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Saturday, October 29, 2016

Mystery over assurances given to Nissan

What exactly the UK Government promised Nissan for them to invest in new production lines in the UK remains a mystery but denials by government ministers that it did not involve them getting their chequebook at some time in the future are difficult to believe.

As Vince Cable says in the Guardian, either Nissan were told that the Government will pick up the tab for any tariffs they have to meet after Brexit, or they are envisaging that the UK will remain in the European free trade area. Suddenly, Brexit is starting to sound remarkably like anything other than Brexit.

The paper says that it emerged on Thursday that the car industry has been given concrete assurances that it will remain competitive and not be subject to tariffs when the UK leaves the EU. This enabled Nissan to announce it planned to build two new models at its Sunderland plant:

The government and Nissan have said there was no “sweetheart deal” but refused to deny that a written guarantee was offered that gave assurances the company would not be disadvantaged by May’s Brexit policy. Pressed repeatedly on whether there was a letter, No 10 said there were “all forms of communications”.

Cable told the Guardian: “The only way these big supply chain companies are going to commit themselves to Britain – and Nissan is the biggest – is that if they give them guarantees they are not going to be caught up in rules of origin problems, which is what happens if you leave the customs union.

“And if you stay in the customs union, which I think is what we’re talking about, what is the role of Dr Fox? Because it means you no longer have an independent trade policy.”

He added: “If you leave a customs union you, by definition, will have tariff regimes and have to validate all the flows of widgets going backwards or forwards. A customs union is not an incredibly big deal and it is not more radical than the single market. Turkey is in a customs union with the EU. But it does mean you can’t go round the world doing separate bilateral deals.”

The UK Government's position on Brexit is now as clear as mud. Many other companies, including those building helicopters in Somerset, will now be asking for a similar deal. The Government did a good job in keeping Nissan on board, but the ramifications of whatever deal they struck will be significant. The Brexit web has become much more complex and difficult to navigate.
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