The European Union has snubbed calls for the Brexit trade deal to be altered over warnings that looming tariffs on electric vehicles will put jobs and exports at risk.
Under the deal, 10 percent tariffs on electric car exports are due to come into force in January, although EU leaders are under mounting pressure to suspend the duty.
Thierry Breton, European Commissioner for the Internal Market, has insisted that the deal cannot be altered.
His reluctance to budge comes after Stellantis, the parent company for 14 automotive brands including Vauxhall and Jeep and the world number three carmaker by sales, warned if the tariffs weren’t lifted temporarily, then it would have to close operations in the UK, with thousands of job losses.
The European Automobile Manufacturers’ Association (ACEA), which represents 14 major car, truck, van and bus makers, has also warned billions of euros in exports to Britain would be risked if the deal isn’t reconsidered.
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Despite the warnings, Mr Breton argued the car industry is not only made up of big brands and it is his job to make sure there is a level playing field.
He said the automotive industry is made up of hundreds of thousands of companies which provide everything needed for a car.
Calling for a rethink, Marco Forgione, Director General of The Institute of Export & International Trade, told Express.co.uk: “The UK and the EU’s automotive industries enjoy a strong and mutually dependent relationship.
“It’s also a hugely important sector to economies across the continent, not least one which employs thousands of people throughout the supply chain. So it is critical that dialogue remains open and constructive in order to find solutions that work for both parties.
“On the subject of the EU-UK Trade and Cooperation Agreement, it is worth remembering it is up for review in 2025 – so there will be an opportunity for all parties to agree on any amendments then.
“But in the interests of continued trade and growth, I hope talks will remain open and they will continue to work to find solutions to any acute issues affecting sectors on both sides of the channel.”
In order to qualify for tariff preferences, goods exported under EU free-trade agreements must comply with “rules of origin”. The current transitional rules in the EU-UK Trade and Cooperation Agreement (TCA) allow batteries assembled in Europe to qualify for European origin.
These rules will become much more restrictive from January 1, requiring all battery parts as well as some critical battery material to be produced in either the EU or UK to qualify for tariff-free trade.
As many electric vehicle batteries are imported from China, the tariffs are expected to hit carmakers in Britain and the EU.
They could also lead to higher EV prices for consumers and therefore hinder efforts to cut carbon emissions. Britain wants to postpone the tariffs until 2027.
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The ACEA has called for a three-year postponement, warning tariffs could total £3.7billion (€4.3bn) and potentially reduce EV production by 480,000 units.
Recent reports suggest Germany is in favour of waiving the tariffs, but the French government’s position is believed to be unclear.
Society of Motor Manufacturers and Traders (SMMT) Chief Executive Mike Hawes said the need to resolve the issue is now urgent.
Mr Hawes told Express.co.uk: “Upcoming rules of origin for batteries pose a significant challenge to manufacturers on both sides of the Channel, with the prospect of tariffs and price increases on electrified vehicles that would discourage consumers from buying the very models needed to achieve shared climate change goals.
“With now just over 100 days until this situation arises, we look to the EU and UK to agree urgently a pragmatic solution to delay the introduction of overdemanding origin requirements for batteries, something which is perfectly possible within the existing UK-EU TCA (Trade and Cooperation Agreement) framework.”
The renewed pleas for the EU to back down come after Mr Breton told the Guardian: “If something has been negotiated, it shouldn’t be changed.”
He argued that the European Commission and EU leaders are bound by competition laws to consider the whole automotive “ecosystem” and not favour one category of the industry over another.
He added: “It is a global supply chain. I call it the ecosystem, and I have to look at, as commissioner of industry, not at one single part of this ecosystem but all of the ecosystem.”
He added each sector had to be treated fairly because they have the same rights under competition law.
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