The European Automobile Manufacturers’ Association (ACEA), which represents companies including BMW, Toyota and Fiat, sounded its dire warning in a letter sent to Brussels chiefs earlier this week. In it, they stressed some aspects of the bloc’s current position were “not in the long-term interests of the EU automotive industry“.
Specifically, ACEA urged the EU to “reconsider its position” on rules which will determine whether or not goods will qualify for tariff-free trade.
The letter, sent on October 15, also called on the EU to reduce the percentage of components in a car which need to be made in Europe or Britain in order for the vehicle to benefit from any EU-UK trade deal.
ACEA is also urging the new rules to be phased-in to enable the industry to adapt to the changed business environment.
Michel Barnier has been urged to back down by car manufacturers
German car manufacturers are deeply concerned
Both sides are hoping to strike an agreement which offers tariff-free, quota-free trade on all goods – but talks appear to be stalled.
EU chief negotiator Michel Barnier has told businesses they must accept “short-term adaptation costs” in the name of protecting the bloc’s “long-term economic interests”.
His uncompromising approach has rattled companies concerned about the potential economic consequences for Europe of weaker trade links.
Michel Barnier talks to European Commission vice-president Maros Sefcovic in Brussels today
In June, more than 50 food and drink trade associations in the EU and UK wrote to Brussels urging more flexibility, suggesting a tariff-free trade agreement would be “meaningless” without a corresponding move to ensure companies were able to take advantage.
The European Commission confirmed it had received the letter, which has been seen by the Financial Times.
Various industries are particularly concerned by the so-called rules of origin in a future EU-UK trade deal.
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Nicolas Peter, BMW’s finance director
UK President Boris Johnson
Such rules seek to establish the extent to which a company is able to source components from different parts of the world while still counting the finished product as European.
Britain is pushing for a deal which will permit companies to count all EU and UK content as local, along with content from other countries with which Britain and Brussels both had trade deals — for example Japan.
However, Brussels has so far resisted including goods from other trade partners.
Trade deal timetable
The EU wants non-UK/non-EU content be limited to 45 per cent of the car.
ACEA wants the figure pushed up to 50 per cent “in line with the UK’s position”.
The letter adds: “Long-term supplier contracts bind manufacturers to specific suppliers for many years and this should be taken into account in the FTA.”
BMW is one of the letter’s signatories
Nicolas Peter, BMW’s finance director, outlined his concerns during an online press conference last week.
He said: “The European Automobile Manufacturers Association (ACEA) has estimated that it could cost car manufacturers and suppliers from 10 to 11 billion euros, so we need tariff-free trade.
“And even then, it must be seamless.
“We have a just-in-time production system, so customs administrative processing must be efficient.”