Since the UK voted to leave European Union, automakers with industrial footprints in Britain such as Jaguar Land Rover, BMW, Nissan, Honda and Toyota have been warning about the danger to their operations of the country leaving the trading bloc without a deal. They have urged the British government to negotiate with the EU to keep as many advantages as possible, such as tariff-free access between the UK and EU and staying in the customs union to ensure the quick flow of essential components to their just-in-time UK plants.
As the UK’s ruling Conservative party struggles to agree on what sort of deal that should be ahead of the March 29 leave date, automakers' fears of a hard Brexit are growing.
The hard-Brexit wing of the Conservative party is trying to convince the UK public that the country will be fine economically without a trade deal with the EU. In making their case, they have demonstrated they either have little idea how the modern car industry works or are prepared to sacrifice it altogether to achieve their aim. Here are five of the worst examples.
1. Boris Johnson’s vanishing car industry.
Former foreign secretary Boris Johnson is one of the most prominent hard Brexit figures and he at least seems to realize that leaving is damaging to the car industry once you remove the benefit of frictionless borders. In September last year, in a Facebook post entitled 'My Brexit Vision' he brushed away those concerns by saying the industry probably would not survive anyway. "In the next 20 years I believe traditional car companies will vanish as we switch to automated vehicles," he wrote.
2. No tariffs, no border friction!
The hard-Brexit faction in the Conservative party is called the ERG (European Research Group) and its members frequently display a shocking lack of knowledge when it comes to cross-border trading. This month it was former minister John Redwood’s turn. When interviewed on the BBC about how a no-deal Brexit would work for just-in-time manufacturing, he said a future Conservative government would simply remove WTO (World Trade Organization) tariffs on auto parts. "So instead of there being more friction at the border there will be less restriction because we can take the tariff off of the EU components coming in," Redwood said. Aston Martin CEO Andy Palmer said on Twitter that his comment showed "bewildering ignorance of the complexity of automotive supply-chains."
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3. Forgetting the EU already has free-trade agreements
As an EU member, the UK takes advantage of free-trade agreements negotiated by the EU. Conservative ERG member Jacob Rees-Mogg, a highly vocal Brexiter, forgot this during a television interview in February outside the Prime Minister's office, where a delegation of Japanese industrialists were pressing for continued free access to EU markets for their UK-built products, including cars. Rees-Mogg said Japan would be happier once the UK was out, citing the ability to strike new free-trade deals. "If you buy a Toyota made in Japan you have pay 12 percent more than you would for a Peugeot that probably won't work, he said, including a jibe about the reliability of French-made cars. Except that the EU had already signed, and has now ratified, a trade agreement with Japan, meaning that in time, Japanese cars could be imported tariff free if the UK stayed in the single market.
4. 'Run down the UK car industry'
Hard Brexiters push for a highly liberalized global trading relationship that removes tariffs altogether. Their argument is that removing the protections for local industries might harm local manufacturing, but that's a price worth paying for cheaper goods. Their economic guru is Patrick Minford, a professor at the University of Cardiff and a member of the Economists for Brexit group. In 2012 he told a committee of MPs: "If you remove the protection of the sort that has been given to car industry, you're going to have a change in the situation facing that industry, and you are going to have to run it down. It'll be your interest to do it, just in the same way we ran down the coal industry, or the steel industry. These things happen."
5. Parts will be cheaper in a hard Brexit
Reacting to warnings from Jaguar Land Rover that a bad Brexit deal would threaten 80 billion pounds worth of future investment Conservative MP and ERG member Owen Paterson said in a BBC radio interview in July that JLR CEO Ralf Speth was wrong. Paterson claimed in fact that JLR will be better off once the UK leaves the customs union. "It's really important this, Jaguar Land Rover will have access to cheaper parts and components all around the world," he said. In his theory, the UK's liberal attitude to tariffs will mean EU suppliers will have compete harder for UK business. A spokesperson for one unidentified UK trade association told the Guardian newspaper: "We are not going to dignify those comments with a response because they're not worth anything."
