Car industry body chief tells Brussels that locking the UK out of Made in Europe law would be a deliberate choice to hurt EU carmakers

Källenius is arguing against a short calendar. The prime minister intends to press the UK's case when the two sides meet at the 20 November summit and hopes there is still time, the Guardian reported, even though EU leaders are aiming for political agreement on the current text by December ^[7]. Andy Burnham has been lobbying hard for inclusion but is meeting resistance, particularly from France ^[6].

Speaking at an annual briefing in Brussels on the state of the car industry, Källenius said excluding the UK made no sense. It would hurt the industry in the UK and the EU, he said, and would be a deliberate choice by the EU to worsen the competitiveness of its own industry ^[2]. He described the act in industrial terms. "We are talking about how we industrialise more in Europe, how we build local supply chains, that is what the IAA is all about," he said ^[5]. He was speaking for the European Automobile Manufacturers' Association (ACEA), a trade body, and the Guardian's account does not set out France's objections to his case ^[1].

Brussels has said what it wants in return. Last month the EU urged the UK to follow its 2024 lead and put tariffs on imported Chinese vehicles, arguing that closer alignment on key trading sectors would help the UK's case ^[8]. During a visit to India, Jonathan Reynolds, the business secretary, said such a move was not currently being considered ^[9]. In our view the two positions do not meet yet.

The pressure behind the EU's side is large. The act is mainly aimed at China, which enjoys a trade surplus with the EU of £1bn a day ^[4], or about £365bn a year at that rate ^[19]. Brussels and Beijing agreed on Friday to reduce sales of hybrid electric cars by half over four years ^[16]. A senior EU official told a separate trade policy briefing that no amount of champagne exports would revitalise the relationship with China ^[17].

The second file has a hard date. The ACEA also wants an urgent suspension of 10% tariffs on UK electric vehicles imported to the EU, and on EU electric vehicles exported to the UK ^[10]. Under the Trade and Cooperation Agreement, car exports are tariff-free if mainly made in Europe, but neither side makes enough batteries to compete with China, so the 10% tariff would apply from next year ^[13]. Batteries can represent about 45% of the cost of a new car ^[12]. The tariff was originally due in 2024 and was suspended for three years ^[14].

Jonathan O'Riordan, the ACEA's international trade director, said: "We are getting very anxious about it. The deadline is in less than three months' time. We have our feet to the fire in terms of the tariffs. All our manufacturers are worried" ^[11]. We think the two files compound each other. A UK carmaker shut out of key EU contracts ^[3] and also paying a 10% tariff on electric exports would be hit twice in one window. The car industry says it needs a further two- or three-year suspension urgently ^[15].