Automobile industrial groups in the United Kingdom and European Union countries have urged negotiators in London and Brussels to conclude a free trade deal at an early date.
The groups said a lack of an agreement will further damage the auto sectors, which are already reeling from the coronavirus pandemic. The groups released an emergency joint statement on Monday.
The statement warns that vehicles will be subject to a 10-percent tariff if the Brexit transition period ends without a free trade deal.
The auto groups fear that the higher levies will erode demand and lead to a loss of 110 billion euros, or roughly 130 billion dollars, over the next five years.
Signing a free trade accord has become a distant prospect after the UK government submitted a contentious bill to parliament on Wednesday.
The legislation would override part of the Brexit withdrawal agreement between the UK and the EU. The bloc is demanding the British government retract the bill.
The UK and the EU have close economic ties. They have been negotiating a free trade accord to maintain smooth trade after the transition period expires at the end of this year.
The Brexit agreement ensures that EU rules will apply to trade between Northern Ireland, which is part of the UK, and Ireland, an EU member.
But the UK’s proposed bill would grant the government the power to set regulations if an agreement isn’t reached in the ongoing free trade talks.
A potential lack of a free trade deal will also affect Japanese automakers that export vehicles they assemble in the UK.