The Brexit trade deal should not be reopened just to satisfy demands from some sectors of the UK and EU motor industry concerned about looming tariffs on electric cars, Thierry Breton, the influential European commissioner, has said.
EU leaders have come under pressure to suspend 10% tariffs on electric car exports that are expected to begin in January under the Brexit trade agreement sealed by Lord Frost in 2020.
But Breton, who is responsible for the EU internal market and was speaking exclusively to the Guardian, said the commission and EU leaders are bound under competition laws to look at the entire automotive “ecosystem” and not favour one “category” in the industry over the other.
He believes the trade deal should not be unpicked.
“If something has been negotiated, it shouldn’t be changed,” Breton said.
Earlier this year Stellantis, the parent company for 14 brands including Vauxhall and Jeep, issued a stark warning that it may have to close operations in Britain with the loss of thousands of jobs if the tariffs were not temporarily lifted.
Their call has been backed by the European Automobile Manufacturers’ Association (ACEA), which has said exports of electric cars to the UK worth tens of billions of euros a year will be put at risk unless the Brexit trade deal is altered.
Recent support from Germany has fuelled anticipation of a favourable decision by the commission.
But Breton warned that the car industry was not made up of big brands like BMW, Volkswagen or Vauxhall alone and he had to ensure a level playing field for all.
“Remember the automotive industry is not made only of the manufacturers but is made also of the hundreds of thousands of companies providing everything which is needed for a car, including the battery providers.
“It is a global supply chain. I call it the ecosystem, and I have to look at, as commissioner of industry, not at one single part of this ecosystem but all of the ecosystem,” he said. Each sector had to be treated fairly, he added, as they had the same rights under competition law.
“What has been negotiated has been negotiated and I think it’s very important to stick to a treaty when it has been so difficult to do it. Andwhen we speak about the automotive system, everyone who is part of this ecosystem I have to take care of, not one single category.”
Breton is responsible for driving through legislation to try to boost Europe’s ability to produce its own electric car batteries. Production on the continent is trailing China, and European leaders are concerned that a sector which has until now held its own is facing a serious challenge from cheaper Chinese imports.
“We have to look at everything, the battery provider, the European providers, the providers of chemical components,” he said.
European manufacturers fear the Chinese, which have already seen their share of the market grow in three years to 4% of the electric car market, will steal a march on them because of the absence of chemicals made in the EU for electric batteries.
China controls the supply of lithium hydroxide, a critical chemical for batteries, which account for up to 45% of the cost of an electric car.
Under the Brexit deal, a 10% tariff will apply to any EU cars exported to the UK or UK cars exported to the EU that are not 45% home made, something they say is impossible while China has the stranglehold on chemical supplies.
Last week Ursula von der Leyen, the president of the European Commission, announced an investigation into state subsidy of Chinese cars, which some fear could lead to fresh tensions with President Xi Jinping’s administration.
Breton said the commission will have up to 13 months to decide whether to impose tariffs above the standard 10% EU rate for cars, in its highest profile case against China since an EU probe into Chinese solar panels narrowly avoided a trade war a decade ago.
