Holden Says Australia-US FTA To Boost Automotive Trade Sun Feb 8, 7:20 PM ET CANBERRA -(Dow Jones)- Vehicle manufacturer Holden Ltd. said Monday the free trade agreement between Australia and the U.S. will strengthen already robust automotive trade between the two nations. Holden, the local arm of U.S. auto heavyweight General Motors Corp. (NYSE:GM) , said the pact will boost opportunities to import and export vehicles and components. In the fiscal year ended June 30, 2003, the U.S. was the second-largest export destination for Australian automotive products, valued around A$900 million, behind Saudi Arabia. The U.S. was the second-largest automotive product importer to Australia in 2002-03, totaling A$2.5 billion, behind Japan. Holden Chairman and Managing Director Denny Mooney said the free trade pact is a sensible outcome for both sides. "From the Australian perspective, we believe it will provide the best possible opportunities for Australian car makers and component manufacturers seeking to export to the United States," said Mooney. "It is also a positive outcome from an import perspective because Holden is the industry's largest importer of engine components and transmissions from the United States," he said in a statement. Last year, Holden exported more than 36,000 vehicles, the company's second highest year on record behind 1973. This included the start of 18,000 Pontiac GTO coupe exports, based on the Holden Monaro model, to the U.S. Mooney noted Holden's longer-term goal is to achieve annual export sales of 70,000 worldwide, with new programs being investigated to China and South Korea. Australia's A$17 billion auto industry is dominated by four local units of overseas manufacturers, being General Motors, Mitsubishi Motors Corp., Ford Motor Co. (NYSE:F), and Toyota Motor Corp. (NYSE:TM). ----- AUTOMOTIVE Australia and the United States have agreed to eliminate customs duties on almost all automotive products from the day the agreement enters into force. including the 25 per cent US customs duty on Utes ("pick-up trucks"). Australian duties on passenger motor vehicles will be phased out, to zero in 2010. Summary The United States has agreed to remove, from day one, all tariffs on automotive products. For most automotive products, US tariffs are already quite low. Included amongst these, however, is the elimination of the 25 percent tariff on pick-up trucks that has prevented Australian manufacturers exporting utes to the United States. Australian tariffs on finished passenger motor vehicles will be phased out gradually between entry into force of the agreement and 2010, in response to concerns expressed by local manufacturers about the impact of removing tariffs immediately. Australia's tariffs on all other automotive goods, in particular car parts and commercial vehicles, will be eliminated from day one of the Agreement. Gains for Australia The United States is the largest market in the world for autos and auto parts. The AUSFTA will enhance the integration of Australian manufacturers into the US market. Removing the high US tariff on light commercial vehicles, in particular, provides a real opportunity and challenge for Australian ute manufacturers. Auto parts exports of $310 million in 2002 will also be boosted by the immediate removal of tariffs. Though US tariffs on automotive parts are relatively low, their removal will provide Australian manufacturers with an edge against competitors from other US import markets in an industry where margins are slim.