Tokyo Seeks Equal Treatment for Japanese Cars in Proposed EU Support

Key Facts

Japanese Prime Minister Sanae Takaichi plans to raise the treatment of Japanese cars in European support programs at the Japan-Germany summit scheduled for October 28, according to a Nikkei report published on October 25. The move follows reports that Germany and France agreed to exclude vehicles made in countries including Japan from a proposed European system favoring cars. Tokyo is calling for products made in Japan to be treated on an equal basis with EU products. The issue centers on the terms for eligibility for support and public procurement, and whether they cover vehicles produced in Japan. But the European proposal has not yet been adopted, so the German-French agreement does not represent a final EU decision.

The Japanese government said that products made in Japan "should be treated on an equal basis with those made in the European Union," according to a report by Jiji Press carried by Nippon.com. The demand puts Tokyo at odds with the prospect of tying European benefits to where a vehicle is made or to low-carbon production requirements. The issue matters to Japanese automakers because the support terms could determine whether their vehicles qualify for benefits granted to European cars. The Japanese government has warned against any move to deny Japanese vehicles the preferential treatment under consideration for European vehicles. The practical question for companies remains the scope of those benefits as discussions on the proposal continue.

Japan's Chief Cabinet Secretary Minoru Kihara said Tokyo had conveyed its concerns to the European side "at every level" to ensure Japanese companies are not harmed. That shows the government's efforts extend beyond the upcoming summit to contacts with the European Union at various levels. Economy, Trade and Industry Minister Ryosei Akazawa said Japan would continue pressing for its products to be treated on an equal basis with European products. He warned that excluding Japanese products may have more than a limited effect, saying "it is very difficult to say the impact will be small." The warning puts the potential impact of the rules on companies at the center of Japan's objection.

Akazawa said the European Union had told him the proposal was not aimed at Japan, but he saw a conflict between the goal and the means. Bloomberg, citing TBS Cross Dig, quoted the minister as saying that "the goal and the means do not match." The position distinguishes the EU's stated rationale for the proposal from Tokyo's concern about how it would be applied to Japanese products. The question is whether conditions favoring European production would be applied in a way that excludes vehicles from Japan, even without officially targeting them. The Japanese government has not said the exclusion is a final decision; it has instead called for equal treatment to be guaranteed before the rules are finalized.

The legislative framework is the European Commission's proposed Industrial Accelerator Act, which includes "Made in the EU" or low-carbon production requirements in public procurement and support programs for selected sectors, including cars. This proposal is distinct from the political agreement reported between Germany and France on excluding vehicles made in countries including Japan; the bilateral position does not mean the European Union has adopted a final rule. The European Parliament and the Council of the European Union are due to review the proposal before trilogue negotiations with the Commission begin. If adopted, the legislation's rules could take effect as early as 2028. The impact on Japanese automakers will therefore depend on the review and negotiations, and on the version ultimately adopted.

The Japan-Germany summit on October 28 is expected to give Takaichi and German Chancellor Friedrich Merz an opportunity to raise the issue directly, according to the Nikkei report. The meeting comes as Tokyo seeks to ensure that support conditions do not put Japanese companies at a disadvantage relative to European firms. Review by the European Parliament and the Council, followed by trilogue negotiations with the Commission, will be the next steps before the final text becomes clear. If the proposal is approved, 2028 is the earliest possible date for its implementation, according to an estimate by Jiji Press. Until then, the treatment of Japanese vehicles remains a subject of negotiations and a Japanese diplomatic demand, not an effective EU rule.