World Trade Organisation terms
The United Kingdom must secure interim, tariff-free, trade terms that protect its motor industry in case new, permanent, terms cannot be finalised by March 29th 2019 – the date it leaves The European Union, The Society of Motor Manufacturers and Traders said.
World Trade Organisation terms apply if there is no consensus (it seems). The Society – a trade association that represents the interests of the motor industry – fears such a prospect. Note why:
In The United Kingdom, import/export charges might make it more expensive to purchase vehicles produced in Europe
In The Europe Union, import/export charges might make it more expensive to purchase vehicles produced in The United Kingdom
This scenario is the “worst foreseeable outcome” for the sector, its employees and the economy, The Society said. It also concluded the complexity of negotiations make it unlikely a permanent deal can be reached in the time frame. “A final agreement would be hugely complex” and there is only twenty months left, it suggested.
It called for interim terms that:
- Maintain membership of the single market (free movement of goods, services, people and capital)
- Maintain membership of the customs union (no customs duties)
Industry wants success
The Society of Motor Manufacturers and Traders Chief Executive, Mike Hawes, explained: “We accept that we are leaving the European Union, and we share the desire for that departure to be a success.”
“But our biggest fear is that in two years time we fall off a cliff edge – no deal, outside the single market and customs union and trading on inferior WTO (World Trade Organisation) terms. This would undermine our competitiveness and our ability to attract the investment that is critical to future growth”, Mr Hawes concluded.
“That’s why we have to be honest with ourselves. If the UK cannot secure – and implement – a bespoke and comprehensive new relationship with the EU in two years time we need a back-up plan.”
“Having looked at all the alternatives, we need government to seek an interim arrangement whereby we stay within the single market and customs union until that new relationship is implemented”, he said.
United Kingdom relies on the motor industry
The Society of Motor Manufacturers and Traders also quantified the significance of the motor industry. In The United Kingdom alone it:
- Turns over £77.5 billion per-annum
- Employs more than 1,000,000 people
- Accounts for 12% of goods exported
- Invests £2.75 billion per-annum in research and development
- Enables 30+ manufacturers produce 70+ models