Britain’s car industry faces being slapped with huge EU import tariffs even if the UK does a trade deal with Brussels, manufacturers have been warned.
Brexit negotiator Lord Frost has warned the industry that a bid to have foreign-made car parts used in vehicles assembled in the UK considered ‘British’ for duty reasons has been rejected.
It means that even if a ‘zero tariff’ deal is done to exempt cars that roll off UK assembly lines from EU import duties, they will face extra levies if the parts in them were sourced from outside the UK and EU.
Manufacturers in Britain currently some use parts made in plants in countries like Japan and Turkey, which are then shipped to the UK for assembly.
An anticipated deal is expected to allow any components sourced from EU countries to count as British, an idea known as ‘cumulation’.
But in a letter to manufacturers, seen by the BBC, Lord Frost said: ‘The (European) Commission has made clear that it will not agree third-country cumulation in any circumstances, which we regret, but obviously cannot insist upon.
Brexit negotiator Lord Frost has warned the industry that a bid to have foreign-made car parts used in vehicles assembled in the UK considered ‘British’ for duty reasons has been rejected
It means that even if a ‘zero tariff’ deal is done to exempt cars that roll off UK assembly lines from EU import duties, they will face extra levies if the parts in them were sourced from outside the UK and EU
‘I am sorry to say that so far they (EU negotiators) have neither been willing to discuss these nor share any proposed text with us.’
The BBC said it has also obtained a separate draft legal text in which the UK requested the manufacturing of goods such as electric cars and batteries to be counted as British, even if the majority of components are imported.
Both documents reportedly refer to the need for UK manufacturers, even if a deal is reached, to ensure that goods exported from the UK are British-made and contain a certain amount of British parts, believed to be about half.
It came as the Government risked further rows with Brussels after Boris Johnson’s controversial Brexit legislation, which allows the Government to break international law, was backed by MPs.
The Internal Market Bill last night cleared its final stage in the House of Commons by 340 votes to 256 and now passes to the Lords for further scrutiny.
It allows ministers to override parts of the Brexit Withdrawal Agreement brokered with Brussels last year, an act which the Government concedes breaches international law ‘in a limited and specific way’.
The EU has threatened legal action if it is implemented.
Critics, including all five living former prime ministers, also argue this would wreck the UK’s reputation as a nation which honours its agreements.
But the Government insists it needs the powers to safeguard the integrity of the UK amid fears the EU could block goods travelling between Great Britain and Northern Ireland.
The Prime Minister was forced to water down the legislation earlier in the Bill’s passage to appease a Tory backbench rebellion – MPs will now be given a vote before ministers are able to wield such powers.
No Conservative MP voted against the Government tonight and the Bill sailed through the Commons with an 84-vote majority.
Yet a handful of Tories, including former Tory prime minister Theresa May, abstained from voting.
However the Bill’s smooth passage into law will likely face hurdles in the pro-Remain Lords which has previously thwarted Brexit legislation.