Brussels is ready to reject UK attempts to secure smooth market access for electric vehicle exports, rejecting UK proposals to maintain supply chains after the Brexit transition period.
EU diplomats say the European Commission has been wary of the plans proposed by British negotiators last week. Automakers can export duty-free vehicles to the EU, giving them the right to procure large quantities of parts from other countries.
Four of the five cars produced in the UK are exported, and more than half are now exported to the EU. British auto plants owned by Nissan, Toyota and PSA all rely on European sales for more than half of their business.
Last year, Nissan sold more than 30,000 UK-made Leaf electric cars to Europe, and Toyota exported nearly 120,000 hybrid models through the channel.
Some of the UK’s major auto plants, such as Toyota and Nissan, are already importing significant amounts of electrical technology from Japan for use in British-made cars, and will be hit if tariffs are imposed when exporting finished cars. European Union.
The UK plan, as seen by the Financial Times, greatly eases these requirements compared to other trade deals by greatly relaxing the rules requiring commodities to contain a minimum of locally produced content. Trade agreements tend to stipulate that about 50% of products must be procured locally to qualify for preferential market access.
The agreement proposed by the UK will be applied to the term “electric vehicle” that encompasses electric and hybrid vehicles.
The UK has proposed that Japanese parts should be considered “UK” because the EU and UK have a trade agreement with Tokyo. The EU will have the same rights for exports to the UK. Doing so will make it easier for your car to meet the local content criteria required to qualify for the zero tariffs offered by a potential EU-UK trade agreement.
More generally, the UK is trying to minimize the amount of local content needed to ensure tariff-free access to electric vehicles. That offer suggests that 70% of the parts may not be UK as a starting point.
This threshold will be gradually lowered during the early years in which trade deals were established. Initially, it drops to 60%, and then to 50% by 7 years after the agreement enters into force.
Cars exported under the UK plan could benefit from these high thresholds for placement on Japanese parts or especially for non-local content.
Many mass-market automakers in the UK are already struggling to boost their UK content levels above the threshold needed to avoid export tariffs, but the shortage of domestic suppliers for key components is hindering the industry.
However, EU officials said the plan revived fears among some member states that the UK would remain an assembly hub exporting to a single market despite the UK’s withdrawal from the block. This is a threat that Michel Barnier, the EU’s top Brexit negotiator, has repeatedly spoken of.
Barnier, who clarified reservations on the UK plan at a meeting with EU automotive industry representatives on Monday, warned earlier this year that the EU should prioritize “long-term economic benefits” over “short-term adaptation costs” for business.
Strong Gyeong-seon of the committee backed by countries, including France, comes despite the industry’s demand for flexibility on both sides of the channel, taking into account the current lack of self-sufficiency in the production of battery and electric vehicle parts in Europe.
One person familiar with negotiations said the committee could be more flexible about batteries than finished cars.
The European Automobile Manufacturers Association warned that restrictions on country of origin regulations for battery technology should be “corrected for the increase in European battery manufacturing capacity”.
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