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Abu Dhabi, UAEThursday 21 June 2018

Car makers warn of potentially disastrous Brexit as EU and UK sign agreement

European car association says Britain's biggest manufacturing sector is at a serious risk of disruption with UK's divorce from Europe Union

Cars are displayed outside a showroom in west London, Britain. The European car association Acea says there is probably major trouble ahead for the region's car makers. Luke MacGregor/Reuters
Cars are displayed outside a showroom in west London, Britain. The European car association Acea says there is probably major trouble ahead for the region's car makers. Luke MacGregor/Reuters

European car makers on Monday urged Brexit negotiators to pay "urgent attention" to the impact of the UK's divorce from the bloc on Europe's auto industry or risk disastrous consequences.

The warning came as Britain and the European Union on Monday reached a landmark deal on a transition phase that will last for nearly two years after the historic Brexit divorce next year, EU negotiator Michel Barnier said.

The fate of British auto production after Brexit has been a major concern for Prime Minister Theresa May who has pleaded for certain economic sectors to be allowed to keep seamless trade links to Europe.

But the European side has flatly refused any talk of the UK "cherry picking" benefits of EU membership after Brexit, without fulfilling the obligations of being a member.

Given the split, the European Automobile Manufacturers' Association (Acea) said that Britain's biggest manufacturing sector was at a serious risk of disruption with Brexit.

The association "is calling on the negotiators to pay urgent attention to sector-specific issues in order to avert potentially disastrous implications on the entire automotive supply chain", said Acea, which represents Europe's 15 major car and truck makers.

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The fate of the auto sector will be at the heart of talks on future relations between Britain and the EU, which are expected to launch in the coming weeks.

Britain is home to over 30 production facilities, producing both engines and vehicles, as well as other suppliers that are deeply integrated into European production chain.

In total, the sector employs some 814,000 people in Britain, Acea said.

The association warned that the continued health of Britain's car sector required "the UK remains fully aligned with all relevant EU legislation" in order to avoid major turmoil.

This meant that Britain must maintain full powers to approve new vehicle models for EU roads, part of the so-called type approval system that allows national authorities to greenlight vehicles for use Europe-wide.

Acea also warned that if Britain, the second biggest market in the bloc, withdrew from the EU's CO2 emission targets, the industry would struggle to stick to its anti-pollution commitments.

The association also warned that any hard Brexit scenario, which would see tariffs slapped on cars traded between the EU and Britain, "would be extremely burdensome" for car makers and consumers alike.