UK car industry 'welcomes' tariff-free post-Brexit trade agreement

by James Attwood, Autocar UK 25 Dec 2020


British car industry bosses have welcomed the post-Brexit trade agreement reached between the UK and the European Union, which is set to avoid the introduction of tariffs on cars and car parts.

The trade deal, which Prime Minister Boris Johnson estimates is worth around £660 billion (Rs 5,978,940 crore), was agreed after years of negotiation between the UK government and EU officials. The deal still needs to be ratified by both the UK parliament and the 27 EU member states.

Johnson described the agreement as a “comprehensive Canada-style free trade deal”, and said it will “allow UK goods and components to be sold without tariffs and without quotas in the EU market.”

European Commission president Ursula von der Leyen said: "It was a long and winding road, but we have got a good deal to show for it. It is fair, it is a balanced deal, and it is the right and responsible thing to do for both sides."

The full text of the deal has yet to be released, and while the deal will avoid tariffs it will introduce extra paperwork for goods shipped across the UK-EU border. The new agreement also includes continued co-operation on issues including climate change, energy and transport, although details of what this entails have yet to be released.

Car industry reaction to the new UK-EU trade deal
UK car industry leaders have repeatedly pushed for such a tariff-free trade deal, which they said was vital given the frequent movement of both car parts and completed vehicles across the UK-EU border. More than 85 per cent of the cars made in the UK are exported, with the EU the biggest single market.

The Society of Motor Manufacturers and Traders (SMMT) had estimated a no-deal Brexit could cost the car industry £55 billion in five years, and add an average of £2000 to the price of a car in the UK.

SMMT boss Mike Hawes welcomed the new deal, saying it “provides a platform for our future relationship.”

He added: “We await the details to ensure this deal works for all automotive goods and technologies, including specifics on rules of origin and future regulatory co-operation. A phase-in period is critical to help businesses on both sides adapt and efforts should now be sustained to ensure seamless implementation, with tariff-free trade fully accessible and effective for all from day one.

“We will continue to work closely with government to ensure all companies are as prepared as possible in the limited time left.”

The European Automobile Manufacturers' Association (ACEA) also welcomed the deal, which it described as "a great relief" for manufacturers that avoided "the catastrophic effect of a no-deal Brexit".

“There is no other industry that is more closely integrated than the European automotive industry, with complex supply chains stretching right across the region,” said ACEA head Eric-Mark Huitema.

But the ACEA noted that it could not make a full assessment of the deal until the full agreement was revealed, and noted that the agreement would introduce "even more red tape and regulatory burden" for the industry.

Huitema added: "Major challenges still lie ahead, as trade in goods will be heavily impacted by barriers to trade in the form of new customs procedures that will be introduced on 1 January 2021.”