The Business, Energy and Industrial Strategy (BEIS)
Committee calls for the Government to keep the
closest possible relationship with the existing EU regulatory and
trading framework to give UK volume car manufacturing a realistic
chance of survival post-Brexit.
In a report published today on The impact of Brexit on
the automotive sector, the BEIS
Committee says a no-deal puts hundreds of thousands
of UK jobs at risk and threatens hundreds of millions of pounds
of inward investment. The Society of Motor Manufacturers and
Traders (SMMT) estimated the introduction of trade barriers to
result in a £4.5bn drop in exports while other studies pointed to
a greater decline.
The report finds that non-tariff barriers, in the form of border
delays and increased bureaucracy, will also impact on UK
competitiveness. The report recommends the Government places a
high premium in its Brexit negotiations on securing frictionless
trade for the automotive sector.
MP, Chair of the Business,
Energy and Industrial Strategy (BEIS) Committee,
said: “The car industry is one of the UK’s
great manufacturing successes. Innovative and efficient car
plants across the country provide thousands of jobs and the
automotive sector is a major contributor to our economic growth.
There is no credible argument to suggest there are advantages to
be gained from Brexit for the UK car industry. Regulatory
consistency and friction-free trade benefits car companies,
consumers and car-workers. The Prime Minister now needs to ensure
common-sense pragmatism prevails and spell out the Government’s
intention to seek continued regulatory and trading alignment with
the EU in the automotive sector.”
The UK automotive industry is largely export-led with Europe as
the primary market[1]. The industry is
also one of the most closely integrated sectors with the EU. The
UK automotive sector’s success is built on the complex supply
chains that stretch throughout Europe: typically, parts are
transferred through different countries before being assembled
into the final product.
The report takes a hard look at potential opportunities arising
from Brexit but finds it unrealistic to expect an expansion of
trade overseas to outweigh the loss of trade to Europe arising
from a hard Brexit. The report also states that any new bilateral
trade deals secured by the Government are unlikely to lead
directly to a significant increase in investment and jobs in the
UK automotive sector. The Committee finds that retaining good
access to the single market is more important than securing the
freedom to secure new trade deals with third countries.
On the key issue of the future regulatory regime, the report does
not identify any potential benefits from divergence from the EU,
only costs. The report recommends the Government seeks in the
negotiations to preserve existing arrangements for the
certification of vehicles throughout the EU, either as part of a
Mutual Recognition Agreement or some alternative arrangement. To
maximise trade opportunities with the EU – the UK’s biggest
trading partner - and to provide certainty to global
manufacturers, the Government should also aim to retain
regulatory alignment with the EU regulatory framework for the
short to medium term.
The report also calls on the Government to seek a deal on
immigration that enables the sector to access the full range of
skills it requires and further incentivise locating relevant
research and development in the UK once we leave the EU.
ENDS
