Call me stuck in my ways, but I’ve believed in the power of the free market for too long to be excited about the UK being part of the EU’s new Industrial Accelerator Act (IAA) scheme.
This is the ‘Made in Europe’ proposal that seeks to protect mainly French and German car makers from the hyper-competitiveness of the Chinese industry.
Now that we’re outside the EU, the benefits are being cooked up without our input.
In the past few weeks, the French and the Germans have found enough common ground to agree on “a joint approach to securing the future of the European automotive industry” – an approach that reportedly requires us to punish the Chinese by applying import tariffs in return for British cars to be considered European and therefore gain the benefits.
There’s no doubt that the UK needs to be included within the IAA scheme. Putting up another barrier to access to the EU, the biggest market for our cars, would sound the death knell to our beleaguered car industry.
The benefits, however, seem to be meagre. For example, our EVs will be included in EU public procurement lists and could qualify for state purchase benefits. They would also count towards corporate fleet quotas. This is small stuff. For a start, few of our premium or luxury EVs would count anyway. Which French local authority is thinking of buying electric Range Rovers?
Right now this would benefit precisely one car: the Nissan Leaf. This is a car that has already been given a state leg-up in multiple ways, from generous government investment in its Sunderland build location to a £3750 purchase incentive. Now apparently we need to hobble its Chinese competition as well.
So far the UK government has put forward the free trade argument for not following the EU on Chinese EV tariffs. But reportedly it’s being told to dump that stance, in return for which the status quo will remain for the UK’s automotive exports.
It’s a Hobson’s choice, but there is a downside to saying yes: cars will become more expensive, because the EU will enforce local content rules as well as restricting access to cheap Chinese electrified cars.
Protecting local jobs is of course a good thing. We don’t want to add to the reasons for the UK’s car makers, particularly Nissan and Toyota, to follow Honda out of the door. But we must be careful that we don’t give away more than we gain.