British carmakers seek clarity on ‘Made in EU’ rule as trade risks grow

[BRUSSELS] The UK’s automotive industry group SMMT said on Thursday carmakers need clarity now on whether Britain will count as ‘Made in EU’ in the European Commission’s Industrial Accelerator Act (IAA) policy as the ambiguity risks delaying investments.

The trade uncertainty comes at a time when both Britain and the EU face stiff competition from cheap Chinese electric vehicles.

“The objective was to bolster the competitiveness of European industry vis-a-vis the increasing challenge coming from further afield, low-cost countries. We are not a low-cost country. The intention of this regulation was not to hit the EU-UK trade,” SMMT chief executive Michael Hawes told reporters.

The IAA sets low-carbon and ‘Made in EU’ requirements for public procurement of, or subsidies for, making aluminium, cement, steel, renewable energy and green tech.

Under the proposal, countries with which the EU has trade agreements would be included as ‘Made in EU’ with any exclusions to be published once the IAA is adopted, which could take at least a year.

However, Hawes said the car industry needs a political statement on Britain sooner - ideally ahead of an EU-UK summit due to take place in June or July.

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An IAA annex specific to automakers would require vehicles to be assembled in the EU, which could exclude British automakers.

SMMT said the annual value of EU-Britain automotive trade was about 80 billion euros (S$120 billion) and the two sides remain each other’s biggest passenger car markets. Britain is also the EU’s biggest buyer of auto components, SMMT said, citing UN data said.

“So for a couple of years unless there is a clear indication from the outset ... it casts a cloud over the UK automotive industry. It’s harder to put UK investment on a boardroom agenda if you can’t cost the future. We’re trying to get a clear political statement now,” Hawes said. REUTERS