Will UK OEMs and suppliers continue to trade with the EU in a largely frictionless way post-2020? Greg Clark is determined that should be the case.

Will UK OEMs and suppliers continue to trade with the EU in a largely 'frictionless' way post-2020? Greg Clark is determined that should be the case.

The UK minister responsible for Business and Industrial Strategy, Greg Clark, has told an industry conference that the government appreciates the importance of UK-EU automotive supply chains and wants to retain frictionless trade to deepen cross-border trade relationships further. His remarks come amid mounting political tensions inside the government over the terms of the UK's separation from the European Union and pressure from Brussels to speed up negotiations ahead of the UK's exit from the EU in March of next year.

Business Secretary Clark also told the FT Future of the Car Summit in London that the almost two-year transition or 'implementation period' that starts when the UK leaves the EU in March 2019 will see trade arrangements between the UK and EU left largely unchanged as a default position.

Clark said a key objective of the government's industrial strategy in the automotive sector is to get deeper supply chains in the UK and that means not upsetting trade flows between the UK and the continent of Europe. "We want to get the value of UK supplied [passenger car] content up from 44% in 2017 to 50% by 2022. Of course, these supply chains depend on our trade with the rest of Europe continuing uninterrupted," he said.

"It is crucial that the [trade] agreement we get with the EU respects the ability to continue those flourishing supply chain relationships by avoiding introducing new frictions, and allowing the successful model - not only to continue - but to deepen as technologies develop further in the future."

Clark said the two-year transition or 'implementation period' will avoid multiple changes so that current arrangements with the EU will continue as a 'default position' to ensure continuity for businesses and avoid any so called 'cliff-edge' of sharp transition to new arrangements under a deal yet to be negotiated with the EU on the UK's future relationship with the trade bloc.

The UK government has yet to determine a finalised trade arrangements proposal as part of its negotiations for future post-Brexit trade and customs arrangement with the EU.

However, Clark told delegates that there is intensive work taking place in government on two alternative customs proposals that both meet three tests  - avoid new trade frictions, avoid a hard border between Northern Ireland and the Republic, and enable the UK to strike new trade deals around the world. "They both have pros and cons and there is intense work going on to examine and refine them further," he said.

Clark admitted that there is currently no deadline - on the UK side - set for a decision. "We haven't set a date at which we would come to an agreed position on that," he said.

"UK Automotive needs to be more international not less"

Clark also told delegates that the UK's automotive sector is international and that the government recognises the need for continued access to an international talent pool of engineers and technology specialists.

"No part of any debate that I have been part of in government or more generally in politics has, in any way, lamented the number of overseas engineers and technicians working in Britain," Clark said. He added: "There has been no appetite whatsoever to somehow determine to reduce their numbers - quite the reverse. We need to be more international, not less.

"This industry proves that the future is not based on a model of national self-sufficiency, but is based on engaging with the world in all the opportunities that come with that. The government's industrial strategy emphasises the importance of taking an international approach."

He also said there are more visas being made available for much-needed technologists in key technology sectors.

Clark also outlined the importance of the UK government's industrial strategy to position the UK economy to benefit from key long-term global challenges.

"The industrial strategy has chosen the future of mobility as one of four prime challenges and where we want to concentrate particular focus, as a nation," he said.

"Between now and 2030, we want to bring together our leading scientists technologists, universities, research institutions in the UK and around the world, businesses large and small, to ensure that Britain is well-equipped from talent to test-beds, from the regulatory environment to public infrastructure, to be one of the best places to not only develop and test new approaches to technologies but to make them available as fast as possible to UK consumers."

Clark outlined a plan for the biggest increase to public R&D investment that the UK has ever experienced.

He also said that the commitment in the government's Industrial Strategy is to raise R&D spending nationally from the current 1.7% of GDP to 2.4% within ten years and 3% thereafter.

See also: UK government understands our trade concerns - Toyota