France and Germany have proposed allowing the UK’s automotive industry to participate in the EU’s “Made in Europe” public procurement rules, reported the Financial Times (FT).
However, the report also said that there would be a condition: the British government must align its trade measures against China with those of the bloc.
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The proposal, contained in a draft agreement seen by the FT, would extend eligibility beyond the 27 EU member states to “other European partners that were part of the EU internal market on 1 January 2020”.
This would bring UK carmakers within rules intended to restrict access to subsidies and public contracts to European companies.
However, the UK would need to adopt “EU trade protection measures”, including tariffs on Chinese electric vehicles, to qualify.
Japan, South Korea and Turkey, which have also sought access for their carmakers, would remain outside the arrangement.
The draft has not been finalised. It follows months of discussions between Paris and Berlin on the future of the European car industry, including combustion engine rules and preferential treatment for European-made vehicles and components such as batteries.
Germany had pushed for the UK and other trading partners to be included, while France had supported a stricter EU-only approach aimed at strengthening the region’s car industry.
The proposed compromise would give the UK the market access sought by Prime Minister Andy Burnham’s government but would require closer alignment with EU trade policy.
The UK currently applies a 10% import duty to Chinese electric cars. The EU’s maximum tariff has reached 45% since 2024, while the US applies a 100% levy.
Business secretary Jonathan Reynolds has said higher UK duties on Chinese electric vehicles are “under review”.
The government remains concerned that such measures could trigger retaliation against British carmakers selling into China, including Jaguar Land Rover.
It also wants to attract Chinese manufacturers to build factories in the UK.
A UK government official said: “This is a Franco-German proposal and there is still a European process to run, but if confirmed, we welcome the objective to have UK included” in Made in Europe, adding that “this would be good news for the British automotive industry and the jobs and investment it supports across the UK”.
The UK and EU automotive industries have argued that excluding British manufacturers would disrupt highly integrated supply chains.
UK carmakers are already facing stronger Chinese competition and higher US tariffs, which have contributed to significant production cuts.
The draft would also ease several EU climate requirements. It proposes a 2035 emissions reduction target of 90% from 2021 levels, removes a requirement to compensate for the remaining emissions, and relaxes rules for plug-in hybrids, renewable fuels and corporate fleet electrification.
An agreement is reportedly close, although negotiations continue, particularly over 2030 carbon dioxide targets.
Any final package would require approval from other EU governments and the European Parliament.
