+--------------------------------------------------+-------------------+
| **[World Trade]{.smallcaps}**                    |                   |
|                                                  |                   |
| **[Organization]{.smallcaps}**                   |                   |
+--------------------------------------------------+-------------------+
|                                                  |                   |
+--------------------------------------------------+-------------------+
|                                                  | **                |
|                                                  | G/TBT/N/USA/142** |
|                                                  |                   |
|                                                  | 2 September 2005  |
+--------------------------------------------------+-------------------+
|                                                  | (05-3838)         |
+--------------------------------------------------+-------------------+
|                                                  |                   |
+--------------------------------------------------+-------------------+
| **Committee on Technical Barriers to Trade**     | Original: English |
+--------------------------------------------------+-------------------+

NOTIFICATION

The following notification is being circulated in accordance with
Article 10.6.

+----+---------------------------+---+---------------------------------+
| ** | **Member to Agreement     |   |                                 |
| 1. | notifying:** [UNITED      |   |                                 |
| ** | STATES]{.underline}       |   |                                 |
|    |                           |   |                                 |
|    | **If applicable, name of  |   |                                 |
|    | local government involved |   |                                 |
|    | (Articles 3.2 and 7.2):** |   |                                 |
|    |                           |   |                                 |
+----+---------------------------+---+---------------------------------+
| ** | **Agency responsible:**   |   |                                 |
| 2. | Department of             |   |                                 |
| ** | Transportation/National   |   |                                 |
|    | Highway Traffic Safety    |   |                                 |
|    | Administration (NHTSA)    |   |                                 |
|    | (145)                     |   |                                 |
|    |                           |   |                                 |
|    | **Name and address        |   |                                 |
|    | (including telephone and  |   |                                 |
|    | fax numbers, e-mail and   |   |                                 |
|    | web-site addresses, if    |   |                                 |
|    | available) of** **agency  |   |                                 |
|    | or authority designated   |   |                                 |
|    | to handle comments        |   |                                 |
|    | regarding the             |   |                                 |
|    | notification shall be     |   |                                 |
|    | indicated if different    |   |                                 |
|    | from above:**             |   |                                 |
+----+---------------------------+---+---------------------------------+
| ** | **Notified under Article  |   |                                 |
| 3. | 2.9.2 \[** X **\], 2.10.1 |   |                                 |
| ** | \[ **  **\], 5.6.2        |   |                                 |
|    | \[ **  **\], 5.7.1        |   |                                 |
|    | \[ **  **\], other:**     |   |                                 |
|    |                           |   |                                 |
+----+---------------------------+---+---------------------------------+
| ** | **Products covered (HS or |   |                                 |
| 4. | CCCN where applicable,    |   |                                 |
| ** | otherwise national tariff |   |                                 |
|    | heading.\                 |   |                                 |
|    | ICS numbers may be        |   |                                 |
|    | provided in addition,     |   |                                 |
|    | where applicable):**      |   |                                 |
|    | Light trucks\             |   |                                 |
|    | (HS: 8703; ICS: 43.060)   |   |                                 |
+----+---------------------------+---+---------------------------------+
| ** | **Title, number of pages  |   |                                 |
| 5. | and language(s) of the    |   |                                 |
| ** | notified document:**      |   |                                 |
|    | Average Fuel Economy      |   |                                 |
|    | Standards for Light       |   |                                 |
|    | Trucks; Model Years       |   |                                 |
|    | 2008-2011 (52 pages, in   |   |                                 |
|    | English).                 |   |                                 |
+----+---------------------------+---+---------------------------------+
| ** | **Description of          |   |                                 |
| 6. | content:** This notice    |   |                                 |
| ** | proposes to reform the    |   |                                 |
|    | structure of the          |   |                                 |
|    | corporate average fuel    |   |                                 |
|    | economy (CAFE) program    |   |                                 |
|    | for light trucks and      |   |                                 |
|    | proposes to establish     |   |                                 |
|    | higher CAFE standards for |   |                                 |
|    | model year (MY) 2008-2011 |   |                                 |
|    | light trucks. Reforming   |   |                                 |
|    | the CAFE program would    |   |                                 |
|    | enable it to achieve      |   |                                 |
|    | larger fuel savings while |   |                                 |
|    | enhancing safety and      |   |                                 |
|    | preventing adverse        |   |                                 |
|    | economic consequences.    |   |                                 |
|    |                           |   |                                 |
|    | During a transition       |   |                                 |
|    | period of MYs 2008-2010,  |   |                                 |
|    | manufacturers may comply  |   |                                 |
|    | with CAFE standards       |   |                                 |
|    | established under the     |   |                                 |
|    | reformed structure        |   |                                 |
|    | (Reformed CAFE) or with   |   |                                 |
