CEO Update

A US-UK trade deal offers future benefits for UK Auto

22 January 2021 #CEO Update

The big news this week is the inauguration of a new President in the US, with Joe Biden replacing the outgoing President Trump. Now that the UK has agreed and ratified the TCA with the EU, we need to forge new trading relationships with other important partners and the US is a crucial market for the UK automotive sector and our second biggest trading partner after the EU.

President Biden – the son of a car dealer – has already signalled that he intends to pursue a different agenda than his predecessor, re-joining the Paris Agreement and a shift in focus towards electrification, despite his prized possession being a 1967 Chevrolet Corvette Stingray.

Whilst trade deals may not be top of President Biden’s agenda, decarbonisation and Net-Zero firmly is and that is shared with the UK and the automotive sector on both sides of the Atlantic. Reciprocal trade and investment has created high-value jobs across the automotive industry, boosting both economies over many years. Despite the many hurdles to overcome, the US and UK should now work to reduce tariffs and other trade barriers, establish workable rules of origin that ensure preferential access to our markets and maintain high environmental and safety standards. This would help support sector jobs and growth across the Atlantic. The Biden Presidency will be the subject of an SMMT webinar on Thursday 4 February, which you are able to sign up for here.

Meanwhile, the news that the UK will be home to additional battery production in the North East is hugely positive and an essential step in the transformation of the automotive sector to electric motoring. It is an investment that is a direct consequence of the UK agreeing a deal with the EU, providing a much needed boost to the sector and, particularly, to the local workforce, both of which have endured a number of years of uncertainty.

The Road to Zero requires rapid acceleration in the take up of new battery technologies and massive investment in infrastructure and local capability. We have the scale – as a market and as a production location – to warrant the necessary investment but our attractiveness depends on maintaining advantages and consistently enhancing our competitiveness. We need to build on this announcement and implement a strategy which safeguards automotive manufacturing and delivers a rapid transition to the benefit of all of society.

We must take every opportunity to grow business and, with this in mind, SMMT will once again be organising the UK pavilion at Automechanika Frankfurt 2021 which will be held between 14-18 September. There is still some limited space available, so I encourage you to contact SMMT’s International Team to register your interest, or to find out more information.

Finally, the realisation that trading goods between GB and the EU is now much more complicated than it was previously, has begun to sink in, the effects of which are well documented with pictures of empty shelves in Northern Irish supermarkets and trucks from Scotland, Devon and other fishing industry regions descending on Westminster in protest.

Automotive firms were as well prepared as any, spending a significant amount of time and investing huge sums to try and ensure their operations would work under the new systems, processes and procedures. However, there are a lot more goods now being officially exported and imported, and, it will take time for everyone involved to understand the new processes and inherent responsibilities.

So far, trade volumes have been low but they are now rising towards normal levels and we know many companies are working furiously to ensure trade flows and production continues. The additional work required is immense and in some cases costly and there remains the potential for delays which would then have an impact on production. SMMT is in daily contact with the government on border issues and we remain on hand to help automotive businesses where possible. Our regular webinars are combined with updates posted on our Brexit transition support hub, and I would advise that you check this regularly to stay up to date with the latest news and information.

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