SMMT urges parliament to ratify trade deal

The Society of Motor Manufacturers and Traders (SMMT) is today calling for the immediate ratification by UK Parliament of the draft UK-EU Trade and Cooperation agreement (TCA), to ensure all automotive companies benefit from continued tariff-free trade with our largest market from 1 January 2021.

While no substitute for the benefits provided by remaining in the EU, the TCA provides hope for the future, with a foundation on which to build, domestically and internationally, in 2021.

Given the deeply integrated nature of UK-EU automotive manufacturing and the critical importance of preferential EU market access to the sector’s competitiveness, SMMT has worked closely with government to help achieve an outcome within which the sector has a chance to recover.

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, albeit challenging, provisions on transitional phase-ins for both electrified vehicles and batteries is also welcome.

However, 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 we leave the single market and customs union.

With new customs requirements already being introduced, the commitment to simplify administration is much needed and we look forward to seeing a firm timeline for its implementation to reduce the overall burden. Doing so will help minimise disruption at the border, vital when every minute of delay can cost the sector £50,000.

Securing a deal with the EU that works for automotive has been the industry’s top priority for the last four and a half years. It is, therefore, of great relief that this could now be in place with the potential to unlock continued preferential access to key markets around the world. With the TCA in place, the industry will continue to work closely with government to identify essential areas for investment and support to ensure UK Automotive retains its global competitiveness, helping transition the country into post-Brexit, post-Covid prosperity, while delivering on ambitious environmental goals.

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.”