|    | standards established in  |   |                                 |
|    | the traditional way       |   |                                 |
|    | (Unreformed CAFE). This   |   |                                 |
|    | will permit manufacturers |   |                                 |
|    | to gain experience with   |   |                                 |
|    | the Reformed CAFE         |   |                                 |
|    | standards. In MY 2011,    |   |                                 |
|    | all manufacturers would   |   |                                 |
|    | be required to comply     |   |                                 |
|    | with a Reformed CAFE      |   |                                 |
|    | standard. The reform is   |   |                                 |
|    | based on vehicle size.    |   |                                 |
|    | Under Reformed CAFE, fuel |   |                                 |
|    | economy standards are     |   |                                 |
|    | restructured so that they |   |                                 |
|    | are based on a measure of |   |                                 |
|    | vehicle size called       |   |                                 |
|    | \"footprint\", the        |   |                                 |
|    | product of multiplying a  |   |                                 |
|    | vehicle\'s wheelbase by   |   |                                 |
|    | its track width. Vehicles |   |                                 |
|    | would be divided into     |   |                                 |
|    | footprint categories,     |   |                                 |
|    | each representing a       |   |                                 |
|    | different range of        |   |                                 |
|    | footprint. A target level |   |                                 |
|    | of average fuel economy   |   |                                 |
|    | is proposed for each      |   |                                 |
|    | footprint category, with  |   |                                 |
|    | smaller footprint light   |   |                                 |
|    | trucks expected to        |   |                                 |
|    | achieve more fuel economy |   |                                 |
|    | and larger ones, less.    |   |                                 |
|    | Each manufacturer would   |   |                                 |
|    | still be required to      |   |                                 |
|    | comply with a single      |   |                                 |
|    | overall average fuel      |   |                                 |
|    | economy level for each    |   |                                 |
|    | model year of production. |   |                                 |
|    | A particular              |   |                                 |
|    | manufacturer\'s           |   |                                 |
|    | compliance obligation for |   |                                 |
|    | a model year is           |   |                                 |
|    | calculated as the         |   |                                 |
|    | harmonic average of the   |   |                                 |
|    | fuel economy targets in   |   |                                 |
|    | each size category,       |   |                                 |
|    | weighted by the           |   |                                 |
|    | distribution of           |   |                                 |
|    | manufacturer\'s           |   |                                 |
|    | production volumes across |   |                                 |
|    | the size categories.      |   |                                 |
|    |                           |   |                                 |
|    | The proposed Unreformed   |   |                                 |
|    | CAFE standards are: 22.5  |   |                                 |
|    | miles per gallon (mpg)    |   |                                 |
|    | for MY 2008, 23.1 mpg for |   |                                 |
|    | MY 2009, and 23.5 mpg for |   |                                 |
|    | MY 2010. The Reformed     |   |                                 |
|    | CAFE standards for those  |   |                                 |
|    | model years would be set  |   |                                 |
|    | at levels intended to     |   |                                 |
|    | ensure that the           |   |                                 |
|    | industry-wide costs of    |   |                                 |
|    | the Reformed standards    |   |                                 |
|    | are roughly equivalent to |   |                                 |
|    | the industry-wide costs   |   |                                 |
|    | of the Unreformed CAFE    |   |                                 |
|    | standards in those model  |   |                                 |
|    | years. For MY 2011, the   |   |                                 |
|    | Reformed CAFE standard    |   |                                 |
|    | would be set at the level |   |                                 |
|    | that maximizes net        |   |                                 |
|    | benefits, accounting for  |   |                                 |
|    | unquantified benefits and |   |                                 |
|    | costs. We believe that    |   |                                 |
|    | all of the proposed       |   |                                 |
|    | standards would be set at |   |                                 |
|    | the maximum feasible      |   |                                 |
|    | level, while accounting   |   |                                 |
|    | for technological         |   |                                 |
|    | feasibility, economic     |   |                                 |
|    | practicability and other  |   |                                 |
|    | relevant factors.         |   |                                 |
|    |                           |   |                                 |
|    | Since a manufacturer\'s   |   |                                 |
|    | compliance obligation for |   |                                 |
|    | a model year under        |   |                                 |
|    | Reformed CAFE depends in  |   |                                 |
|    | part on its actual        |   |                                 |
|    | production in that model  |   |                                 |
|    | year, the obligation      |   |                                 |
|    | cannot be calculated with |   |                                 |
|    | absolute precision until  |   |                                 |
|    | the final production      |   |                                 |
|    | figures for that model    |   |                                 |
|    | year become known.        |   |                                 |
|    | However, a manufacturer   |   |                                 |
