WORLD TRADE  
ORGANIZATION  TN/MA/W/18/Add.6 
28 January 2005 
 
 (05-0371) 
Negotiating Group on Market Access Original:   English 
  
 
U.S. PROPOSAL ON NEGOTIATING NTBS RELATED 
 TO THE AUTOMOBILE SECTOR 
 
Communication from the United States 
 
Addendum
 
 
 The following communication, dated 28 January  2005, has been received from the Delegation 
of the United States.  
_______________  
   The United States considers addressing non-tariff barriers (NTBs) to be an integral part of the Doha mandate on non-agricultural market access, and equally important as addressing tariff barriers.  
Previous NTB submissions by the United States have highlighted our belief that a consolidated focus 
on a number of NTB issues relevant to a single indus try is a creative new approach for identifying and 
effectively addressing NTBs.  The United States has previously indicated its interest in negotiating 
NTBs affecting the motor vehicle and motor vehicl e parts industry, most recently in the revised 
indicative list we tabled in November 2004 (TN/MA /W46/Add.8/Rev.1).  The United States now is 
pleased to contribute this proposal on a vertical NTB discussion on motor vehicle and motor vehicle 
parts.  As we have indicated in previous proposals,  calling attention to the variety of different NTBs 
that affect this industry does not suggest that th e United States will seek to negotiate each of these 
issues in the NAMA group.  Rather, we would envisag e that negotiations be taken up in the relevant 
Doha negotiating group where one exists, or in th e NAMA group if no other appropriate venue exists.  
Also, in our view, each of the NTB issues affecti ng the automotive (motor vehicle and motor vehicle 
parts) industry should be discussed and negotiated on its  own merits.  We note that we do not foresee 
the end result of NTB negotiations to resemble the Ai rcraft Agreement, but rather to result in a series 
of results, each of which addresses a particular  NTB facing the automotive industry.  This 
comprehensive focus on the NTB problems faced by the motor vehicle and motor vehicle parts 
industry illustrates that effective market access liber alization for products of this industry requires a 
multi-pronged approach. 
 
I. INTRODUCTION 
1.1 Internationally, the motor vehicle and motor vehi cle parts industry is one of the world’s most 
globalized, with trade that contributes significantly to the economies of both developed and developing country Members.  However, NTBs incr easingly act to limit market access in international 
automotive trade. The global automotive industry has demonstrated a common interest in reducing 
these trade barriers, and meets often in regional and multilateral trade fora to discuss NTBs.  The 
United States views the opportunity that WTO Members now have through NAMA negotiations to pursue NTBs of interest to the global automotive industry as important to spurring growth in the 
sector, both in developed and developing economies.  TN/MA/W/18/Add.6 
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 II. THE CASE FOR ELIMINATING AUTOMOTIVE NTBS 
A. E
CONOMIC IMPACT OF THE SECTOR  
2.1 As clearly demonstrated by WTO trade sta tistics, the automotive industry has a significant 
role in global trade, with an overall value of $724 billion in 2003.  Furthermore, trade in automotive 
goods has consistently expanded over the last  25 years, including 15 per cent in 2003 alone.1  
Automotive trade represents 13.3 per cent of global trade in manufactured goods,2 and automotive 
exports are important to both deve loped and developing countries from all regions of the world.  For 
example, in 2003, Brazil had automotive exports of $6.5 billion, representing 8.9 per cent of its total 
merchandise exports.  The Republic of Korea had exports of $22.3 billion (11.5 per cent of 
merchandise exports); the Slovak Republic had export s of $5.9 billion (26.9 per cent of merchandise 
exports); and South Africa had exports of $3 billion (8.3 per cent of merchandise exports).3 
 2.2 Global motor vehicle sales are predicted to grow 27 per cent between 2003 and 2009 to 
75 million units, according to an industry consulting group.
4  Developing countries, particularly in 
Asia and South America, will see growth in their share of global motor vehicle production.  
 2.3 In 2003, the global consumption of motor vehi cle parts was estimated to be about $900 billion 
and is expected to increase to $1.1 trillion by 2 010, according to an original equipment industry 
association study.
5  While the developed countries have traditi onally tended to be the main consumers 
of motor vehicle parts, demand in developing na tions is increasingly strong.  Many developing 
countries already have strong motor vehicle parts industries and make a significant contribution to 
global trade in these products.  In 2003, non-OECD countries accounted for $38.3 billion USD in motor vehicle parts exports.  
2.4 The automotive industry is a strong economic driver in developed and developing economies 
alike.  In fact, in many cases it is a linchpin ar ound which much of the manufacturing sector revolves.  
It also makes significant contributions to th e services sector of an economy, through sales, 
distribution, aftermarket care and financing operations.   
 
