VDA President: Retain channels for intensive trade – on condition of EU cohesion
“However difficult the process may be, we should welcome the fact that it has now officially been set in motion by the letter from the British Prime Minister Theresa May to European Council President Donald Tusk. Now it is important that the negotiations achieve reasonable results as soon as possible. In the view of the German automotive industry, everything must be done to maintain the free movement of goods and services between Britain and the other EU countries in the future. But there is a clear priority: the cohesion and the integrity of the EU are both foundation and precondition for reaching a reasonable understanding,” stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA).
Wissmann pointed out that Britain was the second largest passenger car market in Europe – after Germany – with approx. 2.7 million new car registrations last year. Imports made up a very large share of the British car market, at 86 percent. Passenger car production in the UK rose by 28 percent to 1.7 million units in the period from 2011 to 2016, and 79 percent of these vehicles were exported. Furthermore, 56 percent of the cars exported from the UK went to EU countries. “This means that the British OEMs depend crucially on exports to the European continent,” Wissmann underscored.
In 2016 Britain was the largest export market for the German auto makers. Around 800,000 new vehicles were exported to the UK last year, which was almost one fifth of all exported German cars. What is more, the German automotive industry has 100 production plants in Britain, and most of them are facilities of German supply companies.
The VDA president drew attention to the fact that the two-year negotiation period was very short. A European Commission negotiation mandate could be expected at the end of April, and only then could negotiations with the British begin. “The whole thing is complicated by the fact that not only will departure from the EU be negotiated, but also the future relationship between the UK and the EU-27 has to be regulated. In private life it would be as if a married couple wanted to draw up an agreement on good neighborliness while they were divorcing. Not an easy task,” Wissmann said.
He emphasized that it would be absolutely crucial just how constructive both sides were during the negotiations, adding: “The EU needs Britain, and Britain needs the EU. There is no doubt that a ‘hard Brexit’ would also damage the British automotive industry, and would be both difficult and expensive. The consequence would be a long phase of uncertainty. It will be years before new treaties are concluded. Prospects like that deter investors.” Therefore the UK, too, must necessarily have a major interest in finding compromises so that within the two-year deadline solutions can be worked out allowing intensive trade and the value creation associated with it to continue.