|    | could calculate its       |   |                                 |
|    | obligation with a         |   |                                 |
|    | reasonably high degree of |   |                                 |
|    | accuracy in advance of    |   |                                 |
|    | that model year, based on |   |                                 |
|    | its product plans for the |   |                                 |
|    | year. Prior to and during |   |                                 |
|    | the model year, the       |   |                                 |
|    | manufacturer would be     |   |                                 |
|    | able to track all of the  |   |                                 |
|    | key variables in the      |   |                                 |
|    | formula used for          |   |                                 |
|    | calculating the           |   |                                 |
|    | obligation (e.g.,         |   |                                 |
|    | distribution of           |   |                                 |
|    | production among the      |   |                                 |
|    | categories and vehicle    |   |                                 |
|    | fuel economy). This       |   |                                 |
|    | notice publishes          |   |                                 |
|    | estimates of the          |   |                                 |
|    | compliance obligations,   |   |                                 |
|    | by manufacturer, for MYs  |   |                                 |
|    | 2008-2011 under Reformed  |   |                                 |
|    | CAFE, using the fuel      |   |                                 |
|    | economy targets proposed  |   |                                 |
|    | by NHTSA and the product  |   |                                 |
|    | plans submitted to NHTSA  |   |                                 |
|    | by the manufacturers in   |   |                                 |
|    | response to a request for |   |                                 |
|    | product plans published   |   |                                 |
|    | in December 2003.         |   |                                 |
|    |                           |   |                                 |
|    | This rulemaking is        |   |                                 |
|    | mandated by the Energy    |   |                                 |
|    | Policy and Conservation   |   |                                 |
|    | Act (EPCA), which was     |   |                                 |
|    | enacted in the aftermath  |   |                                 |
|    | of the energy crisis      |   |                                 |
|    | created by the oil        |   |                                 |
|    | embargo of 1973-74. The   |   |                                 |
|    | concerns about energy     |   |                                 |
|    | security and the effects  |   |                                 |
|    | of energy prices and      |   |                                 |
|    | supply on national        |   |                                 |
|    | economic well-being that  |   |                                 |
|    | led to the enactment of   |   |                                 |
|    | EPCA remain alive today.  |   |                                 |
|    | Sustained growth in the   |   |                                 |
|    | demand for oil worldwide, |   |                                 |
|    | coupled with tight crude  |   |                                 |
|    | oil supplies, is the      |   |                                 |
|    | driving force behind the  |   |                                 |
|    | sharp price increases     |   |                                 |
|    | seen over the past        |   |                                 |
|    | several years.            |   |                                 |
|    | Increasingly, the oil     |   |                                 |
|    | consumed in the U.S.      |   |                                 |
|    | originates in countries   |   |                                 |
|    | with political and        |   |                                 |
|    | economic situations that  |   |                                 |
|    | raise concerns about      |   |                                 |
|    | future oil supply and     |   |                                 |
|    | prices.                   |   |                                 |
|    |                           |   |                                 |
|    | We recognize that         |   |                                 |
|    | financial difficulties    |   |                                 |
|    | currently exist in the    |   |                                 |
|    | motor vehicle industry    |   |                                 |
|    | and that a substantial    |   |                                 |
|    | number of job losses have |   |                                 |
|    | been announced recently   |   |                                 |
|    | at large full-line        |   |                                 |
|    | manufacturers.            |   |                                 |
|    | Accordingly, we have      |   |                                 |
|    | carefully balanced the    |   |                                 |
|    | cost of the rule with the |   |                                 |
|    | benefits of conservation. |   |                                 |
|    | We believe that, compared |   |                                 |
|    | to Unreformed CAFE,       |   |                                 |
|    | Reformed CAFE would       |   |                                 |
|    | enhance overall fuel      |   |                                 |
|    | savings while providing   |   |                                 |
|    | vehicle makers the        |   |                                 |
|    | flexibility they need to  |   |                                 |
|    | respond to changing       |   |                                 |
|    | market conditions.        |   |                                 |
|    | Reformed CAFE would also  |   |                                 |
|    | provide a more equitable  |   |                                 |
|    | regulatory framework by   |   |                                 |
|    | creating a level-playing  |   |                                 |
|    | field for manufacturers,  |   |                                 |
|    | regardless of whether     |   |                                 |
|    | they are full-line or     |   |                                 |
|    | limited-line              |   |                                 |
|    | manufacturers. We are     |   |                                 |
|    | particularly encouraged   |   |                                 |
|    | that Reformed CAFE would  |   |                                 |
|    | reduce the adverse safety |   |                                 |
|    | risks generated by the    |   |                                 |
