Interim EU deal urged for car industry to avoid ‘cliff edge’

Time 5 years ago

THE government needs to sort an interim arrangement with the EU to stop the UK car industry plunging ‘off a cliff edge’ as Brexit nears, trade body the Society of Motor Manufacturers and Traders urged today.

It said such a stopgap agreement was needed to maintain membership of the single market and customs union until a final agreement on a new relationship with the EU was negotiated and put in place.

The SMMT said a final agreement would be ‘hugely complex’ and such a comprehensive agreement couldn’t be reached by March 2019. Without interim arrangements being agreed, businesses would be forced to trade under World Trade Organisation (WTO) rules, which it labelled ‘the worst foreseeable outcome for the sector, its employees and the British economy’.

Speaking today as the sector announced its annual performance figures, the SMMT said it was time to be pragmatic about what could be achieved in the time available and what the consequences would be if the UK left without a deal. It said the UK and EU automotive sectors were highly integrated and any new relationship would need to address tariff and non-tariff barriers plus regulatory and labour issues, all of which would take time to negotiate.

SMMT chief executive Mike Hawes said: ‘We accept that we are leaving the European Union and we share the desire for that departure to be a success. But our biggest fear is that in two years’ time we fall off a cliff edge – no deal, outside the single market and customs union, and trading on inferior WTO terms. This would undermine our competitiveness and our ability to attract the investment that is critical to future growth.

‘That’s why we have to be honest with ourselves. If the UK cannot secure – and implement – a bespoke and comprehensive new relationship with the EU in two years’ time, we need a back-up plan. Having looked at all the alternatives, we need government to seek an interim arrangement whereby we stay within the single market and customs union until that new relationship is implemented.’

The EU is by far the UK’s biggest automotive export market, taking more than half its finished vehicles, and the sector already exports to more than 160 global markets. The SMMT has said that trade needs to be tariff-free and as frictionless as possible.

Commenting on the SMMT’s call for action, Honda Motor Europe senior vice-president Ian Howells, said: ‘Honda remains committed over the long term to its sales and manufacturing activities in the UK and Europe. The recent £200m investment into Swindon’s Honda UK manufacturing plant has evolved the facility into the global production hub for the Civic hatchback, exporting to North America, Japan and the EU.’

Echoing the SMMT, he added: ‘My request would be for the UK government to do all it can to seek a deal that will promote free and frictionless trade between the UK and the EU, while ensuring the continued competitiveness of the small and medium-sized businesses that make up our supply chain.’

Picture: Anna Gowthorpe/PA Wire/PA Images

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