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LEGAL VIEW
PLAYING BY THE RULES
by Ged Henderson
The clock is ticking. Car makers on both sides of the Channel warn new rules on EU-UK electric vehicle trade set to come into force in January will have a devastating impact.
Their concern is being driven by the issue of Rules of Origin. Goods exported under EU free- trade agreements must comply with these rules to obtain tariff preferences.
The current transitional rules in the EU-UK Trade and Cooperation Agreement (TCA) allow electric vehicle batteries assembled in Europe to qualify for European origin.
But from January 1 these rules will become much more restrictive, requiring all battery parts and some critical battery material to be produced in either the EU or the UK to qualify for tariff-free trade.
The European Automobile Manufacturers’ Association (ACEA) is calling for a three-year postponement of the new rules. It says Europe has not yet established a secure and reliable battery supply chain.
And it is warning that the 10 per cent tariff could cost its industry nearly €4.3bn over that period.
The UK industry is also warning the threat of tariffs would make British-built electric vehicles uncompetitive in Europe, its biggest export market. And it will also push up EV prices for British buyers just as the UK and EU try to accelerate their uptake.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), says: “At a time when every country is accelerating their transition to zero emission
transport and global competitors are offering billions to attract investment in their industries, a pragmatic solution must be found quickly.”
ACEA director general Sigrid de Vries agrees. He points out that the UK is also the EU auto industry’s number one export market, accounting for almost a quarter of electric vehicle exports.
Country of origin matters to customs
authorities, importers,
exporters, buyers, sellers and consumers
Calling for the postponement, he says: “As we face increasing competitive pressures from abroad, the application of these rules would have severe consequences for electric vehicle manufacturing in Europe – at the very time when we should be massively ramping up sales and production.”
It is an issue that may impact on Lancashire’s automotive supply chain. Figures released last year show the North West is now the UK’s second biggest car-making region, employing 21,500 workers and generating £1.9bn for the economy.
It is not the first time the impact of Rules of Origin, which determine the economic nationality of goods, has made headlines since the UK’s departure from the EU.
The rules allow exporters to claim tariff preferences and importers to prove origin of goods, which can lead to a reduction of duties on them.
International trade experts say it is vital that Lancashire businesses looking to export or import goods understand and comply with the rules.
Mandy Lockett, East Lancashire Chamber of Commerce international business director, says the issue can be “overwhelming” but there is help and advice at hand.
The chamber’s international trade team serves on the National Certification Group which is responsible for overseeing the issuing of certificates of origin in the UK – with more than 500,000 issued annually.
It also runs an International Trade Club - a network for exporters and importers that meet five times a year to support, guide and encourage businesses to develop overseas trade through best practice and knowledgeable presenters.
Mandy says: “Country of origin matters to customs authorities, importers, exporters, buyers, sellers and consumers.
“It’s a powerful component of international trade as it can command premium price, dictate levels of import duty and can identify customs and regulatory documentation.
“Understanding Rules of Origin has never been more important to Lancashire businesses as the UK continues to advance its position in securing lucrative trade deals around the world for businesses to benefit from, the latest being
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