France has dropped its opposition to the UK being treated as European for the car industry under the EU's draft "Made in Europe" rules, provided the British government aligns with the bloc's tariffs on Chinese electric vehicles, the Guardian reported on Thursday.
The paper said Paris had come round to backing Germany, which has supported British calls to be included in the Industrial Accelerator Act, the legislation that would favour European-made products in public procurement and subsidies in strategic sectors.
The shift, if confirmed, would remove the main obstacle to Andy Burnham's push for the UK to be designated a "trusted partner" under the act. As drafted by the European Commission in March, the text would exclude cars built in Britain from its benefits, a prospect that has alarmed the UK motor industry and the unions.
The price attached is a change in British trade policy. The EU imposed additional duties of 7.8% to 35.3% on Chinese-built EVs in October 2024, depending on the manufacturer, on top of the standard 10% import duty. The UK currently applies only the 10% standard rate.
The link between access to the scheme and tariff alignment is not new. The Financial Times reported in September that Brussels wanted the UK to raise duties on Chinese cars and align more closely with EU trade policy, and the Times reported on 4 October that ministers were prepared to match the EU levy. Reuters said it could not verify the Times report.
A UK government spokesperson told Reuters and CNBC that no tariffs had been imposed on Chinese EVs and that the government continued to "engage closely with industry". No commitment to align has been announced.
Politico reported that the UK's trade minister, Anas Sarwar, said on Thursday that Britain and the EU must "work together and act in lockstep" to tackle China's dominance in the automotive sector.
Burnham has made access to the scheme a central aim of his reset with Brussels. Speaking to reporters on 22 September on his way to the UN General Assembly, he said the UK would argue to be a trusted partner and that "we are not the problem". On 12 October he told MPs that the EU-UK summit in November would be an opportunity to raise concerns about the legislation.
France had led resistance to that case. At a meeting of EU ministers in September, Sébastien Martin, the French minister delegate for industry, backed limiting public support to products made in the EU, saying the UK had made a choice to leave the EU. Poland's economic development minister, Michał Baranowski, said at the same meeting that the UK needed a "clear answer" because it sits outside the EU but inside Europe.
Germany's support for British inclusion reflects the integration of its car supply chains with UK plants. UK carmakers have warned that the EU economy stands to lose €24bn overall if Britain is excluded, according to Borderlex, a figure drawn from analysis published by the Society of Motor Manufacturers and Traders.
Ireland, which holds the rotating presidency of the Council of the EU, is brokering a compromise among the 27 governments. MLex reported on 12 October that Irish officials aim for an agreement in November and expected to circulate a further compromise text in mid-October.
Any move by the UK to raise duties carries a risk of retaliation from Beijing. The Chinese embassy in London expressed "serious concern" at reports that ministers were considering matching the EU levy, CNBC reported.
The French government has not made an on-the-record statement on its position, and no Council text including the UK has been published. The legislation remains a proposal and requires agreement by member states and the European Parliament before it takes effect.
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