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Carmakers Warn of “Catastrophic” No-Deal Brexit
Trade groups say a no-deal exit from the European Union by the U.K. will trigger a “seismic shift” in trade conditions that threatens the future of the British auto industry.
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A no-deal exit from the European Union by the U.K. next month would trigger a “seismic shift” in trade conditions that threatens the future of the British auto industry.
So say Europe’s carmaker group ACEA, supplier group CLEPA and 21 national-level industry organizations.
They warn in a united declaration that a hard Brexit at the end of October would trigger an immediate and severe shift in trade costs between Britain and the rest of Europe. ACEA estimates that a break in the just-in-time supply chain between the two regions could cost £50,000 ($62,200) per minute in the U.K. alone.
The groups point out that the end of barrier-free trade between the two markets would cause an instant hike in tariffs under default World Trade Organization rules. They say the new taxes could add £5 billion ($6.2 billion) to the collective EU-U.K. annual auto trade bill.
A disorderly Brexit also would unplug the U.K. from EU trade agreements between the bloc and 30 countries ranging from Canada and South Africa to Japan and South Korea. One far-reaching repercussion: Components from British suppliers would no longer contribute to local content ratios that enable EU carmakers to qualify for preferential trade terms.
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