Dear Rt. Hon. Liam Fox MP,
We are writing in response to approaches made to us by representatives of the automotive sector from across the UK in connection with the situation that will confront them in March next year.
They face immediate difficulties arising from the rules of origin requirements of the EU’s treaties with third countries. If we take the example of a car that is assembled in the EU, but where the engine is made in the UK, the inclusion of the engine takes it perilously close to being disqualified from the rules of origin requirements. In other words, the final car (including the British engine) will not be considered to have been made in the EU after March next year, should Brexit go ahead on that date.
While the rules of origin requirements differ according to the different EU treaties they require that between 55% (South Korea FTA) or 60% (South Africa FTA) of the value of the final product must have been created within the single market for goods to count as of EU origin. The car companies we have been talking to have made it clear that they will need to shift production of valuable car parts to within the single market this autumn in preparation for our leaving the EU in March next year.
Given the lack of clarity around the Brexit deal, and the uncertainty around trade relationships that will begin in March next year, automotive manufacturers are already making plans to shift production into countries in the EU27 where they have manufacturing plants. This process will accelerate after the summer if they have no greater clarity.
Please can you let us know:
• What conversations you are having with the leaders of the many countries the EU has signed FTA deals with requesting that they allow manufactured output produced in the UK to continue to count as of EU origin during the transition period?
• Whether you have asked that EU negotiators make this request on behalf of the UK.
And please can you provide:
• Copies of written commitments or public statements from 3rd countries that have accepted to extend their EU FTAs to the UK during the transition period
• An explanation of how rules of origin will be handled post-transition since uncertainty remains in the medium term
Given that the automotive sector accounts for 856,000 jobs, many of them high-skilled and well-paid, and many in some of our most economically vulnerable regions, we would ask you to take steps urgently to ensure that the car companies have the clarity they need to keep their investment and their production in the UK.
Catherine Stihler, Labour Party
Richard Ashworth, Conservative Party
Catherine Bearder, Liberal Democrats
Molly Scott Cato, Green Party
Richard Corbett, Labour Party
Julie Girling, Conservative Party
Theresa Griffin, Labour Party
Wajid Khan, Labour Party
Jude Kirton-Darling, Labour Party
Jean Lambert, Green Party
David Martin, Labour Party
Alex Mayer, Labour Party
Alyn Smith, Scottish National Party
Charles Tannock, Conservative Party
Keith Taylor, Green Party
Derek Vaughan, Labour Party
Julie Ward, Labour Party