REQUEST FOR GUIDANCE: SINGLE IMPORTS OF VEHICLES

C O N F I D E N T I A L SECTION 01 OF 02 WARSAW 000674 SIPDIS STATE PASS TO USTR STATE FOR EEB E.O. 12958: DECL: 06/10/2018 TAGS: ECON ETRD BEXP PL SUBJECT: REQUEST FOR GUIDANCE: SINGLE IMPORTS OF VEHICLES TO POLAND Classified By: Economic Counselor Richard Rorvig for reasons: 1.4 (b,d) ¶1. (U) This cable contains a request for guidance regarding a proposed Polish law that could threaten several hundred million dollars of U.S. trade in vehicles. -------------- Background: Homologation -------------- ¶2. (U) Polish law specifies three procedures applicable to vehicles imported from outside the European Union: -- (1) conversion to European specifications, which costs roughly US$2,000 for most cars; -- (2) an initial technical inspection, which currently costs PLN 163 (about US$76); and -- (3) homologation, an in-depth analysis of a given make of vehicle. That analysis can cost as much as EUR 5,000 (about US$7,900). Only two bodies in Poland are authorized to do homologation tests: the Motor Transport Institute (ITS),and the Automotive Industry Institute (PIMOT). Of these procedures, the first two must be performed for all vehicles. However, homologation sometimes can be avoided. Currently, Polish law allows dealers and individuals to import and register one vehicle per year without homologation. ¶3. (U) For a given vendor, homologation only has to be performed once for a given make/model. Thus, the allocated per-vehicle cost of homologation is relatively unimportant to a dealer who sells, say, 100 vehicles of a particular type. -------------- Rising Imports -------------- ¶4. (C) As the dollar has weakened, more and more Poles are importing individual cars. In 2006, Poland imported US$85 million worth of vehicles from the United States. In 2007, Poland imported at least US$217 million of vehicles from the United States. If figures for the 1st quarter of 2008 hold up for the rest of the year, in 2008 Poland will import about US$342 million of cars from the United States. In other words, in the last two years, imports of vehicles from the United States will have increased 300 percent. ¶5. (C) A General Motors representative based in Poland told EconOff that he does not believe there are significant imports from the United States into Poland through the dealer system. This suggests that much of the rise in vehicle imports from the United States is attributable to single imports by individuals. 
 ¶6. (U) Individuals also import single vehicles from Switzerland, Norway and Canada. Officials at the Polish Ministry of Infrastructure told EconOff that imports of cars from China are rising rapidly. In addition to Ford, GM and Chrysler brands, makes of cars imported from the United States include BMW (Series 3),Lexus (model RX),Mercedes (M class and E class),Toyota (Camry) and Volkswagen (Golf and Touareg). An analysis of imports from the United States in January 2008 showed that they were divided roughly equally among (a) cars less than five years old, (b) cars 5-10 years old, and (c) cars more than 10 years old. ¶7. (SBU) Some fine print: the figures in paragraph 4 above are based on data provided by the Polish Ministry of Economy. These data are not publicly available, and were provided only for the first 11 months of 2007. Post annualized the 2007 data. The annualized figure may understate the actual magnitude of trade, as sales of most products increase in December. -------------- Proposed Change To Polish Law -------------- ¶8. (SBU) Officials in the Polish Ministry of Infrastructure told EconOff the single import exception is "overused," and that the EU has given Poland until the end of 2008 to change the rule. They have drafted a bill that would change Polish law to require homologation by all importers -- including by individuals importing a single vehicle. The cost of homologation would be capped at EUR 5,000. Potentially, the cost could vary depending on type of vehicle, costing more or WARSAW 00000674 002 OF 002 less for a car than a truck, based on the procedures needed. The Ministry hopes to move its bill to the Council of Ministers by the end of June, and to have it approved by the Polish parliament by year-end. The Ministry officials asserted that changing the law is not only required by the EU, but also essential for safety on Polish roads. -------------- Request for Guidance -------------- ¶9. (C) Post has not received any complaints from U.S. auto manufacturers concerned by the proposed change. One U.S. car company with whom we raised the matter stated that they would welcome the change in the law to the extent it would eliminate parallel imports into the Polish market, thereby reducing competition for the company's dealers. Notwithstanding the dollar's weakness, adding EUR 5,000 to the cost could make importing a single vehicle uneconomical, leading to a significant loss of U.S. trade. Given the competing equities in play, post requests guidance on what position, if any, it should take with respect to the proposed change in Poland's homologation rules. ASHE