UK trade deal: EU auto makers call for far-reaching agreement

Every year, almost 3 million motor vehicles worth €54 billion are traded between the EU and the UK, and cross-Channel trade in automotive parts accounts for almost €14 billion. With approximately 30,000 parts used in the construction of a single car, the automotive industry heavily relies on just-in-time manufacturing schedules.

“With this interdependence in mind, it is essential that tariff free trade and an open flow of goods and services are a cornerstone of the ongoing negotiations between the EU and the UK,” stated ACEA’s Director General, Eric-Mark Huitema. “Any future trade agreement must therefore combine zero tariffs, workable rules of origin, simplified customs requirements and ensure the absence of technical barriers to trade.”

The rules of origin for motor vehicles should reflect the very high level of integration between the EU and the UK and the unique circumstance in which this negotiation is taking place, according to ACEA. Special consideration should also be given to the trade in batteries for electrified vehicles, given the lack of EU or UK battery manufacturing capacity.

“Developing and deploying battery technologies is a fundamental challenge for the automotive industry, it is also key to Europe’s ambitious climate agenda,” explained Mr Huitema. “The rules of the future trade deal should not limit manufacturers’ ability to bring low- and zero-emission technologies to the market.”

Divergent legislation could become a significant impediment to trade, requiring manufacturers to adapt or develop new technologies in order to comply with different requirements. Huitema: “In their common interest, the EU and the UK should actively maintain alignment across all key automotive legislation.” This includes existing legislation on type approval, safety and environmental performance, as well as the framework for future technologies such as automated vehicles.

“The clock is ticking for these complex negotiations, and we are very concerned that the time remaining under the transitional arrangement is insufficient, especially given the on-going COVID-19 crisis,” warned Huitema. The unintended consequence of this could be a no-deal scenario. In terms of tariffs alone, this would have a massive impact, with some €6 billion being added to the cost of doing cross-Channel trade.

“Such an outcome would be catastrophic to the automotive sector, and to the European economy in general, and should be avoided at all reasonable cost.”

It is essential that tariff free trade and an open flow of goods and services are a cornerstone of the ongoing negotiations between the EU and the UK.