EU Urges UK To Join Trade Treaty To Avoid Risks To Electric Cars Industry - Reports

EU Urges UK to Join Trade Treaty to Avoid Risks to Electric Cars Industry - Reports

The European Union is urging the United Kingdom to join the Pan-Euro-Mediterranean (PEM) convention on preferential rules of origin to avoid risks to its electric cars industry caused by coming post-Brexit tariffs, the Financial Times reported on Friday, citing senior Brussels officials

MOSCOW (UrduPoint News / Sputnik - 02nd June, 2023) The European Union is urging the United Kingdom to join the Pan-Euro-Mediterranean (PEM) convention on preferential rules of origin to avoid risks to its electric cars industry caused by coming post-Brexit tariffs, the Financial Times reported on Friday, citing senior Brussels officials.

In mid-May, the Stellantis car manufacturing corporation, which owns 16 popular brands including Peugeot, Citroen and Opel, threatened to leave the UK if the country's authorities do not revise the post-Brexit trade agreement on the production of electric cars. Starting next year, at least 45% of parts must be locally produced. If the figure is not reached, producers will have to pay a 10% tax when exporting their vehicles through the English Channel.

"The simple way to solve this is for the UK to join the Pan-Euro-Mediterranean convention," a senior European official told the newspaper.

The duties were postponed until 2024 to allow the electric car industry in the UK and the EU to increase the output of batteries, which make up a significant part of the cost of electric cars. The European Commission has ruled out extending the duty-free regime, even as London and Brussels continue to import many components from China, South Korea or Japan due to lack of local production capacity, the newspaper said.

"If you go down that route (of an extension) we will never be able to build our own battery supply chain in Europe because (companies) will lock in long-term supply from China," European Commission Vice-President Maros Sefcovic, who is in charge of relations with the UK, told the Financial Times.

After joining the PEM convention, the UK will be considered a single "region of origin" with other signatory-states. As a result, the UK and the EU will be able to avoid paying duties when exporting certain goods, including electric cars, since Turkey and Norway, which are also parties to the convention, are already developing their own battery industry, the newspaper said.

The PEM convention was adopted in 2012 at the EU's initiative. To date, the convention encompasses EU members, the countries of the European Free Trade Association, as well as several middle Eastern, North African and Balkan states.