Richard North, 23/01/2021  

"Good news from Nissan", writes wunderkind Tom Harwood, he of Students for Britain. Now writing for the Daily Telegraph, he is living proof that profound ignorance is no bar to a career in modern journalism.

He is not, of course, the only one to remark on the intervention of the car-maker's chief operating officer Ashwani Gupta, who says that Brexit will give the company a competitive advantage over its car industry rivals.

But, to Harwood, this provides "more proof that Brexiteers were right". It turns out, he writes, "that regulatory autonomy, combined with a free trade deal with nearby markets is a good thing after all".

If nothing else, this demonstrates that the man-child either hasn't read the TCA or simply hasn't understood it. And, quite obviously, no one in his circle has pointed out to the poor lad that, in respect of the automotive industry, Johnson's administration has not secured regulatory autonomy.

Rather, the government has committed to the maintenance of UNECE (WP.29) standards, thereby keeping British automotive regulations in lockstep with EU regulations, ensuring that the UK and EU regulations remain fully harmonised.

This drives a horse and cart through Johnson's claim in his Christmas Eve speech that: "We have taken back control of every jot and tittle of our regulation, in a way that is complete and unfettered".

The irony here is that, as far back as 1958, when the EEC was still polishing its desks in its new offices in Brussels, UNECE concluded an Agreement on "harmonised technical UN Regulations for the approval and certification of new wheeled vehicles, their equipment and parts".

Administering a global body known as the World Forum for Harmonisation of Vehicle Regulations (WP.29), UNECE thus launched what was the first – and largely successful - attempt to create a single market in automobile manufacture, and on a global scale, pre-dating any harmonising activity by the then EEC, its systems now adopted by the EU as the basis for its vehicle construction and approval regulations.

Crucially, in 2018, the EU then adopted what is regarded as the Holy Grail of regulatory harmonisation, UNECE's so-called Regulation 0 on the International Whole Vehicle Type Approval (IWVTA). This completed the suite of regulations covering vehicle construction from components to finished vehicles.

With the rest of the UNECE standards, the IWVTA has been included in the TCA, requiring each Party to "accept on its market products which are covered by a valid UN type-approval certificate as compliant with its domestic technical regulations, markings and conformity assessment procedures, without requiring any further testing or marking to verify or attest compliance".

While the UK failed to secure a mutual recognition agreement on conformity assessment – thus exposing any number of UK manufactured products to the expense and potential delay of border checks on entry to the EU – this provision effectively serves as such an agreement in respect of motor vehicle exports.

Checks are done in-factory and the worst-case scenario is that Nissan has to hire regulators from an EU Member State, instead of from the UK, in order to verify compliance. The cost implications for a company the size of Nissan are minimal.

This, as far as Brexit goes, very much makes the automotive industry a special case - with the media completely unaware of what is going on. To all intents and purposes, the Single Market survives in respect of the automotive industry and, with the no-tariff agreement, Nissan's position has changed very little from pre-Brexit days.

Unsurprisingly, therefore, Gupta is claiming that the "new" customs procedures amount to "peanuts". And he is right. Unlike most other businesses, the company can continue trading on very similar lines to those it enjoyed before the UK left the EU.

The one possible fly in the ointment was the rules of origin, and in particular, the "insufficient" production" rule which might have had a significant impact had the company imported batteries from other third countries for its electric vehicles, and then sought to export the vehicles to EU Member States.

But now the company is planning to build its own electric batteries in Sunderland, it will have the edge on many of its rivals which will still be reliant on batteries imported from Asia.

Those of Nissan's EU-based rivals which then seek to export to the UK may well be caught by the self-same rules of origin provisions, thereby giving Nissan the competitive advantage on what will be, effectively, a protected home market.

Given that Johnson is planning to ban new cars and vans powered solely by petrol and diesel by 2030, and hybrids by 2035, the prime minister is creating an ideal market base for Nissan – a strong domestic demand on which to build a competitive export performance.

Separately, of course, Nissan has been offered £80 million in subsidies, but there have also been scarcely concealed indirect subsides, such as infrastructure improvements to induce Nissan to keep producing in the UK.

In its own terms, this makes absolute sense and is little different from what other countries are doing to keep car producers on their territories. But no one should be under any illusion that this is the "free market" at work, or that Johnson has secured "regulatory autonomy" in respect of the car industry.

The treatment of this car firm is also in sharp contrast to the way the food industry is being treated. Only yesterday, we saw the plaintive lament from the Cheshire Cheese Company which announced, "with great sadness" that it had been forced to stop sending its cheese to the EU.

"Due to an oversight in the Free Trade deal", it said, "it is impossible for us to send cheese to our EU online consumers", adding that "DEFRA has told us not to expect an exemption or change anytime soon". The company concluded: "Investment and hope is lost today".

Yet, there was a way in which small, mail-order firms could have been accommodated - by the UK agreeing to adopt in its entirety the EU's food safety acquis - as per the Isle of Man, outlined here in respect of the infamous Isle of Man "kippergate" incident, into which Johnson blundered.

IoM is within the EU's customs union but is not part of the Single Market. Therefore, ostensibly, Regulation (EC) No 854/2004 on "official controls" applies, which would require fisheries products sent to the UK (pre Brexit) to be routed via a Border Control Post, putting IoM traders in the same impossible position as the Cheshire Cheese Co.

However, as a special concession, its traders are permitted to conduct direct mail order trade with the UK, selling small quantities of goods. This has been permitted because the Isle of Man government has committed to adopt in its entirety the EU's food safety acquis.

However, since Johnson insisted on regulatory autonomy in respect of food legislation, and the freedom to diverge from EU rules, there were no circumstances where UK firms were going to be permitted to carry out direct selling to EU retail customers. This is not a bug, as they say. It is a feature.

Perhaps the difference was that Johnson had hopes of doing a deal with the US on trade in food and agricultural products whereas it is unlikely that there could be any regulatory convergence between the US and the UK on automobile manufacture.

Thus, while food businesses and other enterprises have been thrown to the wolves, the position of Nissan (and other UK car manufacturers) has been protected by an agreement to keep regulatory harmonisation with the EU. And dozy little Tory boys like Tom Harwood haven't even noticed.

Also published on Turbulent Times.

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