Although Nissan has received assurances from the UK government on the post-Brexit competitive position for its UK plant, a senior executive has warned that “if anything material changes, we’d review constantly.”
UK prime minister Theresa May has raised fears that the UK may be forced to rely on WTO trade arrangements – which would entail 10% tariffs on UK car exports to the EU market – if a trade deal with the EU is not concluded prior to the UK’s departure from the EU in 2019. “No deal [with the EU] is better than a bad deal,” she has said.
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Nissan makes over 500,000 cars a year at its Sunderland, UK, car plant – the UK’s biggest – and most of the cars made there are exported to markets in the EU.
Mrs May has also confirmed that when it leaves the EU, the UK will also leave the European single market – a free trade and customs union that facilitates the easy circulation of goods across national borders – in order to control immigration.
Colin Lawther, Nissan’s senior vice president in Europe, told a committee of UK MPs that he expected the final trading environment agreed by the government would not be to the detriment of the business, although it would need “a whole bundle of solutions” for this, possibly including lower corporation tax.
“The government will need to come up with a lot of different solutions, free import duty for parts coming from customs union in and out would be one example,” he said. “An automotive specific trade deal would be another example.
“At the moment we’ve got a set of circumstances that we’re quite happy with. We’ve made our decision and we’ll honour that decision and go forward. But if anything materially changes, we’d review constantly.”
“The big point for us is mainly the free trade agreement. That’s the big ticket item,” Lawther told the House of Commons International Trade select committee.
He added: “We would have to look at the degrees of change and adjust our business to take into account whatever this new trading platform would be.”
He also said that automotive companies may need help from the UK government to raise the level of UK content on UK-made products that have to meet ‘rules of origin’ when the UK is outside of the EU customs area. Rules of origin are designed to ensure that products are from where they say they are and to prevent the avoidance of common external tariffs that apply to all goods entering a customs union from outside. The audit for rules of origin (itself a potentially complex affair in the case of autos and parts) at borders is an example of non-tariff barriers that could be raised and add cost to UK exports when the UK leaves the EU.
