European authorities are advising their companies to avoid British products ahead of Brexit in a move that will alarm many businesses in the North East.
The region’s automotive industry in particularly could be hard hit after both the EU and the Dutch Government issued advice warning businesses that British-made products will no longer receive trade benefits.
Most free trade agreements include “rules of origin” regulations which mean that goods manufactured in an area like the EU can benefit from lower tariffs.
But the uncertainty around Brexit has raised the likelihood that products containing British components will no longer have that protection.
For car manufacturers based on the continent, this means using British-made components could harm their access to countries the EU has free trade agreements with, making it more attractive for them to get parts from mainland Europe instead.
In an advice bulletin to businesses, the EU has said that “EU-27 exporters and producers, intending to claim preferential tariff treatment in an EU FTA partner country as from the withdrawal date, are advised to treat any United Kingdom inputs as ‘non-originating’ when determining the EU preferential origin of their goods; and take appropriate steps to be able to prove the EU preferential origin of their goods, in case of subsequent verification, without taking account of any United Kingdom inputs as ‘EU content’.”
The Dutch Government, meanwhile, has told firms that “Brexit will also have consequences for exports outside the European Union. If you use lower import duties on the basis of a trade agreement, you might not be able to benefit from this after Brexit”.
A number of reports have previously raised the possible harm to the UK automotive industry if it loses access to the EU single market.
The automotive sector is a particularly important employer in the North East, with around 7,000 people working at the Nissan plant in Sunderland, thousands more in the supply chain and hopes to create even more jobs with an automotive park being planned at Sunderland and South Tyneside.
But it is seen to be particularly at risk because of the number of times components cross national borders before a finished product is made.
Jonathan Walker, head of policy and campaigns, North East England Chamber of Commerce said: “We have made it clear to Government that avoiding harm to the regional economy should be the number one priority for Brexit negotiations.
“Ensuring our businesses can continue to sell products in the single market and retain membership of the customs union would give exporters certainty and allow us to build on our strong trading relationship with the EU.”
Earlier this week, a coalition of business groups in the North East issued a report calling for continued access to the single market.
The North East Brexit Group – which comprises business groups, unions, universities and charities – said the region had already lost its position as an exporting region while local businesses had lost work to European competitors.
Responding to that report, the Department for Exiting the EU said the Government would not “seek membership of the Single Market after we leave the EU, but a bold and ambitious new economic partnership.”
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