WEST Midlands Mayor Andy Street has joined with business leaders in highlighting concerns over the need for the Government to secure vital tariff-free exports in any trade agreement between the UK and the European Union.
In letters to Liz Truss, the Secretary of State for International Trade, and Lord David Frost, the UK’s chief Brexit negotiator, the Mayor has warned that if complex ‘Preferential Rules of Origin’ terms are not included in any trade deal, the region’s exporters could face tariffs of up to 10 per cent on their EU bound goods.
International trade rules mean a product has to pass a nationality threshold to be exported tariff free, but once the UK leaves the EU many high-value products made in the West Midlands would fail to meet this threshold due to a large number of parts being sourced from around the world.
The EU has said it will accept parts sourced from within the bloc, but not those coming from other parts of the world – which is the existing arrangement, also known as ‘Preferential Rules of Origin’.
Modelling by the University of Birmingham shows the impact of tariffs to the region’s economy could be a drop of more than 12 per cent of GDP, while around £3,000 could be added to the average cost of a West Midlands-produced car.
To avoid this, the Mayor and the region’s business leaders have asked negotiators to push for ‘Preferential Rules of Origin’ to be included in any trade agreement.