By Daniel Hunter
Ken Clarke, in his capacity as the Prime Minister’s trade envoy, has highlighted the extraordinary potential benefit which a successful Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US could have on jobs and output in the UK car industry.
His comments come in the week he and the Business Secretary Vince Cable jointly hosted a meeting in Whitehall with senior executives in the automotive industry and the powerful sectoral trade body, the Society of Motor Manufacturers and Traders (SMMT) to discuss how to ensure UK firms get the most out of the TTIP.
A successful trade partnership between the EU and the US would not only remove trade tariffs, reducing costs for those who export to and import from the US, it would also bring manufacturing standards in the two blocs into line. This would have a huge positive impact by removing the red tape and bureaucracy that can get in the way of companies that would like to take advantage of the opportunities presented by foreign markets. It is forecast that the agreement could boost total exports for the UK as a whole by 1.3%, or around £19 billion.
Figures released in an impact assessment on the TTIP conducted by the Centre for Economic Policy Research show a successful deal could see the UK automotive industry gain double digit growth in exports:
- In the most optimistic scenario UK motor vehicle exports (including components) are projected to grow by up to 25% whilst imports grow by 5%. The study projects that motor vehicles (including components) output could increase by over 7%, and that jobs could also increase by 7%.
- Even based on a more modest scenario, exports are expected to grow by nearly 11%, sectoral output by 4%, and jobs by 4%.
- Current UK auto sector employment is up at 131,000.
- Other key sectors set to gain are financial services, insurance services, the chemicals industry, and the food & drink industry.
A joint paper written in May by the European and American Automotive trade bodies estimates that the elimination of tariffs and 10% of existing non-tariff barriers would increase EU vehicle and parts exports to the US by 71%, and that the elimination of tariffs and 25% of existing non-tariff barriers would increase EU vehicle and parts exports to the US by 149%. (Note: these percentages are accumulative. UK car industry output is set to be one of the highest beneficiaries in the EU from a successful deal).
This comes at a time when the UK car industry is going from strength to strength. In 2012, we produced 1.58 million vehicles. Figures compiled by the Society of Motor Manufacturers and Traders (SMMT) on a rolling 12 month basis show that UK vehicle production continues its upward trend, up 17% in April and output so far this year is up 1.5%. SMMT analysis suggests that UK car manufacturing could grow a third bigger by 2016 with growth expected year-on-year.
Ken Clarke, Minister Without Portfolio and the Prime Minister’s Trade Envoy said: “These figures show the extraordinarily beneficial impact this partnership could have on the United Kingdom car industry and supply chain. They will provide welcome news to workers and employers in Sunderland, Luton and all over the UK. A successful agreement should also see millions shaved off export related costs for UK companies across many other sectors and provide an extremely welcome boost to our overall economy of 0.3 per cent of GDP. This is manna from heaven for western economies looking for opportunities to stimulate growth.
"The Transatlantic Trade and Investment Partnership is a once-in-a-generation opportunity to boost the economies on both sides of the Atlantic by billions of pounds. It is also the sort of world-defining reform that we, in the UK, could only ever lead from within the EU. The Prime Minister has been banging the drum from inside the EU to ensure that this agreement is the best it can be for Britain. Outside the EU we would be reduced to watching from the sidelines.
"I want to make sure that our already highly successful car industry and supply chain benefits from this partnership to the greatest possible extent, which is why the Business Secretary and I will spend this afternoon hearing from senior executives what barriers they face in exporting to the US, and how we can ensure this trade deal tears them down.”
Join us on