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LONDON — China will be “the biggest beneficiary” if the EU and the U.K. cannot resolve a post-Brexit “cliff-edge” on trading electric vehicles (EVs), a U.K. minister warned.
Industry Minister Nus Ghani said that Beijing will emerge as the winner if the EU does not give ground on the cut-off date, set for January 1 2024, at which point a 10 percent tariff will be applied to EVs traded between the U.K. and the bloc.
Ghani told lawmakers on Tuesday that the tariffs would open the door to “cheaper imports, potentially Chinese-made cars” to fill the gaps in EU and U.K markets.
Giving evidence to the House of Commons business and trade committee, Ghani added: “There will be impact on not just the U.K. car industry but also … manufacturers in Europe as well.”
Chinese imports already represent a growing share of the electric vehicle market in the U.K. and the EU. Ghani’s comments will increase pressure on negotiators to resolve the post-Brexit trade dispute, with less than four months until the cut-off date.
Ghani said she was “confident” the two sides could resolve the issue, given the likely impact on automotive industries on both sides of the Channel — but added that the “pattern of these discussions is that they always go to the wire.”
The dispute centers on so-called “rules of origin” requirements under the U.K.-EU Trade and Cooperation Agreement (TCA). Under a temporary waiver in the TCA, up to 70 percent of an electric battery’s components can come from outside the U.K. or EU before tariffs kick in.
But that threshold will plummet to 40 percent on January 1 — meaning vehicles exceeding this limit will be slapped with a 10 percent levy when traded between the EU and U.K.
