Agreement Concerning the Adoption of Uniform Technical Prescriptions for Wheeled Vehicles, Equipment and Parts which can be Fitted and/or Used on Wheeled Vehicles and the Conditions for Reciprocal Recognition pf Approvals Granted on the Basis of these Prescriptions
5.1
This chapter reviews the Agreement concerning the Adoption of Harmonized Technical United National Regulations for Wheeled Vehicles, Equipment and Parts which can be Fitted and/or be Used on Wheeled Vehicles and the Conditions for Reciprocal Recognition of Approvals Granted on the Basis of these United Nations Regulations (the proposed Agreement), which was transmitted to Parties on 14 December 2016 and tabled in the Parliament on 7 February 2017.
5.2
The proposed Agreement will supersede the Agreement Concerning the Adoption of Uniform Technical Prescriptions for Wheeled Vehicles, Equipment and Parts which can be Fitted and/or Used on Wheeled Vehicles and the Conditions for Reciprocal Recognition pf Approvals Granted on the Basis of these Prescriptions, signed in Geneva in 1958, amended in November 1967 (Revision 1) and again in October 1995 (Revision 2) (the existing Agreement).
5.3
According to the terms of the existing Agreement, the proposed Agreement will be deemed accepted by the Parties on 14 June 2017 if no country objects. If no objection is lodged, the proposed Agreement will enter into force three months from the end of the objection period, on 14 September 2017.
5.4
This chapter will first provide an overview of the Agreement, the operation of United Nations (UN) regulations and the multilateral fora which coexist alongside the Agreement. The chapter will then examine the changes incorporated into the proposed Agreement in detail, before presenting the Committee’s conclusions and recommendation.
Background
5.5
The existing Agreement was developed to reduce barriers to international trade in the motor vehicle industry by harmonising national and international standards. It provides for the development of UN regulations to standardise technical prescriptions relating to safety, anti-theft, emissions and energy for new wheeled vehicles, their equipment and parts.
5.6
Under the existing Agreement, UN regulations are adopted by a vote of two‑thirds majority among the Parties to the existing Agreement in the UN World Forum for Harmonisation of Vehicle Regulations (WP.29). As of July 2016, the WP.29 has adopted 138 UN Regulations.
5.7
Any Party to the existing Agreement has authority to assess and approve any manufacturer’s design of a regulated product against the relevant UN regulation, regardless of the country in which that component was produced. Once a Party has determined that the product complies with the UN regulation, every other Party to the existing Agreement is obliged to accept that approval and regard that vehicle or component as legal for import, sale and use. Parties issuing an approval to a UN regulation are also obliged to meet technical and administrative requirements.
5.8
In July 2016, there were 50 signatory countries to the existing Agreement, including all major European countries and key Asian manufacturing nations such as Japan, the Republic of Korea, Malaysia and Thailand.
5.9
Australia acceded to the existing Agreement on 25 February 2000, declaring a reservation under Article 11 that it would not be bound by Article 1. This reservation created an opt-in option for Australia to accept UN regulations adopted by WP.29.
5.10
Australia has since accepted 40 out of 138 UN regulations as domestic implementation regulations–the Australian Design Rules (ADRs)–have gradually aligned with the UN regulations. The Department of Infrastructure and Regional Development (DIRD) explained why Australia has only accepted 40 UN regulations:
There is a whole smorgasbord of UN regulations available. If you look at US regulations, there are about 65. The ADR has about 65. UN regulations have a lot of extra to be picked up, and they also have some old ones that are not used anymore.
5.11
The ADR and the UN Regulations adopted by Australia are both acceptable Australian standards for the import of vehicles. Forty-seven ADRs have been harmonised with the corresponding UN regulations and mirrors their content. A further seven are partially harmonised, meaning that extra requirements are needed on top of the UN Regulation to meet Australian standards required for import.
5.12
The National Interest Analysis (NIA) states that ‘it has been a long-term Government policy’ to harmonise the ADRs with UN regulations as ‘harmonisation avoids unique national standards, minimising the impediments to international trade’. Harmonisation with UN regulations also ‘ensures Australian consumers may access vehicles conforming to the highest standards at the lowest possible cost’.
5.13
Australia does not issue vehicle compliance approvals under UN regulations as it is able to do under the existing Agreement, as vehicle manufacturers and importers in Australia have ‘cost effective access to overseas testing and approval arrangements’.
