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Brexit deal must be ratified immediately, says UK auto sector

By / 6 months ago / Latest News / No Comments

The UK automotive industry is calling for the immediate ratification by UK Parliament of the draft UK-EU Trade and Cooperation agreement (TCA), in order to ensure all automotive companies benefit from continued tariff-free trade from 1 January 2021.

The SMMT said the TCA delivers on the core ask to avoid tariffs for most finished vehicles, parts and components

Industry body the Society of Motor Manufacturers and Traders (SMMT) said the draft agreement, while no substitute for the benefits provided by remaining in the EU, avoids a ‘no deal’ disaster and “provides hope for the future”, with a foundation on which to build, domestically and internationally, in 2021.

It added that the draft TCA delivers across several areas for UK automotive, limiting damage in some others, and keeping the sector connected to a market that accounts for eight out of 10 of its vehicle exports.

The TCA delivers on the core ask to avoid tariffs for most finished vehicles, parts and components. The inclusion of specific – but still challenging according to the SMMT – provisions on transitional phase-ins for both electrified vehicles and batteries has also been welcomed.

However, it said the deal does not deliver some key asks, including diagonal cumulation with common trading partners such as Japan, Korea and Turkey, and Technical Barriers to Trade – such as mutual recognition of Type Approval schemes and technical services – or formalising co-operation on the development of mutually beneficial regulations and standards after the end of Transition. Nor does it prevent increased administration and potential for friction at the border, as the UK leaves the single market and customs union.

Mike Hawes, SMMT chief executive, said: “For automotive, Brexit has always been about damage limitation, and the draft Trade Cooperation Agreement, while no substitute for the completely free and frictionless trade with Europe we formerly enjoyed, will address immediate concerns. The TCA provides the opportunity for tariff and quota-free trade, foundations on which the industry can build. Even with immediate ratification, however, there will be just hours to adjust to new trading rules, so a phase-in period is critical to help businesses adapt. All efforts should now be made to ensure its seamless implementation, with tariff-free trade fully accessible and effective for all from day one.

“Further ahead, we must pursue the wider trade opportunities that Brexit is supposed to deliver while accelerating the UK’s transition to electrified vehicle manufacturing. With the deal in place, government must double down on its commitment to a green industrial revolution, create an investment climate that delivers battery gigafactory capacity in the UK, supports supply chain transition and maintains free-flowing trade – all essential to the UK automotive sector’s future success.”

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.