Vidya Ram

Post-Brexit, Jaguar Land Rover too looks to gain from UK’s ‘Nissan deal’

Vidya Ram London | Updated on January 16, 2018 Published on October 31, 2016

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Pledge to seek market access without tariffs, bureaucratic hassles has excited manufacturers, especially Indian units

Hopes for the post-Brexit future of Jaguar Land Rover have improved significantly in the past few days after Britain made clear that the reassurances it had offered Nissan were relevant to the wider auto sector operating in the UK.

The Japanese car-maker announced last week that it would make the new Qashqai and X-Trail at its Sunderland plant, prompting speculation about the kind of assurances it had been given by the government — and Labour Party accusations of “backroom” deals.

To work for EU access

The contours of those reassurances emerged over the weekend as Business Secretary Greg Clark told the popular Andrew Marr television show that he had offered written pledges to Nissan that the UK would push for “access to the markets in Europe and vice versa without tariffs and bureaucratic impediments” for the auto sector in its negotiations with the EU.

“Our intention and negotiating remit when it comes to the discussion with European partners is to have a constructive and civilised dialogue and to look for a common interest here,” he had said.

The tone of Clark’s remarks, which emphasised the hopes for establishing common ground, is in contrast with the more gung-ho remarks vis-à-vis Europe that have emerged from ministers over the past weeks. Other assurances offered to the industry included pledges to support them on training and skills, research and development, and efforts to bring more of the supply-chain to the UK.

Clark’s comments have been welcomed by the industry, which is heavily intertwined with that on the Continent. According to the Society of Motor Manufacturers and Traders (SMMT), 57 per cent of UK-manufactured cars are sold to the EU, while according to a survey conducted by it in 2012, 63 per cent of the supply-chain in the UK was sourced internationally, and mainly in the EU.

SMMT CEO Mike Hawes said he was “greatly encouraged” by the comments, and stressed the importance of maintaining competitiveness. “This means maintaining a competitive business environment, ensuring talent can be recruited from abroad and securing the benefits we currently enjoy in the single market.”

“This will be quite critical for the car duty, with most of the supply chain on the European mainland,” said Deepesh Rathore of EMMAAA, an automotive consultancy. However, he added that “the ambiguity will stay till we hammer out an individual trade agreement… Till that time we don’t know.”

Movement of talent

Also crucial will be the issue of the movement of talent: the industry has long pointed out that access to talent on the Continent and beyond has been key to its success (earlier this year, UK auto manufacturing reached its highest level in a decade). However, the extent of that access remains unclear, with the government’s clear statements that freedom of movement of EU citizens was not guaranteed as it sought to enforce what it saw as one of the mandates of the Brexit referendum: a clamp-down on immigration.

The bigger question will be the extent to which the government is willing to offer assurances to the wider manufacturing sector, including Tata Steel’s UK operations. According to UK government estimates, 3.3 million of the 6.3 million tonnes of steel exported by the UK last year went to the EU. Trade body EEF has also stressed the significance of Europe to the survival of the industry — including joint efforts with the rest of the EU to prevent dumping via tariffs on steel from China and beyond, urging the government to continue to work with the EU on this in a post-Brexit Britain or bring in similar measures.

Industry, unions and opposition politicians have called for further clarity on whether the government would give similar assurances to the wider industry.

Published on October 31, 2016
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