2.5 According to the Organisation Internationale  des Constructeurs d’Automobiles (OICA – the 
International Organization of Motor Vehicle Manufacturers), the industry directly employs 
approximately eight million people, with several m illion additional jobs depending on the sector.  If 
the global industry were to be regarded as a single country, its annual turnover would make it the sixth 
largest economy in the world.
6 
 
2.6 In the United States, it is estimated that the automotive industry accounts for 3.5 per cent of 
the total gross domestic product (GDP).  U.S. mo tor vehicle and equipment manufacturing companies 
provided employment for 911,500 workers in 2003.7  When other jobs dependent on the industry are 
included, this figure rises dramatically, to 6.6 million jobs, or about five per cent of private sector jobs.
8  For the motor vehicle manufacturing segment of the sector, employees’ earnings were 65 per 
cent greater than the national average for all manuf acturing industries.  The automotive industry is 
                                                      
1  http://www.wto.org/english/res_e/statis_e/its2004_e/its04_bysector_e.htm   table IV.48. 
2 http://www.wto.org/english/res_e/st atis_e/its2004_e/its04_bysector_e.htm   table IV.50. 
3 http://www.wto.org/english/res_e/st atis_e/its2004_e/its04_bysector_e.htm   table IV.54. 
4 JD Power and Associates, Ward’s Automotive Reports , December 13, 2004. 
5 Original Equipment Manufacturers Association and RolandBerger Consultants Study - Odyssey of 
the Auto Industry. 
6 http://www.oica.net/htdocs/Main.htm  . 
7 Ward’s 2003 Motor Vehicle Facts and Figures, Ward’s Communications , page 76. 
8 Alliance of Automobile Manufacturers, March 07, 2004,  ECONOMIC INDUSTRY CONTRIBUTIONS.   TN/MA/W/18/Add.6 
 Page 3 
 
 
 also a large purchaser of raw materials.  The industry accounts for a high percentage of the annual 
U.S. consumption of many products, including 13.4 per cent of the steel, 74.3 per cent of the natural 
rubber, and 31.4 per cent of the iron sold annually.9 
 2.7 The automotive sector is also a significant i nvestor in research and development.  In the 
United States, the automotive industry invested $18. 4 billion in research and development in 1997, 
higher than any other manufacturing industry.
10  Similar economic impacts can be found in any 
country with an established automotive sector.  For those countries working to develop their 
automotive sectors, these facts are key motivators.  
B. 
 INDUSTRY INVOLVEMENT  
2.8 The world automotive industry has already s hown a strong interest in having automotive non-
tariff barriers reduced or eliminated as part of the Doha Round.  Trade associations representing most of the major vehicle producing companies have, at their own initiative, met on several occasions to 
compare views, find common ground, and educate government officials on their key NTB concerns.  
Their first exploratory meeting took place in September of 2003 in Cancún, with representatives from 
seven automotive trade associati ons (representing automotive makers in the United States, the EU, 
France, Brazil, Japan, Korea and India) mee ting to discuss potential commonalities in addressing 
NTBs.  In March of 2004, the United States (ATPC),  EU (ACEA) and Japanes e (JAMA) associations 
met again to brief government officials in Geneva.  On June 3, 2004, a large group of representatives 
of the global automotive industry met in Geneva to seek agreement on an agenda of common interest 
on NTBs and to prepare a presentation for WTO NAM A delegates. The group agreed on a set of 
common NTBs of the greatest interests and pres ented their findings and recommendations to a 
gathering of approximately 25 WTO Member delegations.  Industry associations that participated included:  Brazil (ANFAVEA); Canada (CVMA); EU (ACEA); Japan (JAMA); Korea (KAMA); India (SIAM); and the United States (ATPC). 
 
