VDA: Use the transition period after Brexit to conclude a comprehensive agreement

Brexit means that the European Union is losing a strong member. The German Association of the Automotive Industry (VDA) regrets the United Kingdom’s departure and appeals to the negotiating partners in London and Brussels to use the transition period following Brexit for swift and comprehensive clarification of all as yet unresolved issues in their future economic relations. Everything possible must be done to avoid disruption to cross-border trade relations and value chains after the United Kingdom leaves the EU.

The withdrawal of the United Kingdom from the EU on January 31, 2020, marks the beginning of a transitional period that will last until the end of this year, during which the existing regulations will remain in force.

On the positive side, a hard Brexit has been avoided for the time being. Yet some questions are still unanswered. For example, legal clarification is still required that during the transition phase the United Kingdom will be treated like an EU member by states that have concluded a free trade agreement with the EU. Concerning the origin of goods and preferential treatment, this is important for VDA’s member companies that produce and/or buy in parts within the UK.

The economies of the EU Member States and the United Kingdom have close ties, particularly in the area of vehicle construction. Many parts from suppliers, which are procured in the UK, undergo further processing and are then exported to other countries. Britain is the largest export market for passenger cars built by German OEMs. In addition, more than half of British passenger car exports are destined for the European Union.

The 27 EU Member States and the UK intend to use the transition period to negotiate a new framework for their future relationship. The British Government would like to have an agreement in place by December 31, 2020, and not request an extension of the transition period. The VDA regards that as a very ambitious timetable.

The new relationship should be extensively regulated to retain the closest possible ties between Britain and the EU, and to ensure that trade continues smoothly. The transition period must not be allowed to end either without an agreement or with a less ambitious one.

The agreement should avoid import tariffs on goods traded between the UK and the EU wherever possible. Customs formalities should be simplified to ensure that materials can still cross borders smoothly and to minimize the amount of administrative work both for companies and for the customs and tax authorities. The new relationship should also cover cooperation on regulations.

The VDA supports all efforts to achieve a close, constructive and trusting new relationship between the United Kingdom and the EU. The challenges faced by the automotive industry on both sides of the English Channel should be tackled jointly.