UK minister: China wins unless EU budges on post-Brexit electric car trade

UK minister: China wins unless EU budges on post-Brexit electric car trade

POLITICO — 2023-09-12

News from Brussels

China will be “the biggest beneficiary” if the EU and the U.K. cannot resolve a post-Brexit “cliff-edge” on trading electric vehicles (EVs), a U.K. minister warned.

Industry Minister Nus Ghani said that Beijing will emerge as the winner if the EU does not give ground on the cut-off date, set for January 1 2024, at which point a 10% tariff will be applied to EVs traded between the U.K. and the bloc.

Ghani told lawmakers on Tuesday that the tariffs would open the door to “cheaper imports, potentially Chinese-made cars” to fill the gaps in EU and U.K markets.

Giving evidence to the House of Commons business and trade committee, Ghani added: “There will be impact on not just the U.K. car industry but also ... manufacturers in Europe as well.”

Chinese imports already represent a growing share of the electric vehicle market in the U.K. and the EU. Ghani’s comments will increase pressure on negotiators to resolve the post-Brexit trade dispute, with less than four months until the cut-off date.

Ghani said she was “confident” the two sides could resolve the issue, given the likely impact on automotive industries on both sides of the Channel — but added that the “pattern of these discussions is that they always go to the wire.”

The dispute centers on so-called “rules of origin” requirements under the U.K.-EU Trade and Cooperation Agreement (TCA). Under a temporary waiver in the TCA, up to 70% of an electric battery’s components can come from outside the U.K. or EU before tariffs kick in.

But that threshold will plummet to 40% on January 1 — meaning vehicles exceeding this limit will be slapped with a 10% levy when traded between the EU and U.K.