West Midlands Conservative Mayor Andy Street is pushing the government to sign a more ambitious trade deal with the EU to avoid a severe recession in Britain’s manufacturing core country.
Mr Street, whose election as mayor in 2017 paved the way for the party to take the Labor Party strongholds in the region in the general election two years later, has campaigned with the government for duty-free exports.
In letters to Liz Truss, International Trade Secretary, David Frost, UK Brexit chief negotiator, and local MPs, the Mayor has warned that West Midlands exporters could pay tariffs of up to 15% if a trade deal lacks preferential rules of origin contains 10 percent of their EU-bound goods that they displace from the market.
Modeling by the University of Birmingham found that tariffs could cut the regional economy by 12 percent and increase the average cost of an exported car by £ 3,000.
Jaguar Land Rover, electric taxi maker LEVC, aerospace and automotive components maker GKN, and thousands of other suppliers are in the region.
Preferential rules of origin would allow goods assembled with parts outside the EU and the UK to be classified as made in the UK and therefore included in duty-free trade.
Mr. Street said: “Because of our strong manufacturing sector, which includes exporters who rely heavily on complex supply chains across continents, the West Midlands are more exposed than other parts of the UK to a trade agreement that does not protect the export industry. ”
This would affect the UK automakers, including Nissan and Toyota, who buy a significant portion of their components such as B. Hybrid systems, import from Japan and likely face tariffs even with a trade deal.
Margot James, a former Tory minister and executive director of Warwick Manufacturing Group, said manufacturers were concerned. “These impacts are particularly relevant for manufacturers in sectors such as electric vehicles, which currently have significant imports of components from outside the EU.”
According to Mr Street’s letter, the West Midlands exports more than £ 16.6 billion annually, with 38 percent destined for the EU. Machine and transport goods make up 71 percent of the total.
In Brussels, where the UK negotiators are currently in the final stages of attempts to reach a comprehensive free trade agreement with the EU, calls for more favorable conditions for rules of origin have so far fallen on deaf ears.
In September, Lord Frost wrote to the auto industry, admitting that the European Commission had rejected an agreement that would allow UK automakers to consider non-EU inputs as UK for the purposes of the free trade agreement.
According to the conditions of a typical EU free trade agreement, around 55 percent of a car must be manufactured in the country concerned in order to receive duty-free access to the EU internal market.
Lord Frost wrote, however, that the EU has made it clear “that under no circumstances will it agree to cumulation by third countries, which we regret but obviously cannot insist”.
Michel Barnier, the EU’s chief negotiator, has argued that it is not in the bloc’s medium-term strategic interest to allow the UK to view contributions from other EU trading partners as “British”.
In a speech in June, Barnier said such a system would allow the UK to become a “manufacturing center” for the EU, assemble materials and goods from around the world and then export them as “British” to the EU’s internal market. Goods tariff and quota-free.
A report by Lexington Communications in October highlighted the threat of a production slowdown for the government. In 35 newly won Tory seats with a “red wall” there is a disproportionately high number of production orders, in which the number of jobs significantly exceeded the majority of Conservative MPs.
Downing Street could not be reached for comment.