Brexit: the absence of the agreement would be harmful to the UNITED kingdom for the car industry, say MPs

A committee has warned that Britain leaving the European Union, without a trade agreement would be “extremely damaging” to the British car industry, according to a report by MPs.

The Business, Energy and Industrial Strategy, the Committee asserts that the failure to reach an agreement would lead to a 10% tariff being introduced on the British-made cars exported to the EU, which, in turn, cause a shift of production towards countries remaining in the EU. The report says that would put “hundreds of thousands” of jobs at risk.

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The uk exports just under 80% of the cars that it produces, which amounts to 13% of all goods exported from the UNITED kingdom with 56% of those going to the EU. The report notes that 86% of all vehicles sold in the UK are imported, with 70% of the total coming from the EU.

The impact of Brexit the Automotive industry’ report, produced after the Commission has heard the figures involved in the UK and EU automotive industries, said that because of the UK car industry supply chains are “inextricably interwoven with those of the EU, any tariffs or non-tariff barriers (such as border delays and added bureaucracy), arising from Brexit would affect UK competitiveness.

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It adds that future trade agreements “would need to satisfy the majority of the content of European cars built in the UK”, and calls for an agreement to allow UK content in the car in order to be classified as the EU, according to the rules of origin.

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When you consider the post-Brexit regulatory framework, the report noted: “We have not identified any potential benefits of [regulatory] divergence from the EU, only the costs. It is advisable that the Government is seeking in the negotiations to preserve the modalities for the certification of vehicles throughout the EU.”

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The report also examined the potential opportunities that arise from Brexit, through Britain’s ability to negotiate independent trade agreements with countries outside the EU. It noted: “We have discovered that it is not realistic to expect an expansion of foreign trade to compensate for the loss of trade for Europe, resulting from a difficult Brexit. In addition, any new bilateral trade agreements set by the Government is unlikely to lead directly to a significant increase in investment and jobs in the UK automotive sector.

“Maintaining a good access to the single market is more important than to ensure the freedom to establish new trade agreements with third countries.”

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When one considers the freedom of movement within, the EU report also calls on the Government to give priority to guarantee the production process of sectors like the car industry able to “maintain a sufficient access to the skills essential to ensure that you can fill in the gaps in an appropriate way with british workers.”

The report concludes: “There are advantages of Brexit for the automotive sector, for the foreseeable future. The negotiations are an exercise in damage limitation.”

11-a member of the Business, Energy, and Industrial Strategy Committee is chaired by the Labour Rachel Reeves MP. The committee characteristics of Labour, Conservative and Scottish National Party members.

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