5.14
In the Committee’s report on the existing Agreement, tabled in 1999, the Committee accepted that each action to adopt a UN regulation should be considered as implementation action within the overall framework of the treaty, rather than an individual and separate treaty action in its own right. In that report, the Committee accepted the then Minister for Transport and Regional Services, the Hon John Anderson MP’s offer to advise the Committee on each occasion that regulatory action was taken.
The Agreement
5.15
In response to Committee concern, DIRD assured the Committee that the Agreement will not compromise Australian standards:
We have in place our own Australian Design Rules under the Motor Vehicle Standards Act. All vehicles that are to be supplied to the Australian market will need approval under that act. By signing up to the international Agreement, we can accept approvals against the applied UN regulations as an alternative to meeting the Australian rules. The Australian rules apply no matter what to those vehicles that come from countries that are not party to the Agreement.
Changes
5.16
The proposed Agreement incorporates a number of revisions to the existing Agreement along two themes:
the process of adoption and approval of UN regulations; and
establishing a whole-vehicle approval process.
Adoption and approval of UN regulations
5.17
The proposed Agreement makes a number of changes relating to the adoption and approval of UN regulations, including:
allowing Parties flexibility to issue and accept approvals pursuant to earlier versions of UN regulations;
allowing Parties to vote in favour of new UN regulations without being obliged to apply them immediately;
changing the voting requirements for the adoption of new and amended UN regulations from two-thirds majority to four-fifths, overcoming the potential of influence of regional voting blocks, such as the European Union, and thereby increasing the influence of individual Parties;
clarifying existing procedures and guidance material for the implementation of UN regulations including harmonising procedures for issuing and numbering UN approvals, procedures for Parties to issue exemption approvals for new technologies and general conditions for virtual testing methods; and
setting timeframes for Parties to rectify a non-conforming vehicle and, in certain circumstances, obliging all Parties to inform each other of non‑conformity immediately.
5.18
The NIA states that these revisions seek to strengthen the approval and compliance regimes as well as improving the quality and reliability of the harmonised regulation system.
5.19
Further, DIRD asserts that these revisions will make the proposed Agreement more attractive to new Parties, ‘particularly countries with developing automotive markets and regulatory systems’. DIRD clarified:
It is about encouraging more Contracting Parties to participate and changing the voting arrangements so they are not influenced as much by large block of countries voting. That now requires a four-fifths majority instead of a two thirds majority for new technical regulation to be mandated.
5.20
In response to the Committee’s question on how the proposed Agreement addresses the issues that arose out of the Volkswagen emissions scandal, DIRD highlighted how the changes to the compliance regime would facilitate better communication about problems:
Initially, one improvement in this revised agreement is an obligation to quickly notify of non-conformance of product, to do that electronically to all other contracting parties and to share information about a noncompliance or non-conformance with initial type. In a [Volkswagen] type example, there would have been a much faster response.
Whole vehicle approvals
5.21
The proposed Agreement will enable the implementation of a new UN regulation, UN Regulation No. 0, creating the International Whole Vehicle Type Approval (IWVTA).
5.22
The current approval process involves multiple separate approvals issued for components and systems, with Parties responsible for approving the whole vehicle on a national basis. If adopted, the IWVTA will streamline this process by allowing Parties to the proposed Agreement to issue mutually recognised approvals for whole vehicles, thereby eliminating the duplicated national processes.
5.23
The NIA clarifies that, under the whole-vehicle approval system, only one Party need approve the whole vehicle in accordance with proposed UN Regulation No. 0. The whole vehicle’s approval is subsequently recognised by all other Parties that apply UN Regulation No. 0.
5.24
The adoption of the IWVTA in UN Regulation No. 0 will be subject to a separate decision in the WP.29 forum.
5.25
The NIA explains that if Australia chooses to apply UN Regulation No. 0, the reform will ‘streamline the approval of vehicles for the Australian market and so reduce the costs for business and the Australian Government’. DIRD explained the savings:
The projected savings—and it is work that is being done elsewhere to do with Reg. 0 when it comes in—are around $80 million per year available to further harmonise the Australian Design Rules. I would only be estimating at this stage, but the IWVTA also reduces the audit requirement and there might be half as much again in that.
