Partial implementation of trade agreement on automobiles between the UK and US
Canada has announced its intention to ratify the United Kingdom's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a significant move that could boost trade between the two nations under the Pacific-rim pact.
The CPTPP, a free trade agreement with 11 other countries, is considered a significant achievement by Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT). The agreement is expected to safeguard jobs and economic growth, providing a platform for future growth based on an unequivocal commitment to free and fair trade, the avoidance of tariffs on all automotive products, enhanced customs cooperation, and regulatory partnership.
The UK has already joined the trade bloc, but Canada and Mexico did not ratify its accession, preventing UK automakers from trading with the two countries under the agreement. However, the US has reduced tariffs on vehicle imports from the UK from 25% to 10%, and has also agreed to a trade deal with the UK in May that includes the reduction of US vehicle import tariffs.
At the recent SMMT summit, Hawes stated that the government's efforts are a good start, but more action is needed to ensure the UK remains and can re-secure its position as one of the best places in the world to invest in automotive. Hawes emphasized the importance of more open rules of origin, renewed investment in battery production, localisation, and shared supply chains, and avoiding tariffs to build a closer relationship and deeper understanding of what makes the UK competitive.
However, there is still confusion over rules of origin for both vehicles and parts, particularly with the tariffs of 25% still on steel and aluminium. Hawes is awaiting details on how the deal will be administered. The diversity of export markets, including the UK's recent improved trade relations with India, the EU, and potentially the CPTPP, is important, particularly given the international headwinds the industry faces.
The CPTPP includes 11 other countries apart from Canada and the UK. The SMMT considers securing a deal that makes automotive a priority as a significant achievement, and the implementation of the deal is welcomed as "great news". The UK government's support for Canada's ratification of the CPTPP reflects a shared commitment to this trade agreement.
In conclusion, the ratification of the UK's accession to the CPTPP by Canada is a significant step towards strengthening trade ties between the two nations. However, there are still challenges to be addressed, particularly with regards to rules of origin and the tariffs on steel and aluminium. The UK government and the SMMT will continue to work towards ensuring the UK remains a competitive player in the global automotive industry.
