Michel Barnier’s threat over British car industry rubbished – UK position ‘not absurd’

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During the final round of Brexit talks this week, it emerged the EU could slap additional tariffs on car parts imported to the UK from Japan and Turkey. Although the parts would be used in British cars, they could face additional taxes once exported to the EU. The UK has argued the parts should be deemed as British, a position one specialist said was not unusual.

Speaking to Express.co.uk, professor Alex de Ruyter, from Birmingham University’s Centre for Brexit Studies explained why UK officials put forward this proposal.

He said: “I think this issue is more subtle than has been reported.

“The issue is this – usually, in order to take advantage of preferential low or zero tariffs in a trade agreement, a country needs to prove that a certain percentage of that good is made domestically.

“This is common sense, otherwise you’d see manufacturers importing 95% complete cars from China, doing the last 5% in the UK and then selling them to the EU – tariff free – as British.

“All trade agreements have these so-called rules of origin.

“Usually the threshold is around 55% ‘local content’.

“So, for a car to be eligible for tariff-free access, at least 55% of its value would need to be British.

“What the UK is asking is to count Japanese or Turkish parts used in UK manufactured cars as ‘British’.

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“This is not as absurd as it sounds: both the UK and EU will have very similar agreements with Japan and Turkey, so what the UK is asking for is so-called ‘diagonal cumulation’.”

Prof de Ruyter also claimed, due to the number of EU parts used in British cars, they could be classified as “local” and therefore be tax-free.

Last month, Lord David Frost, sent a letter to industry leaders revealing the EU had refused to allow imported car parts to be counted as British.

In the letter, seen by the BBC, Lord Frost said: “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.

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“The commission has made clear that it will not agree third-country cumulation in any circumstances, which we regret, but obviously cannot insist upon.”

Prof de Ruyter did warn, however, the aspect of elements in electric cars could become an issue due to their high value.

Lord Frost and his counterpart, Mr Barnier conclude their talks today.

Although progress has been made, the two sides are yet to agree a deal.

However, EU sources have claimed they will continue negotiations next week.

Boris Johnson and EU Commission President, Ursula von der Leyen, will hold talks on Saturday to discuss the current Brexit process.

A No 10 spokesperson claimed the two will take stock on matters with time running out on a deal.

The EU has labelled the end of the month as the deadline for a deal, while UK officials hope for an agreement at the EU summit on October 15.

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