

Malaysia to produce "Islamic Cars"

Malaysian national carmaker Proton is planning to team up with companies in Iran and Turkey to produce "Islamic cars" with distinctive features exclusively for serving Muslim people, such as a compass to determine the direction of Mecca for prayers, compartments for storing the Qur'an and headscarves, and so on.

"The Islamic Cars produced in Malaysia would be primarily for exports," Proton's Managing Director Syed Zainal Abidin told the national news agency Bernama in Malaysia.

According to Bernama, "Proton is aggressively seeking to raise exports and boost sales as its domestic market share fell to 23%, from about 60% five years ago." The state-owned carmaker, as Bernama reported, recorded a loss of US$169 million in the 2007 financial year. For years, Proton thrived in a protected environment in which high duties were imposed on imported vehicles, forcing many Malaysians to buy Proton cars. But duties have been slowly lowered in line with a regional trade agreement, and more Malaysians are buying imported vehicles, according to the news agency.

Morocco to develop auto-manufacturing complex

The Moroccan government in September signed a preliminary agreement with Renault-Nissan for the latter to build a manufacturing complex in northern Morocco with an annual capacity of 200,000 cars in 2010 and up to 400,000 cars in the years beyond.

Moroccan King Mohamed VI presided over the signing ceremony between Renault-Nissan CEO Carlos Ghosn and Moroccan Prime Minister Driss Jettou in Tangiers. The French carmaker and the North African kingdom earlier jointly conducted a feasibility study for the Mediterranean port of Tangiers to serve as the location of the new auto plant. Renault says it plans to invest US$822 million in the project.

The factory would make low-cost Logan sedans and other cars for Renault, Nissan, and Romanian's affiliate Dacia, geared primarily for export.

Auto parts to be excluded from free trade agreement between Japan and ASEAN

Japan and the Association of Southeast Asian Nations (ASEAN) countries reached a consensus in August 2007 that they would sign a free trade agreement (FTA) later. Under the FTA, Japan will remove tariffs on 93% of the imported items from these Southeast Asian countries while the six wealthier ASEAN member countries will gradually cut tariffs on at least 90% of the commodities shipped from Japan to zero and the four poorer countries will slash the tariffs for 88-90% of their imports from Japan.

Sensitive commodities such as rice, auto parts and textiles, however, are excluded from the tariff-cutting schemes.

The free trade agreement will not only boost regional trade, but will also create a favorable investment environment in ASEAN. Japan is now the second largest foreign investor in Southeast Asia after the European Union (EU).

Switzerland to levy pollution tax on cars

To catch up the CO2 reduction table stated in the Kyoto Protocol, Switzerland will begin to levy a CO2 tax on imported fuel from the beginning of this year, at a rate of 0.03 Swiss franc per liter of petroleum gas or 0.025 franc per cubic meter of liquefied natural gas.

The Swiss government compiled a pollution index table in mid-2007 as the reference for it to levy pollution tax on automobiles in the years ahead. In the table, the top three environmentally-friendly models are Prius of Toyota, Punto and panda of Fiat, whereas Patrol of Nissan, Transit of Ford, and T5 of Volkswagen were at the levels of highest pollution index.

Switzerland started a "green label" policy for autos in 2003 under which each car is required to have a label identifying its emission level.

Taiwan raises waste auto management fee

Taiwan government raised the management fees for waste autos and motorcycles twice in 2007, increasing the fee from NT$965 to NT$2,050 over the year. It will double again to NT$4,905 in early 2008. Meanwhile, the management fee for one waste motorcycle will be raised to NT$1,045 in early 2008, from NT$683 a year ago.

The price hikes will add extra cost to car and motorcycle companies, which have seen sales and profits amid a lackluster business environment and soaring gasoline price. Car sales in Taiwan have been slipping for two consecutive years and are estimated to shrink to only 320,000 units in 2007.

The Taiwan government defends its policy, saying that the waste auto and motorcycle management fee increases have not been adjusted for many years. "The fees are adjusted to reflect the rising consumer price index on the island," a government source explained. The new rates would just cover the management cost of processing waste vehicles, the source added.