British cars sold in Canada will be hit by import taxes of an
average £3,000 each from April if the UK and Canada fail to
resume trade talks. That’s the message of a letter from the UK
carmakers’ trade body published today by the Business and Trade
Committee.
Following Brexit, the UK and Canada agreed to “roll over”
arrangements under the EU-Canada Trade Agreement, from which the
UK had benefited as an EU member. Under that roll-over agreement,
British cars exported to Canada must be at least half made in the
UK or Canada in order to be exempt from tariffs. The agreement
further allows EU parts to count as UK-originating for the
purposes of meeting this 50% threshold – but only until this
April, creating a looming tariff “cliff edge”.
The UK and Canada had been negotiating a new trade agreement to
safeguard this trade - but the UK walked away from the talks in
January. Claims by the Secretary of State for Business and Trade,
that there were “ongoing”
discussions on the tariff cliff-edge have been contradicted by
the Canadian government.
The Society of Motor Manufacturers and Traders (SMMT) has now
warned the Select Committee that the impending tariffs could make
British cars less competitive in Canada – and that things will
get worse in September, when the UK-only threshold rises to 55%.
The Society urges the UK and Canada “to get back around the
negotiating table”.
Committee Chair said, “Parliament is still in
dark about exactly what is going on with trade talks with one of
our closest allies. Ministers say talks are alive. But our
Canadian friends say talks have stopped. What is now crystal
clear however is that while confusion reigns, a huge tariff bill
is hurtling towards British car-makers with real risks to
automotive jobs across the Britain’s industrial heartlands.”
Notes to editors
- The full letter from SMMT to
Committee Chair can be found here.
