The Trade and Cooperation Agreement (TCA) between the United Kingdom and Europe came into effect in January 2021 when the UK left the EU in a process known as Brexit.
The TCA specified the rules around tariff-free trading between the UK and the EU post Brexit. Specifically it states that to qualify for tariff-free trading, 40% of the components which make up any goods or products must have been produced and sourced from the EU or UK, with this amount set to increase to 45% by January 2024.
Now, three major car manufacturers producing cars in the UK, Ford, Jaguar Land Rover and Stellantis, which owns Vauxhall, are pushing for the deadline to be extended until 2027 or risk car manufacturing in the UK becoming unviable and the closure of UK plants.
The basic issue is that for manufacturers in both the UK and the EU the majority of battery components are sourced in China and Asia, and although battery plant do exist in the EU and more are being built, the UK is lagging behind following the collapse of Britishvolt and the abandonment of plans to build a gigafactory in Northumberland.
Although the UK government has said the construction of the plant is a priority it will be several years before the plant is operational.
If you are looking for advice on trading in the UK or the EU why not contact our compliance experts at Product Compliance Support.