The UK’s automotive trade body, the Society of Motor Manufacturers and Traders (SMMT), is calling on the UK Parliament to ratify the Brexit trade agreement.
MPs are debating the draft deal with the EU today (Wednesday, December 30) after Parliament was recalled to put the deal into law, a day before the UK severs ties with the European Union.
The SMMT wants the immediate ratification of the draft UK-EU Trade and Cooperation agreement (TCA), to ensure all automotive companies benefit from continued tariff-free trade from January 1.
It says that the draft TCA delivers across several areas for UK automotive, keeping the sector connected to a market that accounts for eight out of 10 of its vehicle exports.
Furthermore, the SMMT says that the TCA delivers on the core ask to avoid tariffs for most finished vehicles, parts and components.
Mike Hawes, the SMMT’s chief executive, explained that for automotive, Brexit has always been about “damage limitation”.
“The draft Trade Cooperation Agreement, while no substitute for the completely free and frictionless trade with Europe we formerly enjoyed, will address immediate concerns,” he said.
“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.”
The SMMT says that the inclusion of specific provisions on transitional phase-ins for both electric vehicles (EVs) and batteries is also welcome.
However, it argues that the deal does not deliver some key asks, including formalising co-operation on the development of 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, it said.
Hawes continued: “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.”
It had faced a significant rise in costs, with tariffs imposed on cars and vans, if no deal had been agreed when the UK exits EU trading rules tomorrow (Thursday, December 31).