|    | Unreformed CAFE program.  |   |                                 |
|    | The transition from the   |   |                                 |
|    | Unreformed to the         |   |                                 |
|    | Reformed system would     |   |                                 |
|    | begin soon, but ample     |   |                                 |
|    | lead time is provided     |   |                                 |
|    | before Reformed CAFE      |   |                                 |
|    | takes full effect in MY   |   |                                 |
|    | 2011.                     |   |                                 |
|    |                           |   |                                 |
|    | We recognize also that    |   |                                 |
|    | our proposals were        |   |                                 |
|    | derived from analyses of  |   |                                 |
|    | information from a        |   |                                 |
|    | variety of sources,       |   |                                 |
|    | including the product     |   |                                 |
|    | plans submitted by the    |   |                                 |
|    | manufacturers in early    |   |                                 |
|    | 2004. We fully anticipate |   |                                 |
|    | that the manufacturers    |   |                                 |
|    | will respond to this      |   |                                 |
|    | proposal by providing     |   |                                 |
|    | revised plans that        |   |                                 |
|    | reflect events since      |   |                                 |
|    | then. We will evaluate    |   |                                 |
|    | the revised plans, the    |   |                                 |
|    | public comments, and      |   |                                 |
|    | other information and     |   |                                 |
|    | analysis in selecting the |   |                                 |
|    | most appropriate          |   |                                 |
|    | standards for MYs         |   |                                 |
|    | 2008-2011.                |   |                                 |
+----+---------------------------+---+---------------------------------+
| ** | **Objective and           |   |                                 |
| 7. | rationale, including the  |   |                                 |
| ** | nature of urgent problems |   |                                 |
|    | where applicable:**       |   |                                 |
|    | Prevent deceptive         |   |                                 |
|    | practices to protect      |   |                                 |
|    | consumers                 |   |                                 |
+----+---------------------------+---+---------------------------------+
| ** | **Relevant documents:**   |   |                                 |
| 8. | 70 Federal Register (FR)  |   |                                 |
| ** | 51413 30 August 2005;     |   |                                 |
|    | Title 49 Code of Federal  |   |                                 |
|    | Regulations (CFR) Parts   |   |                                 |
|    | 523, 533, 537, and 533.   |   |                                 |
|    | Will appear in the        |   |                                 |
|    | Federal Register when     |   |                                 |
|    | adopted.                  |   |                                 |
+----+---------------------------+---+---------------------------------+
| ** | **Proposed date of        | } | To be determined                |
| 9. | adoption:**               |   |                                 |
| ** |                           |   |                                 |
|    | **Proposed date of entry  |   |                                 |
|    | into force:**             |   |                                 |
+----+---------------------------+---+---------------------------------+
| *  | **Final date for          |   |                                 |
| *1 | comments:** 22 November   |   |                                 |
| 0. | 2005                      |   |                                 |
| ** |                           |   |                                 |
+----+---------------------------+---+---------------------------------+
| *  | **Texts available from:   |   |                                 |
| *1 | National enquiry point    |   |                                 |
| 1. | \[** X **\] or address,   |   |                                 |
| ** | telephone and fax         |   |                                 |
|    | numbers, e-mail and       |   |                                 |
|    | web-site addresses, if    |   |                                 |
|    | available of the other    |   |                                 |
|    | body:**                   |   |                                 |
|    |                           |   |                                 |
|    | Full text may be found at |   |                                 |
|    | the following Internet    |   |                                 |
|    | URLs:                     |   |                                 |
|    |                           |   |                                 |
|    | <http://a257.g.akamai     |   |                                 |
|    | tech.net/7/257/2422/01jan |   |                                 |
|    | 20051800/edocket.access.g |   |                                 |
|    | po.gov/2005/05-17006.htm> |   |                                 |
|    |                           |   |                                 |
|    | <http://a257.g.akamaitech |   |                                 |
|    | .net/7/257/2422/01jan2005 |   |                                 |
|    | 1800/edocket.access.gpo.g |   |                                 |
|    | ov/2005/pdf/05-17006.pdf> |   |                                 |
|    |                           |   |                                 |
|    | Product Plan Information  |   |                                 |
|    | can be found at the       |   |                                 |
|    | following Internet URLs:  |   |                                 |
|    |                           |   |                                 |
|    | <http://a257.g.akamai     |   |                                 |
|    | tech.net/7/257/2422/01jan |   |                                 |
|    | 20051800/edocket.access.g |   |                                 |
|    | po.gov/2005/05-17005.htm> |   |                                 |
|    |                           |   |                                 |
|    | <http://a257.g.akamaitech |   |                                 |
|    | .net/7/257/2422/01jan2005 |   |                                 |
|    | 1800/edocket.access.gpo.g |   |                                 |
|    | ov/2005/pdf/05-17005.pdf> |   |                                 |
+----+---------------------------+---+---------------------------------+