TRADE DEAL ON ELECTRIC VEHICLES SECURED
The Somerset Guardian, 10th January 2024
Our relationship with the European Union (EU) has been strained for some time, which is one of the reasons why we voted to leave. One significant bone of contention has been the United Kingdom’s (UK) long standing commitment to free trade while the EU is essentially protectionist.
Against this background, it is welcome news that an agreement that has finally been reached between the UK and EU to extend trade rules on electric vehicles until the end of 2026.
To benefit from zero tariffs under the Trade and Cooperation Agreement, businesses must prove their products include a minimum level of EU or UK manufactured content. These requirements are known as “rules of origin” and help determine where products originate rather than where they are shipped from.
The Trade and Cooperation Agreement has introduced a staged approach for electric vehicles and batteries which required phased increases in these rules of origin requirements. However, owing to the global supply chain caused by the pandemic and Russia/Ukraine conflict, the UK and EU have agreed to cancel the 2024 changes.
The agreement will facilitate UK-EU tariff-free trade in electric vehicles and has prevented 10% tariffs being levied on this trade from January. Industry anticipates that this will save car manufacturers and consumers up to £4.3 billion and provide long term certainty.
This follows the recent announcement of a £2 billion Nissan led investment to produce two new electric vehicles in Sunderland, Tata’s investment of over £4 billion in a new 40 GWh gigafactory, BMW’s investment of £600m to build MINI EVs in Oxford, Ford’s investment of £380 million in Halewood to make Electric Drive Units and Stellantis’ £100m investment in Ellesmere Port for EV van production.
With this key development, those who questioned our post-Brexit success will begin to see the rewards that leaving the EU will reap - and this is only the start.
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