European automakers and suppliers on Monday called for an “urgent” and “ambitious” free trade deal, warning that a no-deal on “Brexit” could result in trade losses of 110 billion euros by now 2025.
The call to negotiators from the European Union and the United Kingdom comes at a time when the transition period for Brexit is more than 15 weeks away, supported by the largest representative organizations of car manufacturers and suppliers at European level and by 21 associations. nationals, including the United Kingdom.
“Negotiators on both sides must now do their utmost to avoid ‘no deal’ at the end of the transition,” says the Association of Manufacturers for the Automotive Industry (AFIA) – one of 21 associations that joined the —- num release sent to editors, where it notes that a “no-deal” scenario would cost the European auto industry around € 110 billion in trade losses over the next five years.
A “no-deal”, the statement read, would still put thousands of jobs at risk, given that the sector accounts for around 16.6 million jobs – the equivalent of one job in Europe. 15 in the EU and UK – as well as the production of around three million cars and vans made in the EU and UK over the next five years.
These figures would add to the roughly 100 billion euros in production value lost this year due to the Covid-19 pandemic.
To avoid a second economic blow to the sector, the industry calls on negotiators to urgently guarantee an agreement that provides for zero tariffs, modern rules of origin and avoids different regulations on both sides of the Channel, ”he said. -he declares.
The absence of an agreement in force until December 31, 2020, warn industry associations, would entail the obligation for both parties to maintain trade relations under the non-preferential rules of the World Trade Organization (WTO), including a 10% tariff on cars and up to 22% on vans and trucks.
“These tariffs would almost certainly be passed on to consumers, making vehicles more expensive, reducing choice and affecting demand,” the statement said, adding that this would happen because these tariffs are “much higher” than the margins of the company. most manufacturers.
In addition to the auto industry, auto makers will also be affected by tariffs, if there is a no-deal that will “increase the price of production or lead to more imports” of components from other countries outside the EU “it will be more competitive”.
In this context, the European Association of Automobile Manufacturers (ACEA, in English), the European Association of Automobile Suppliers (CLEPA), as well as the 21 national associations which have joined this call, stress that reaching an “agreement ambitious free trade plans ”between the EU and the UK are“ the key to the future success ”of this industry.
Any agreement must include zero tariffs and quotas, appropriate rules of origin for both thermal engine vehicles and vehicles powered by alternative energies, as well as components and powertrains and a regulatory framework to avoid discrepancies ” , complain the associations.
For industry representatives, it is also essential that companies are able to know in advance detailed information about the business terms agreed and in effect on January 1, 2021 in order to make the necessary preparations.
Quoted in the press release, Eric-Mark Huitema, Director General of ACEA, recalls that the challenges facing the EU automotive industry are significant and affirms the need for an ambitious agreement or risk seeing the sector in already suffer the effects of Covid-19, only to be “hit hard by a double blow”.
Sigrid de Vries, secretary general of CLEPA, points out that a no-deal Brexit “would disrupt the integrated automotive supply chain and hit the industry at a critical time”.