LONDON/BRUSSELS -- The Brexit battle between the UK and the European Union resumed as British leader Boris Johnson clashed with the bloc’s chief negotiator Michel Barnier at the start of 11 months of talks on a future trade deal.
Barnier said in Brussels that a “highly ambitious” trade deal is on offer for the UK -- but only if Johnson signs up to strict rules to prevent unfair competition.
Speaking minutes later in London, Johnson rejected Barnier’s demand and insisted the UK will thrive even if negotiations fail. He said instead the UK would be happy with a relationship based on Australia’s far looser arrangements with the EU. Australia doesn’t have a formal trade deal with the EU and faces World Trade Organization tariffs and barriers in many areas.
Tariffs would hurt automakers by increasing the cost of new cars imported into Britain and disrupting supply chains for companies with UK production.
Last week, the SMMT UK auto industry association warned that a free-trade agreement is needed between Britain and the UK to reignite investment in the industry and stem tumbling production.
New-car production dropped 14.2 percent last year to 1.3 million cars, the lowest level for a decade, partly on disruption caused by Brexit, the SMMT said. It is expected to drop a further 2.3 percent in 2020 to 1.27 million units.
About 55 percent of all cars made in the Britain are exported to the EU, loaded with parts that have traversed the border multiple times during the manufacturing phase.
Tariffs on imported parts and exported vehicles under World Trade Organization rules would inflate manufacturing costs by 3.2 billion pounds ($4.1 billion), the SMMT said in November, forcing prices to rise and global demand for UK cars to shrink.