Senior figures in Britain’s £80 billion-a-year car industry want the UK to remain in the EU’s customs union and dismiss the two alternatives being considered by the Government as unworkable.
Bosses say the benefits of the customs union have been the ‘foundation’ for the growth of an industry that now supports 800,000 jobs. An end to the arrangements would create ‘major disruption’ and imperil the sector, with firms slashing staff and moving operations abroad.
The UK motor industry has thrived in recent years, thanks to ‘free and frictionless trade’ with the European Union, they said.
Crucial component: The UK’s car industry now supports 800,000 British jobs
The Government has desperately sought to reassure big car firms over the UK’s future, including Japanese giants like Nissan and Toyota, which together employ around 10,000 people.
‘It’s no secret that a lot of Japanese companies are, to be frank, concerned by the prospect of Brexit,’ said Shinichi Iida, minister for public diplomacy and media at the Embassy of Japan, which represents the interests of Japanese firms in the UK.
‘They invested in this country in the first place as a gateway to Europe.’
Under the current system, car makers and other suppliers can ship parts and finished vehicles across EU borders without checks or tariffs. This allows them to run ‘just in time’ systems. This means they can respond quickly and efficiently to demand.
Theresa May’s Government has committed to leaving the customs union. Her cabinet is debating two alternatives: a new customs partnership and a system dubbed ‘maximum facilitation’. Both options in their current form are dismissed by senior car industry figures.
Under the customs partnership blueprint, favoured by May and Business Secretary Greg Clark, the UK would act on the EU’s behalf, applying the bloc’s tariffs to imported goods, then collecting and passing the money on to Brussels.
The ‘max-fac’ option, favoured by pro-Brexit Cabinet members such as Foreign Secretary Boris Johnson, would introduce a customs border between the UK and EU, but would use new technologies to help make it as smooth as possible.
Clark said last week Toyota was ‘making a big decision’ over whether to locate its next plant in the UK, or in mainland Europe.
A senior executive at one major foreign car maker condemned May’s customs partnership as a ‘non-starter’, a ‘blue sky’ idea and ‘unworkable’. The executive said he is ‘frustrated’ because when he talks to Brussels, officials are ‘confused’ over why Britain is debating the merits of the customs partnership versus max-fac when neither is acceptable to the EU.
Smooth ride: Aston Martin has called for free and frictionless trade to continue
He added that the motor industry needs to retain all of the benefits of the customs union, and suggested the UK should remain inside it under a different name.
‘We’re not fussed about labels. If we call it “the customs union”, that’s fine. If it’s “a customs union”, that’s fine. If we call it something else but it delivers the benefits, that’s fine as well.’
Ian Robertson, BMW’s special representative in the UK, told The Mail on Sunday that there was a ‘high degree of frustration building’ in the industry over future customs arrangements, saying that neither option being considered by the Government was good enough.
On the customs partnership option, he said: ‘Honestly, the IT capability needed even to develop the processes would take an inordinate amount of effort, resources, cost and time – and at the end of it, would it really be worth it? I think, in that instance, maybe some people would say it’s not worth the investment.’
He added that BMW was pushing for the new system to have all ‘the outcomes of the current customs union within a new framework’.
Ford, which employs 13,000 people in the UK, also indicated a preference for staying in the customs union.
A spokesman said: ‘Remaining in the EU customs union would preserve tariff-free trade and minimise customs friction – both of these are essential.’ The bosses of luxury car makers Aston Martin and McLaren Automotive also showed their support for keeping frictionless trading arrangements with the EU.
Andy Palmer, president and chief executive of Aston Martin, said: ‘We urge the Government to create the customs and trade conditions that will enable car parts and fully-built vehicles to move without hindrance between the UK and the EU.’
Mike Flewitt, chief executive of McLaren Automotive, said: ‘It’s vital we continue to work with Government to minimise or do away with tariffs to boost exports, help imports of components and also that we maintain the ability to hire the brightest and best talent.’
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the UK’s ‘free and frictionless trade’ with the EU had been ‘the foundation of the UK automotive industry’s recent success’.
He added: ‘Quite simply, any model that fails to replicate the benefits of the trading relationship we currently enjoy with our largest market will be bad for UK automotive, resulting in major disruption to vehicle manufacturers and their supply chains.’