5.26
The NIA also clarifies that the IWVTA process will not increase Australia’s obligations under the proposed Agreement, rather, ‘vehicles being supplied into the Australian market will have conformed to a more robust approval process’. DIRD explained how the implementation of the IWVTA standards would ensure vehicle safety:
The implementation of new vehicle standards is not a fast process. It is only ever implemented after many years of testing and assurance that the standards will deliver a safe product. Standards are not introduced, or new regulations, before technology and sufficient testing give the level of assurance that they will deliver a safer product.
5.27
In response to the Committee’s query on the current status of UN Regulation 0, DIRD informed the Committee that:
It has mostly been drafted and Australia was involved with that. The revision to the Agreement has to go through to then pick up UNR0. If it goes through, then UNR0 will come through in about November and be available for use mid–2018.
Opt-in provisions maintained
5.28
Despite these changes, the proposed Agreement maintains the opt-in measure for accepting UN regulations in Australia’s domestic environment. It will not mandate any UN regulations domestically, impose mandatory restriction on business or increase regulatory intervention. Rather, the proposed Agreement only obliges Australia to accept a product into the domestic market where it is approved to a UN regulation that Australia has chosen to apply.
Economic benefit
5.29
According to the NIA, the proposed Agreement is consistent with existing industry practices, and as such, is not expected to pose any additional cost on governments, manufacturers or consumers.
5.30
DIRD stated that the savings to consumers, in money terms, would be about $80 million per year, or about $100 per vehicle.
5.31
The Committee also queried how the proposed Agreement would provide savings to government. DIRD highlighted that the introduction of the IWVTA would provide those savings:
That will be on the audit side. If the IWVTA is taken to its conclusion, we will not need to go and audit factories around the world. We will accept the product on face value, with the right approval documents.
5.32
The Committee queried whether raising Australia’s vehicle emissions standards up to that of the United States or Europe, would increase vehicle prices. DIRD responded by stating that it was a question of which standard was being used:
That would depend on what standard you wanted to pick up. If you picked up the international standard, that would be the lowest cost option. Different countries manufacture different standards around the world.
Reasons for taking proposed treaty action
5.33
The NIA asserts that the revisions contained within the proposed Agreement will attract new signatory countries, particularly those with developing automotive markets and regulatory systems. The NIA states that this would, in turn, ‘have substantial road safety benefits globally’ and ‘Australia… would benefit from new trade opportunities’. Further, revisions have improved the quality and reliability of the approval of vehicles’ compliance with UN regulations, as well as the robustness and integrity of these assessments.
5.34
The ability for a whole vehicle to be assessed and approved under a UN regulation will ‘significantly reduce the compliance and regulatory costs for the Government, industry and consumers’.
5.35
Australia was a ‘strong contributor’ to the development of the proposed revisions and has been active at international forums in encouraging other countries to adopt the proposed Agreement.
Implementation
5.36
According to the NIA, Australia would not require any new or amended legislation to give effect to the proposed Agreement. The obligation to accept approvals to UN regulations under the existing Agreement is facilitated through the Motor Vehicle Standards Act 1989 (the Act), and the ADR’s which are determined under the Act.
5.37
The Act currently provides for the making of ADR’s for road vehicles and their components. This includes the incorporation of UN regulations into national vehicles standard documentation.
5.38
The NIA states there are no inconsistencies between the proposed Agreement and the Act. The Act enables and facilitates the obligations contained in the proposed Agreement.
Committee comment
5.39
The Committee supports the efforts to streamline international regulations and the application of the highest safety standards for consumers in a global international vehicle market. The Committee questions the claim in the NIA that there will be a ‘significant’ reduction in compliance costs, but agrees that the Agreement should not result in increased costs for government or consumers.
5.40
The Committee notes previous arrangements of considering UN regulations as an implementation action within the framework of the treaty, rather than as a separate and individual treaty action. The Committee also notes the previous arrangement of being informed of each regulatory action taken to harmonise ADRs with UN regulations, and requests that both arrangements continue under the proposed Agreement.
5.41
The Committee supports the Agreement on the Harmonization of Wheeled Vehicles and recommends that binding treaty action be taken.
5.42
The Committee supports the Agreement concerning the Adoption of Harmonized Technical United Nations Regulations for Wheeled Vehicles, Equipment and Parts which can be Fitted and/or be Used on Wheeled Vehicles and the Conditions for Reciprocal Recognition of Approvals Granted on the Basis on these United Nations Regulations and recommends that binding treaty action be taken.
The Hon Stuart Robert MP
Chair
28 April 2017