CANBERRA, Australia - The Australian government said it will give the nation's automobile manufacturing industry an aid package worth as much as $1.3 billion (U.S.) from 2001 to 2005.
The Automotive Competitive-ness and Investment Scheme will give automakers, auto parts manufacturers and related companies credits on import duties based on their investment in new capital assets and technology development.
Those credits are transferable, and companies that do not import auto parts themselves can sell the import duty credits to companies that do, Industry Minister John Moore and Trade Minister Tim Fischer said in a statement.
The plan will provide 'an incentive for industry to continue its progress toward global competitiveness and a self-sustaining future in the context of trade liberalization and the globalization of the car industry,' the ministers' statement said. 'It has been designed to reward higher performing firms that are prepared to invest and innovate.'
The value of the credits will be limited to 5 percent of the value of a company's sales of eligible products that were produced in Australia in the previous year.
Automakers will have their duty-free allowance for imported cars and parts increased from the current 15 percent to 25 percent. The additional 10 percentage points will be reserved solely for fully manufactured vehicles, a spokesman for Moore said. Carmakers also will be eligible for a 10 percent credit on investment in new assets.
Component producers will get a 25 percent credit on investment in new capital assets and a 45 percent credit on technology development expenses.
'The scheme will be consistent with World Trade Organization rules and will ensure a stable transition towards a secure, global position for Australia's car industry,' Fischer said.
The program will coincide with a freeze on tariff reductions the government announced last year, rejecting the recommendations of its own Industry Commission.
Under the current regime, import tariffs on autos and auto parts will fall to 15 percent as previously scheduled, then hold steady until 2005, when they will fall to 10 percent, and a committee will then review further reductions.
The Industry Commission had recommended beginning with an import tariff cut of 2.5 percentage points a year in 2000.
'Support for investment and product development in Australia's automotive industry was essential in developing an industry structure and competitive firms that were able to withstand tariff reductions from 20 percent today to only 10 percent in seven years' time,' said Malcolm Steward, director of the Federation of Automotive Products Manufacturers in Canberra.