Japan, the UK and cars - a THREAD
There's a wrinkle buried in the EU-Japan trade deal which I assume will affect the future of the UK auto industry too, namely that Japan has agreed to conform production to EU standards in future.
1/6
trade.ec.europa.eu/doclib/docs/20…
There's a wrinkle buried in the EU-Japan trade deal which I assume will affect the future of the UK auto industry too, namely that Japan has agreed to conform production to EU standards in future.
1/6
trade.ec.europa.eu/doclib/docs/20…
The EU spins it as helping EU manufacturers sell their cars in Japan. Which it does, in the sense that BMW, Mercedes, etc. don't manufacture in Japan so their cars sold in the Japanese market are imports.
But the situation where the UK is concerned is very, very different. 2/6
But the situation where the UK is concerned is very, very different. 2/6
Why? Because the biggest car producers in the UK are Japanese firms making cars for the UK/EU market. They're making the same cars in the UK they already make in Japan.
But if ALL Japanese cars meet EU standards in future, these firms can supply the EU from Japan not the UK. 3/6
But if ALL Japanese cars meet EU standards in future, these firms can supply the EU from Japan not the UK. 3/6
Why might they choose to do so?
1. The EU's tariff on cars from Japan will fall to 0% by 2027. That makes it cheaper to produce them in Japan and sell them in the EU.
2. The UK will face tariffs of 10% on UK-made cars exported to the EU unless we can reach a deal.
4/6
1. The EU's tariff on cars from Japan will fall to 0% by 2027. That makes it cheaper to produce them in Japan and sell them in the EU.
2. The UK will face tariffs of 10% on UK-made cars exported to the EU unless we can reach a deal.
4/6
Even if we can do a deal with the EU, the situation's not brilliant. Where will Japanese manufacturers base themselves in future?
1. Japan
2. EU, with its barrier-free market of 440 million people.
They won't want to be in the UK, where trade is the most complicated of all. 5/6
1. Japan
2. EU, with its barrier-free market of 440 million people.
They won't want to be in the UK, where trade is the most complicated of all. 5/6
What of the UK domestic market?
They could retain *limited* production here (unlikely).
And/or if we reach a deal with Japan that removes tariffs on Japan-made cars, they'll pop them on ships from Japan.
And/or if we reach a deal with the EU, they'll make more there.
ENDS.
They could retain *limited* production here (unlikely).
And/or if we reach a deal with Japan that removes tariffs on Japan-made cars, they'll pop them on ships from Japan.
And/or if we reach a deal with the EU, they'll make more there.
ENDS.
Added, in case it's not obvious...
Japan has agreed to conform to EU standards. Means UK standards for cars can't deviate from EU standards in the future. Not so long as we still want Japanese firms to produce here. (They're not going to produce "special cars" just for the UK.)
Japan has agreed to conform to EU standards. Means UK standards for cars can't deviate from EU standards in the future. Not so long as we still want Japanese firms to produce here. (They're not going to produce "special cars" just for the UK.)
