France on Thursday came round to backing Germany, which has always supported the UK's calls to be designated European for the purposes of the Industrial Accelerator Act. The legislation, still in draft form, is designed to protect domestic manufacturing from cheap Chinese competition.
The joint paper proposes that for the automotive sector specifically, 'Made in Europe' should comprise the EU27 and an opt-in for European partners who were part of the single market as of 1 January 2020 – a clear reference to the UK. Norway, which is in the single market but not an EU member, would also be included.
The opt-in comes with conditions, including alignment on trade defence measures: the EU's tariffs on Chinese EVs imposed in 2024, any future trade barriers such as the quota deal being finalised with China on hybrid car exports, and relevant anti-circumvention measures. Countries would have to accept dynamic alignment on the EU's conditions related to third-country investments and trade defence measures.
Liam Byrne, chair of the UK's business, innovation, science and trade committee, said aligning with Europe on trade defence was a small price to pay to save British manufacturing. "Sometimes politics is the least worst choice – aligning with Europe on trade defence against an over-subsidised China is the way we deliver for all of us," he said. "Tariffs on these would be a small price to pay for the protection of a European manufacturing industry which safeguards jobs across supply chains in the UK and makes us less prone to coercion from China in the future."
On Wednesday, the head of Mercedes-Benz implored EU leaders to let the UK join the package, warning that locking the UK out would amount to a deliberate choice to hurt the car industry across the bloc.
The UK has been under pressure for weeks to align with EU tariffs on Chinese vehicles. This week Business Secretary Jonathan Reynolds said he would not be coerced into aligning. However, the government has been desperate to be included in the Made in Europe package, fearing billions of pounds of trade could be lost if the UK is locked out of EU supply chains.
On Thursday, Trade Minister Anas Sarwar hinted that the UK was minded to align, telling Politico that the UK and EU must "work together and act in lockstep" to tackle China's dominance in the automotive sector.
Bernd Lange, chair of the European Parliament's international trade committee, told The Guardian the UK should "of course" be included, calling France's previous opposition "not rational".
A Downing Street spokesperson said the government had yet to see the detail but saw the development as positive.