ASIA (Bloomberg): German Chancellor Friedrich Merz said he was pressed by leaders in Japan and Singapore on European Union policies that would favor regional content in the auto industry - and that the issue would have to be addressed.
The conservative leader, on a five-day trip to Asian countries, cited mounting concerns over the EU’s Industrial Accelerator Act, which would favor vehicles assembled in the region with substantial European content. Japan’s economy minister, Ryosei Akazawa, cited the IAA as a "matter of concern” and asked that Japanese products, particularly electric vehicles, receive equal treatment under the planned EU regulation.
"There is quite clearly a concern that what we mean by ‘Buy European’ will lead us into a new phase of protectionism,” Merz told reporters in Tokyo after meeting with Japanese Prime Minister Sanae Takaichi. "I haven’t been able to dispel the concerns that this applies only to the automotive industry and that we view it that way only in the context of public procurement,” Merz said.
"But we’ll have to discuss that again,” he added.
The German leader was on the second stop of a tour during which the competitive threat from China was among the main topics. After visiting Singapore and Japan, Merz will travel on to South Korea on Thursday as leaders in the region discuss how to respond to intensified trade pressure while keeping markets open.
Europe’s local-content rules still require agreement among member states and the European Parliament. Germany and France struck a deal on autos this month that opened the door for the UK to qualify for European subsidies under rules set out by the IAA. To benefit, the country will have to align on EU rules on foreign direct investment and trade defense, a reference to measures the bloc has taken against China.
Merz said he also discussed with Takaichi the possibility of Germany joining the British-Italian-Japanese project for the development of a next-generation fighter jet, the Global Combat Air Programme.
"We need to re-examine the GCAP project to see if Germany can play a role there and if Europe can become more involved,” Merz said. He added discussions among GCAP partners on details of the agreement were already well advanced. Japan pushed for a decision by the beginning of next year, Merz said, though he said he couldn’t promise a quick decision.
Germany pulled out of a joint fighter jet project with France earlier this year due to differences between industry partners. Another option for Berlin is to initiate a program with Sweden and Spain, though Merz indicated that that also carried risks.
"I don’t want to see us having to start from scratch again across the board,” the chancellor said. "We need to ensure that we reduce the number of systems, that we reduce the complexity of the systems, and above all that we increase order volumes.”
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