2.9 Automotive NTBs have also been a topic of  consideration in the Asia Pacific Economic 
Cooperation (APEC) Automotive Dialogue, in which industry groups and governments from all of the 
major automotive producing countries in the region participate.  This group has discussed the NTBs 
facing the industry on a number of occasions (for example, the Automotive Dialogue agreement on 
“Principles of Automotive Technical Regulati on Harmonization), and has sent a letter to the 
Chairman of the NAMA group offering the Dialogue’s  support for the Round.  Moreover, APEC has 
placed high priority on supporting the WTO.  Identi fying NTBs that Members may wish to pursue in 
the WTO is a specific element of APEC’s work, and we  expect to see that effort intensify in 2005.   
 2.10 The continued participation and engageme nt of these industry groups will be vital to 
successfully removing NTBs in the sector.  Industry involvement will be necessary to fully identify 
and prioritize the NTBs, and industry will provi de valuable advice on commercially meaningful 
approaches to removing them.   
III. THE TYPES OF NTBS AFFECTING THE AUTOMOTIVE INDUSTRY 
3.1 Governments have already begun to express th eir interest in addressing NTBs affecting the 
sector.  More than ten developed and developing co untry WTO Members have cited in their indicative 
list submissions NTBs related to automobile or auto mobile parts.  In its revised indicative list of 
NTBs, the United States identified the following five types of barriers affecting the U.S. automotive 
industry:  
 
                                                      
9 Ward’s 2003 Motor Vehicle Facts and Figures, Ward’s Communications , page 57. 
10 Alliance of Automobile Manufacturers, March 07, 2004,  ECONOMIC INDUSTRY CONTRIBUTIONS.  TN/MA/W/18/Add.6 
Page 4  
 
 • Strict and/or excessively burdensome restrictions  on the ability of the private sector to offer 
financing, hampering the ability of c onsumers to purchase motor vehicles.  
 
• Some Members’ distribution channels are not open to imported products.  This services-
related barrier acts as a goods market access barrier  by restricting the ability of importers to 
transfer their automobiles from the production plant to market.   
 
• Several Members apply vehicle taxes based on e ngine displacement in a manner that burdens 
foreign manufacturers disproportionately because they produce vehicles with large engine sizes.
11 
 
• Foreign equity restrictions restrict or distort investments in automotive production. 
 
• Barriers to the importation and sale of remanufactured products. 
 3.2 Similar automotive NTBs have been notifie d by several other WTO Members such as Japan 
and Korea.  Also, while the United States did not  include in its indicative list automotive NTB 
complaints that relate directly to concerns re garding the WTO-consistenc y of existing measures 
maintained by WTO Members, we recognize that ot her Members did.  We note the importance to the 
global industry of addressing these issues.   The Unite d States shares the desire to resolve NTB issues 
and is willing to discuss the best way to deal w ith them in a manner that reduces impediments to 
globalized motor vehicle and motor vehicle parts production.  
 
IV. HOW WE SHOULD PROCEED 
A. WHAT SOLUTIONS ARE WE SEEKING ? 
4.1 The United States envisages negotiations towa rd resolving NTB issues affecting the motor 
vehicle and motor vehicle parts industries as highly flexible, taking advantage of the full range of 
NTB negotiating modalities outlined in Paragraph 14 of Annex B of the Decision Adopted by the 
General Council on 1 August 2004.  We anticipate that the negotiations could include a mix of 
approaches, including the expans ion of multilateral rules applicable to all WTO Members; the 
negotiation of commitments amongst interested parties (plurilaterals), the benefits of which would be 
enjoyed by all WTO Members; and bilateral reque st-offer solutions that would be bound in WTO 
schedules.   
 4.2 On the multilateral level, the United States exp ects, for example, that negotiations related to 
customs practices occurring in the Negotiating Grou p on Trade Facilitation could create rules that 
would eliminate some of the NTBs cited not only by the global automotive industry, but by other 
global industries, as well.  
 4.3 In other cases, while the nature of some ba rriers affecting the automotive industry may be the 
same as barriers affecting other sectors (e.g., the electronics sector), the solutions may be motor 
vehicle and motor vehicle parts-specific.  For ex ample, a group of Members might want to agree 
among themselves to implement a particular set of  international standards relevant only to the 
automotive industry, with the results being applie d on an MFN basis.  We would note that Members 
already are free to adopt such standards in any case, subject to the provisions of the TBT Agreement.  
Doing so in the context of a vertical automotiv e initiative would be just another way to reduce 
fragmentation and promote regulatory convergence efforts where they make sense.   
                                                     
 
 11 This identified NTB encompasses only taxes that  are based on engine displacement and is not 
intended to include vehicle taxes based on other factors.    TN/MA/W/18/Add.6 
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4.4 Finally, individual WTO Members would have the opportunity to address particular concerns by adding bilateral issues negotiated on a reques t/offer basis.  No matter the modality, the United 
States has no intention of re-opening existing Agreem ents through this vertical automotive initiative 
process.   
 
