Germany and France agree on possible exemption for Britain and Norway — Deutsche Welle

Germany and France reached a compromise earlier this month on the European Union’s proposed Industrial Accelerator Act (IAA). It could allow suppliers from non-EU countries, including the United Kingdom and Norway, to qualify for European-origin status. The initiative is intended to modernize European car plants and provide subsidies only to cars made in Europe, Deutsche Welle reports.

Turkey, Morocco, Japan and South Korea are concerned about the rules’ potential impact on their automotive industries. At the same time, the proposals still have to overcome legislative hurdles in Brussels before they can become law.

Requirements for component origin

The draft act stipulates that 70% of the total value of a car’s components, excluding the battery, must be produced in Europe. The initial proposal applies only to battery electric vehicles, plug-in hybrids and fuel-cell models. Last year, such cars accounted for 27% of all new car registrations in the EU.

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Under the updated Franco-German plan, the rules could also be extended to some non-plug-in hybrids, as well as petrol and diesel cars that will be allowed to be sold after 2035. Tommaso Pardi, a researcher at the French National Centre for Scientific Research, noted that, on average, around 83% of components in a European electric vehicle, excluding the battery, already originate in Europe.

Risks for EU partners

Ayhan Zeytinoglu, head of Turkey’s Economic Development Foundation, said that restricting access to the scheme could cause significant harm to Turkish exports to the EU. According to him, 73% of Turkey’s total automotive exports are sent to the European Union. The Turkish automotive exporters’ association OIB estimated supplies to the EU last year at $30.1 billion, or €26.8 billion.

The European Association of Automotive Suppliers, CLEPA, by contrast, is calling for stricter requirements. Its secretary general, Benjamin Krieger, said that without better protection for manufacturers in the region, up to 650,000 jobs could be lost by 2035. He proposed an accession mechanism for partners that meet criteria for regulatory compatibility, social and environmental standards, reciprocity and the rule of law.