20 November 2018

Motor industry groups back Brexit draft agreement to avoid ‘devastating consequences’

Motor industry representative groups have welcomed the government’s draft Brexit agreement with both the Society of Motor Manufacturers and Traders (SMMT) and Freight Transport Association (FTA) calling it “positive”.

Amid political turmoil following publication on Wednesday (14 November) of the draft agreement, Mike Hawes, SMMT chief executive, said: “For the automotive industry, Brexit is about damage limitation.

“The outline agreement is a positive step in avoiding the devastating consequences of ‘no-deal’ and securing a transition period.

“It is, however, only a first step and business seeks certainty and ambition when it comes to securing a competitive future. Truly frictionless trade is the only way to ensure the industry’s future success, and this should be the objective for all parties as we move into negotiating the permanent UK-EU relationship.”

Prime Minister Theresa May faces a battle to win MPs’ support amid calls to reject the deal from both senior Brexiteer and some Remain supporters. However, the draft is seen as a significant moment in the long running negotiations between London and Brussels leading up to the UK’s exit from the European Union on 29 March, 2019.

The motor industry is focused on calling on the government to avoid the implementation of World Trade Organisation tariffs, which could result in significant price increases on vehicles and spare parts and the UK staying in the Customs Union to ensure the ‘just in-time’ logistical supply chain is able to continue unchecked by hold-ups at ports.

Following a briefing from Number 10 Downing Street, the FTA, the industry body representing the logistics sector, reacted “positively” to the draft agreement recognising it as a “decisive step forwards in the process of the UK’s departure from the European Union”.

The detail of the agreement, which must now gain Parliamentary approval, which reports suggest will be extremely hard to win, includes, what the FTA called “essential elements which will allow continued frictionless movement of goods and maintain the integrity of the UK’s supply chain”.

In a statement, the FTA said: “Remaining in the Customs Union will maintain seamless transport of goods and services between the UK and the European Union until a new trade agreement can be negotiated, while the protection of citizen’s rights, both in the UK and the European Union, will safeguard the logistics workforce.

“A transition period, which FTA has been lobbying for, will enable Britain’s businesses to prepare for a seamless transition to new trading arrangements, without concerns over a cliff edge which could be disastrous for the supply chain.

“[The] news is a decisive step in the right direction, and FTA calls on Parliament to respect these crucial economic factors in deciding how it votes, to avoid a disorderly departure from the European Union which could cause untold problems for manufacturers, retailers and exporters and protect the ability for Britain to keep trading.”

David Wells, chief executive of the FTA, said: “Based on the briefing I received from the Chancellor and the Business Secretary, the draft text seems to have recognised the vital importance of preserving the frictionless movement of goods and the availability of European Union workers whilst a new permanent trade deal is negotiated. If so, we believe it is crucial that MPs understand how important these outcomes are to economy and the economic security and welfare of the country.”

Richard Burnett, chief executive of the Road Haulage Association, called the agreement an “important step” and added: “Whatever the outcome of negotiations a transition period is essential - it would be catastrophic for the supply chain if we didn’t have one.

“We must have the time to put in place processes to allow lorries to continue to cross borders without delays.”