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British car industry fears consequences of bad deal on Brexit

Xinhua | Updated: 2018-07-09 11:09
Attendees look at the Range Rover Velar SUV during a launch event at the Design Museum in London. [Photo/Agencies]

LONDON-The British automotive industry faces a threat to investment and to exports if there is a Brexit agreement which fails to produce a favorable outcome on trade and tariffs, according to an industry body.

The Society of Motor Manufacturers and Traders warned that unless there was a clear plan of how trade and tariffs with the remaining 27 nations of the European Union would operate then, supply chains and investment in the sector, which accounts for about 10 percent of the British economy, could be harmed.

"There is no Brexit dividend for our industry, particularly in what is an increasingly hostile and protectionist global trading environment," an SMMT spokesperson told Xinhua on Thursday afternoon.

The British government under Prime Minister Theresa May agreed to a white paper on Brexit dealing with Britain's wishes for trade access in a key Cabinet summit on Friday at the prime minister's country residence Chequers House.

Cabinet ministers discussed how much access Britain requires to the EU customs union and the tariff-free single market after Brexit.

Britain currently has frictionless and tariff-free trade with other EU member nations, but could face trading with the remaining EU member states on World Trade Organization tariff rates if there is no Brexit deal or possibly on reduced tariffs if a deal is reached with the EU.

"Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don't change it," said the SMMT spokesperson.

"There is growing frustration in global boardrooms at the slow pace of negotiations. The current position, with conflicting messages and red lines, goes directly against the interests of the British automotive sector, which has thrived on single market and customs union membership," the spokesperson added.

"There is no credible plan B for frictionless customs arrangements, nor is it realistic to expect that new trade deals can be agreed with the rest of the world that will replicate the immense value of trade with the EU. Government must rethink its position on the customs union."

Earlier on Thursday the largest British car manufacturer Jaguar Land Rover issued a bleak warning on the dangers of an unsatisfactory Brexit trade deal.

Ralf Speth, JLR chief executive, warned that uncertainty over trading arrangements with the EU threatened future investment plans by JLR in Britain.

"We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees," Speth warned.

"A bad Brexit deal would cost JLR more than 1.2 billion pounds ($1.59 billion) profit each year," He added.

"As a result, we would have to drastically adjust our spending profile; we have spent around 50 billion pounds in Britain in the past five years with plans for a further 80 billion pounds in the next five. This would be in jeopardy should we be faced with the wrong outcome."

JLR, a British subsidiary of Indian Motor firm Tata Motors, makes about 600,000 cars a year, the largest total of all British car firms, and its largest export market is the EU.

The JLR warning comes after a similar statement at the end of June from Airbus, the airplane manufacturer, which has significant operations in Britain, where it has several factories which specialize in the high technology production of wings.

Airbus warned that it employs 14,000 workers in Britain and supports up to 100,000 other jobs, but these could be under threat if its sophisticated cross-border supply-chains were disrupted by tariff payments and delays with documentation under post-Brexit trade arrangements.

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