Britain should retain tariff-free access to EU, says UK car industry

News | January 18th, 2017 by 2
Rolls Royce Goodwood plant 13 750x500

Last summer, UK citizens were asked to vote whether they want to remain members of the EU or not, and the final decision to leave the …

Last summer, UK citizens were asked to vote whether they want to remain members of the EU or not, and the final decision to leave the European Union took everyone by surprise. The Brexit vote in June also left anyone wondering whether it can keep tariff free access to the European common market, prompting various carmakers with factories in the United Kingdom to review their production plans.

BMW has a vested interest in the UK market with its MINI factory in Oxford and the Rolls-Royce plant in Goodwood. In a statement made on Tuesday, BMW said that Britain should retain tariff-free access to the European Union’s single market.

MINI Oxford plant 67 750x474

In a major speech on Tuesday, Prime Minister Theresa May said that Britain would leave the EU’s single market and cannot remain a full member of its tariff-free zone but will seek unfettered trade with the bloc.

“We acknowledge the Prime Minister’s announcements today and urge her to ensure the UK’s negotiations with the EU result in uncomplicated, tariff-free access to the EU single market in future,” a BMW spokeswoman said.

Nearly 60 percent of the parts in an average British-assembled car are made abroad and some components travel to and from the continent several times in the manufacturing process. The Society of Motor Manufacturers and Traders said that the overwhelmingly foreign-owned sector, which built more cars last year than in any other for over a decade, must retain the key elements of unfettered trade in order to keep prospering.

“We need … a deal which includes participation in the customs union to help safeguard EU trade, trade that is tariff-free and avoids the non-tariff and regulatory barriers that would jeopardize investment,” Chief Executive Mike Hawes said in an emailed statement to Reuters.

“The danger is that UK-built cars may not qualify under most normal free-trade agreements,” he said.

“Generally rules of origin require around 50 to 55 percent local content. Currently in the UK, the average car has about 41 percent local content. Being part of the customs union, basically European content counts so that’s not an issue.”

Global automakers have also warned that a return to World Trade Organization tariffs of 10 percent on car exports and around 3 percent on engines could make their British plants uncompetitive.

Late last year, BMW board member Oliver Zipse told Reuters that there is no need for the Bavarians to decide now on the future of its MINI plant in Oxford.

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