European carmakers demand EU chiefs ‘reconsider position’ as Brexit tensions soar

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The European Automobile Manufacturers’ Association (ACEA) — a group that represents companies including BMW, Toyota and Fiat — warned Brussels its hardline approach was “not in the long-term interests of the EU automotive industry”. The carmakers are desperate to maintain viable trading links with the UK once it has left the bloc and called on the EU to “reconsider its position” over strict rules on which goods will qualify for future tariff-free trade.

Brexit is a unique and unprecedented situation that creates new barriers

ACEA

The ACEA wants Brussels to lower the percentage of parts in a car that must be either European or British for the vehicle to qualify for the benefits of a trade deal.

It is also calling for a “phase-in period” to help industry adapt to the new rules.

In a letter to the EU officials, the group said: “Brexit is a unique and unprecedented situation that creates new barriers in the shape of rules of origin where none existed before.

“Long-term supplier contracts bind manufacturers to specific suppliers for many years and this should be taken into account in a free trade agreement.”

With fractious trade talks set to resume tomorrow, both sides insist they still want a deal which permits tariff-free, quota-free trade on all goods.

But EU chief negotiator Michel Barnier has warned businesses leaders they might have to accept “short-term adaptation costs” to protect the bloc’s “long-term economic interests”.

Mr Barnier has openly questioned whether Brussels should allow Britain to keep its “prominent position” on the EU market once it has left the bloc, sparking fears about the potential economic consequences for Europe of weaker trade ties.

Speaking on the eve of an “intensified phase of talks”, Mr Barnier said both sides must be willing to compromise.

Number 10 has acknowledged “significant gaps” remain between the two sides and it was “entirely possible that negotiations will not succeed”.

The negotiations had been in limbo after Boris Johnson’s deadline for a deal passed last week.

The main stumbling blocks remain fishing rights, the governance of any deal and the “level playing field” aimed at preventing unfair competition, which includes state subsidies.

Mr Barnier told the European Parliament: “Our door remains open. It will remain open right up until the last day when we can work together.”

But he said “it takes two to make a deal”, adding: “We are not sure that’s the outcome we will obtain and that’s why we need to be ready to deal with the consequences of a possible no-deal scenario.”

Extending an olive branch to the UK, Mr Barnier indicated the EU was willing to make compromises – but only if Mr Johnson also agreed to give ground.

He said: “We will seek the necessary compromises on both sides in order to do our utmost to reach an agreement and we will do so right up until the last day which it’s possible to do so.”

Downing Street said the UK’s position had been set out by Mr Johnson and Michael Gove, who had been clear the EU had to be serious about talking intensively, on all issues, and bringing the negotiation to a conclusion, as well as accepting that it was dealing with an “independent and sovereign country”.

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A Number 10 spokesman said: “We welcome the fact that Mr Barnier acknowledged both points this morning, and additionally that movement would be needed from both sides in the talks if agreement was to be reached.

“As he made clear, ‘any future agreement will be made in respect of the decision-making autonomy of the European Union and with respect for British sovereignty’.

“It is clear that significant gaps remain between our positions in the most difficult areas, but we are ready, with the EU, to see if it is possible to bridge them in intensive talks.”

If a deal is not possible, the UK will end the transition period “on Australia terms” – without a deal with its largest trading partner.

The spokesman said it was now essential for UK businesses, hauliers, and travellers to prepare for the end of the transition period.

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