France has dropped its opposition to the UK being included in the EU’s “Made in Europe” legislation as long as the British government aligns with the bloc’s position over tariffs on Chinese EVs.
France on Thursday came round to backing Germany, which has always supported the UK’s calls to be designated European for the purposes of the Industrial Accelerator Act. The legislation, which is in its draft stage, is designed to protect domestic manufacturing from cheap Chinese competition.
According to a joint Franco-German paper seen by the Guardian, the two countries are now proposing that for the car industry specifically the UK could be included in Made in Europe.
“For the automotive sector, ‘Made in Europe’ should comprise the EU27 and an opt-in to further include European partners who were part of the EU single market as of 01/01/2020, subject to an agreement on full reciprocity – i.e. adopting the European preference scheme relevant to the automotive sector,” it says in a clear reference to the UK, which was still in the single market as an EU member in January 2020.
It would also include Norway, which is in the single market but not a member of the EU.
The paper added that the opt-in would come with conditions, including alignment on trade defence measures, which have included tariffs on Chinese EVs imposed by the EU in 2024 and any future trade barriers, such as the quota deal being finalised with China on its exports of hybrid cars.
The paper says that “as well as relevant anti-circumvention measures”, these “opt-in” countries would have to accept “dynamic alignment on the EU’s conditions related to third countries’ investments and on relevant EU trade defence measures”.
Liam Byrne, the chair of the UK’s business, innovation, science and trade committee, said he believed aligning with the EU on trade defence measures was a small price to pay to save British manufacturing.
“Sometimes politics is the least worst choice – aligning with Europe on trade defence against an over-subsidised China is the way we deliver for all of us,” he said.
“Tariffs on these would be a small price to pay for the protection of a European manufacturing industry which safeguards jobs across supply chains in the UK and makes us less prone to coercion from China in the future.”
On Wednesday the head of Mercedes implored EU leaders to let the UK join the package.
Locking the UK out of the EU’s flagship industrial Made in Europe legislation would amount to a “deliberate choice” by EU leaders to “hurt” the car industry across the bloc, the head of Mercedes-Benz said.
The UK has been under pressure for weeks to align with the EU on tariffs on Chinese vehicles, but this week the business secretary Jonathan Reynolds said he would not be coerced into aligning with the EU’s policy.
However the government has been desperate to be included in the Made in Europe package, fearing billions of pounds of trade in the car industry could be lost if the UK was locked out of supply chains in the EU.
Earlier on Thursday trade minister Anas Sarwar hinted that the UK was minded to align on tariffs.
He told Politico the UK and the EU must “work together and act in lockstep” to tackle China’s dominance in the automotive sector.
Bernd Lange, the chair of the European Parliament’s influential international trade committee, told the Guardian the UK should “of course” be included in the Made in Europe legislation, calling France’s opposition “not rational”.
A Downing Street spokesperson said it had yet to see the detail but saw the development as positive. “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 the Industrial Accelerator Act and this would be good news for the British automotive industry and the jobs and investment it supports across the UK.”
