The Japanese carmaker Nissan has reportedly said it could be forced to close its plant in Sunderland if the UK is not fully included in new “Made in Europe” manufacturing rules proposed by the EU.
The UK car industry trade representative group also said it was “gravely concerned” about the proposals, which it said could damage the £70bn annual cross-channel trade.
Under the EU plans, public subsidies to speed up the development of electric vehicles would only be available to EVs made in European plants. Announced by the EU industrial strategy commissioner, Stéphane Séjourné, on Wednesday, the proposed Industrial Accelerator Act (IAA) is designed to protect the bloc from cheap competition from China.
According to reports on Thursday, Nissan has privately warned the UK government it could be forced to close if the proposals became law. One industry executive told the Financial Times Nissan could face “an existential threat” if it was “frozen out of access to EU incentives”.
The company’s Sunderland site is Britain’s biggest car factory, with 6,000 employees and the theoretical ability to make 600,000 cars a year. However, it is operating significantly below capacity because of lower demand.
Nissan refused to comment on reports but a source indicated that while the carmaker had “not threatened to close the factory” it was “fair to say” it had concerns about the rules concerning procurement of corporate fleets and small EVs locking UK-based companies out.
The British car industry said the attempt to prioritise EU-made products to accelerate green tech including electric vehicles must include trusted partners in the UK.
Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, the main UK auto sector lobby group, said: “The UK automotive sector is gravely concerned by [the] ‘Made in Europe’ proposals set out in the European Commission’s Industrial Accelerator Act. As drafted, it would discriminate against UK-made vehicles and components, damaging a trading relationship worth almost £70bn annually.”
He said he feared the IAA would “effectively put UK manufacturers at a systemic competitive disadvantage in the EU market”, adding that the proposals, as they stood, “may also be in breach of the EU-UK trade cooperation agreement – the Brexit deal”.
It is understood the cause of concern is the third annex of the proposal, which shows how corporate fleets – which account for the majority of car sales and feed into the secondhand car market – could benefit from public subsidy. However, rules requiring them to be assembled in the EU could rule UK cars out of that market.
The German car industry body, the VDA, has also raised concerns, saying protective measures could raise costs for manufacturers and drivers. It is also concerned that the rules could trigger counter-measures from other countries vital for EU exports.
“In its current form, the IAA will not be able to significantly strengthen the competitiveness of industry in Germany and Europe. Its industrial policy impact will unfortunately be extremely limited,” the VDA’s president, Hildegard Müller, said.
Hawes called on the British government and its European counterparts to work together to “urgently resolve the situation” by extending “full trusted partner status to the UK auto sector”.
A spokesperson for Nissan said: “A simple solution would be to apply the equivalent to Union origin rules across all types of EV support, which would be in line with the EU’s goal of making regulations easier to understand and apply.”
A UK government spokesperson said it was a “a close and trusted European partner, committed to our shared security and economic cooperation” and it wanted “to work together as like-minded partners to boost growth, resilience and economic security”.
The business secretary, Peter Kyle, visited Brussels last week to make the case for the UK to be included as a full partner in the “Made in Europe” initiative. However, he did not meet Séjourné, the architect of the proposals.
The commissioner said on Wednesday that third-party countries would not be excluded if they had a trade agreement with the EU, although this would change if they took measures to favour their homegrown industries, such as buy Canadian or buy American policies.
Prof Simone Tagliapietra, a senior fellow at the Bruegel thinktank in Brussels, said: “In its final version, the proposed Industrial Accelerator Act has abandoned the pure ‘Made in Europe’ approach, opening it up to third countries – what we might call ‘Made with Europe’. This is a welcome step, aligning EU industrial and trade policies as it should be.”
A European Commission spokesperson said the EU-UK trade deal meant UK products could be considered equivalent to EU. “The EU-UK trade and cooperation agreement is considered as an ‘agreement establishing a free trade area’ within the meaning of the IAA regulation,” a spokesperson said. “Therefore, products originating in the UK would be considered as equivalent to union origin for the purposes of schemes and auctions, unless the UK excludes products originating from the EU from the scope of schemes and auctions.”
