Global alliances, production changes and mature markets: Japanese FDI in the European car industry and their implications for bilateral trade policies

Abstract

The article reviews the changes in production, investment and trade patterns which have affected Japanese car exports to the EU and their foreign direct investments (FDI) in Europe. Global manufacturing alliances with shared productions and global component sourcing with lean production for most makers have changed the classical trading and FDI patterns beyond recognition. As a result, the trade policy instruments of old have lost most of their meaning and relevance. The abolition of EU import tariffs on Japanese cars in the context of the forthcoming foreign trade association (FTA) with Japan will hence in all likeliness have only a minimal impact on future trade and investment in the sector.