Automotive trade is a key -- and a sticking point -- to the emerging Trans-Pacific Partnership, a proposed free-trade agreement that could spur the economies of the Americas, Asia and Oceania.
Hammering out the pact are the United States, Chile, Peru, Singapore, Malaysia, Brunei, Vietnam, Australia and New Zealand.
Mexico and Canada recently joined the talks. Now the debate focuses on Japan. Should it be invited?
The Detroit 3 say no, arguing that the nation's nontariff barriers -- particularly currency manipulation and automotive regulations -- effectively shut out imports. The Detroit 3 call Japan's technical requirements and certification procedures for vehicles "unique."
But are they?
Japan, the European Union and the United States have separate regs under which imports are certified.
Japan, like the EU, uses a "type approval" system to clear cars for sale. This means the government certifies that the vehicles meet safety standards. In the United States, though, the automakers certify that their vehicles meet federal safety requirements -- and assume the liability of meeting those requirements.
The Detroit 3 see type approval as an obstacle to selling cars in Japan because it typically requires them to submit cars for a lengthy governmental inspection.
There are three kinds of type approval.
1. Type designation, mainly for high-volume domestic and import cars
2. Preferential handling procedure, primarily for low-volume import cars
3. Type notification, mainly for trucks and buses
Imports with annual sales of more than 2,000 units require type designation. In this case, the automaker must submit a sample vehicle that is thoroughly inspected by the Japanese government for compliance with Japanese safety standards.
Small-volume import brands -- particularly the Detroit 3 -- have been especially vocal in griping about type approval. For them, their paltry sales rarely warrant the burden of the testing. To address these complaints, Japan's regulators introduced the preferential handling procedure in 1985.
Preferential handling procedure applies to imports with annual sales of 2,000 units or fewer. In this case, automakers must submit paperwork showing that the vehicles meet safety standards. No vehicles are submitted.
The EU's type approval system is similar to Japan's. The EU and Japan, among others, even have an agreement on reciprocal recognition of type approvals for auto parts. Under this agreement, when some parts are type-approved by one EU country, the approval also is recognized in Japan. To this extent, the EU seems aligned with Japan.
But because the regs on whole vehicles differ in the EU and Japan, the reciprocal recognition of type approval does not apply to completed vehicles. Despite the European automakers' request for Japan to automatically accept whole vehicles that are type-approved in the EU, Japan still requires Europe-made cars to undergo more testing for Japanese type approval.
Auto regs in Japan, the EU and the United States are far from being harmonized: Japan and the EU use type approval, but require each other's cars to undergo more testing. The United States has its own self-certification system. The lack of harmonization makes it difficult to determine which market -- if any -- has regulations that are truly "unique."
Originally published in Automotive News -- September 14, 2012
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