What's Happening?
The Society of Motor Manufacturers and Traders (SMMT) is urging the EU to include the UK under the 'Made in EU' provisions of the proposed Industrial Accelerator Act (IAA). The IAA aims to establish requirements
for public procurement and subsidies across strategic sectors, including electric vehicles, batteries, steel, and clean technology, to counter China and prevent job losses in Europe. SMMT Chief Executive Mike Hawes emphasizes the need for a political commitment ahead of the EU-UK summit, as ambiguity over the UK's status is affecting investment decisions. The EU-UK automotive trade is valued at approximately €80bn annually, with each side being the other's largest passenger car market. Excluding UK-built vehicles and parts from IAA incentives could disadvantage UK automakers.
Why It's Important?
The inclusion of the UK in the 'Made in EU' framework is vital for maintaining the competitiveness of the UK automotive sector, which is highly integrated with EU supply chains. The IAA's exclusion of UK-built vehicles and parts from incentives linked to fleet electrification and CO2 super credits could put UK automakers at a disadvantage, affecting investment and trade relations. The UK automotive industry is a significant contributor to the economy, and its exclusion from the IAA could undermine its international competitiveness. The upcoming EU-UK summit presents an opportunity to secure a political statement that could alleviate concerns and strengthen trade relations.
What's Next?
The EU-UK summit scheduled for the summer is likely the soonest opportunity to address the SMMT's concerns and secure a political statement regarding the UK's inclusion in the 'Made in EU' framework. The legislative passage of the IAA could take at least a year, and the final list of trusted partners will only be confirmed after the Act is adopted. The UK government is preparing legislation to enable 'dynamic alignment' with EU rules in certain areas, which could reduce border friction and deepen the trading relationship. However, this approach has faced criticism from pro-Brexit supporters who view it as a concession of sovereignty.
Beyond the Headlines
The SMMT's lobbying efforts highlight the broader challenges facing the UK automotive sector in the post-Brexit landscape. The UK's position on European trade relations remains complex, with ongoing debates about sovereignty and alignment with EU rules. The IAA's focus on countering China and supporting European industry underscores the competitive pressures facing the UK automotive sector. The UK's lack of distinct tariff barriers on Chinese-made vehicles contrasts with the EU's approach, adding another layer of complexity to trade relations. The outcome of the EU-UK summit and the IAA's legislative passage will have significant implications for the future of UK-EU automotive trade.