B. P
ROCESS  
4.5 The United States submits this paper because it is time to move beyond a list-making exercise 
on NTBs toward more substantive negotiations focu sed on solutions.  Numerous NTBs affecting the 
motor vehicle and motor vehicle parts industry have  already been identified through the indicative list 
process and the work of automo tive associations.  While the United States welcomes new 
notifications from Members who have not yet participated in the indicative list process, the most useful next step is for Members to seek commonaliti es in the existing lists and decide which NTBs are 
the most critical to address.    
4.6 This process could begin with an informal group of countries with an interest in participating 
in a vertical automotive initiative, working to fo cus more closely on the issues to be addressed.  
Members could offer their proposals on NTB solutions  in this group.  All WTO Members would be 
welcome to participate in this informal group discussion process.  Members of the informal group 
would have the responsibility to ensure that th e NAMA group is fully informed of developments.  
 
C. C
OORDINATING WITH OTHER WTO  COMMITTEES (TBT,  CUSTOMS VALUATION , IMPORT 
LICENSING , ETC.) AND NEGOTIATING GROUPS (TRADE FACILITATION , SERVICES )  
4.7 Discussions in the NAMA group on how best to approach those NTBs that may fall under the 
purview of existing WTO Agreements, and in fact  may have been under discussion in Committees for 
some time, have been challenging for all Members.  Some NTBs affecting the automotive industry 
may best be addressed in the NAMA group, either in  an across-the-board fashion for horizontal issues 
that may surface, or in the bilateral request/offer process or discussions among a group of interested 
Members.  Other issues, however, may better be handled in existing Committees, where it may be 
possible to address practical problems involving th e administration of Agreements through dialogue, 
best practices, and sharing positive experiences, th ereby achieving new mark et access under existing 
Agreements.  Committees have used a variety of  tools to resolve issues and can decide on the 
appropriate way to address the NTBs raised by Me mbers.  To facilitate transparency in the 
negotiations, Members choosing to highlight NTB issues in existing WTO Committees may wish to 
inform the NAMA group that they have done so.     
4.8 For those automotive NTBs that appear to fall under negotiations in other areas, the United 
States continues to believe that these negotiating groups are in the best position to pursue them.  
Members should give consideration to the most effec tive and efficient ways to ensure that the NAMA 
group is informed of developments in ot her Committees and negotiating groups.    
 D. T
HE ROLE OF NON-WTO  BODIES  
4.9 Those WTO Members interested in participating in small group discussions on automotive 
NTBs should draw from the experiences and experti se of other groups with a history of addressing 
automotive NTBs, such as the APEC Automotiv e Dialogue, the UN/ECE WP29, and the OECD 
Automotive Working Group, as appropriate.    TN/MA/W/18/Add.6 
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 4.10 In addition, given the prevalence of cust oms issues raised by this industry, it may be 
appropriate to take due account of relevant work of the World Customs Organization (WCO) and 
other international organizations, to ensure soluti ons are not developed in a vacuum, nor duplicated by 
different agencies.  V. NEXT STEPS   
5.1 As we have noted in previous NTB s ubmissions, WTO Members are well aware of the 
significant time constraints on the DDA negotiations, the large number of NTBs of interest to various 
parties, and the need to agree on manageable appro aches that will pay real dividends to industry and 
contribute to growth and development for all WTO tr ading partners.  The United States believes that it 
is important to embark on a Member-driven pro cess.  Given the global nature of the automotive 
industry, a vertical approach makes it easier to energize industry associations around the world to engage in the Doha NTB negotiati ons and to add value.  By beginning an informal group discussion 
process on NTBs affecting the automotive sector, interested WTO Members can take advantage of the opportunity provided by the DDA to reduce and/or eliminate automotive NTBs, as well as the 
significant political support that the global automo tive industry brings to the NAMA negotiations.  
 
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