New rules require the UK to self-certify the origin of its exports to the EU. Only goods that contain a sufficient quantity of UK or EU inputs will be eligible for zero-tariff treatment.
The UK persuaded Brussels that EU materials and processing should to be counted as British input when the completed products are exported to the European market, the Guardian newspaper reported. A product would only attract tariffs if more than 40 percent of its pre-finished value was either not of British origin or from a non-EU country, the paper said.
The UK failed to secure agreement to include parts from countries such as Japan and Turkey, with whom the UK and the EU have trade agreements, to be counted as British input.
ACEA said it cannot make a full assessment of the implications of the deal until all the technical details have been made public. "Only at that stage will it be clear if the deal fully reflects the interests of EU auto manufacturers and their supply chains," it said.
Major challenges still lie ahead because trade in goods will be heavily impacted by barriers to trade because of new customs procedures that will be introduced on Jan. 1, the association said.
About 3 million vehicles worth 54 billion euros ($66 billion) are traded between the EU and the UK annually and cross-Channel trade in automotive parts accounts for almost 14 billion euros, the group said.
Ford Motor said the accord will provide stability as the industry transitions to new technologies.
"It is now important to understand the detailed rules of origin that will apply and to create as smooth a transition as possible by maximizing flexibility as businesses adjust to the new trading environment," Ford of Europe President Stuart Rowley said in an emailed statement.
The UK auto industry association, SMMT, called for a phase-in period to allow businesses adapt to the new rules. "We await the details to ensure this deal works for all automotive goods and technologies, including specifics on rules of origin and future regulatory co-operation," SMMT CEO Mike Hawes said in a statement.
The European suppliers lobby group, CLEPA, said the deal avoids what would have been a worst-case scenario for partsmakers but added that it will still mean "the resurrection of many trade barriers."
Businesses and customs authorities will now need to work around the clock to get ready for the new trading conditions only one week before the deal's implementation, CLEPA Secretary General Sigrid de Vries said.
Bloomberg and Reuters contributed to this report
