Australia's Experience with Local Content Programs in the Auto Industry : Lessons for India and Other Developing Countries

Pursell, Garry

World Bank, Washington, DC

关键词: ASSEMBLY PLANTS;    AUTOMOBILE INDUSTRY;    BALANCE OF PAYMENTS;    BUREAUCRACIES;    CONSUMER GOODS;   

DOI  :  10.1596/1813-9450-2625
RP-ID  :  WPS2625

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Local content programs - especially inthe auto industry - accompanied many import substitutionpolicies during the 1960s and 1970s, but most were abandonedin countries that liberalized trade in the 1980s, and early1990s. The high economic costs of these programs, and theirinherent incompatibility with open, nondiscriminatoryinternational trade, were recognized in the Uruguay RoundAgreement on Trade-Related Investment Measures (the TRIMSagreement), which required developing countries to phasethem out over five years. Despite this, a number ofdeveloping countries have introduced new local contentprograms, and are currently pressing to relax the TRIMSrules, and to extend the year 2000 phase-out deadline. Aleader in this effort at the World Trade Organization (WTO)is India, which in 1995 introduced an"indigenization" program for its auto industrythat typifies similar programs in other developingcountries. Under India's program, permission to importauto components for assembly, is contingent on agreements toreach specified levels of "indigenization", plusenough commitments to export cars, or components to coverthe foreign exchange cost of imported components. The systemis implemented by a "de facto" ban on the importof built-up cars, and import licensing of car components.The United States, and the European Union challenged thesystem as a violation of the TRIMS agreement. Since 1996,similar arrangements in Brazil, Indonesia, Mexico, and thePhilippines have been the subject of WTO disputes. Australiahas a long, well-documented history of local contentprograms in the auto industry. Australia's programsstarted in 1948, and began to wind down only in 1985.Australia's strongly counter-competitive programs - theadministering authority was effectively cartellizing theindustry - led to market fragmentation, high costs andprices, and lower national income. They retarded, ratherthan promoted technical change, and reduced, rather thanincreased, employment in auto production, distribution, andrepair. Export requirements increased the scheme'seconomic costs, which involved bureaucratic micro-managementof the industry, and high transaction costs for thegovernment, and the private sector. Once the schemes wereestablished, they were very difficult to remove, owing totheir populist appeal, their lack of transparency, and thevested interests of the international, and domestic firmswhich relied on them, as well as other interest groups,including the administering bureaucracies, auto industrytrade unions, and politicians in electorate areas in whichcar production was concentrated. The Australian experience,and similar experiences of developing countries with theseprograms during the 1960s, and 1970s, suggest that they donot serve the economic interests of India, and the otherdeveloping countries which are presently seeking tolegitimize them at the WTO. On the contrary, the presentTRIMS agreement is a useful external counterweight to theinfluence of domestic lobbies, and populist arguments, whichin Australia, and elsewhere have made local content schemes,politically difficult to oppose, and once established, evenmore difficult to remove.