EU television manufacturers have warned that they may be locked out of the benefits of a future UK trade deal, threatening thousands of European jobs and driving up the price of TVs for British consumers.
Digital Europe, an association representing Europe’s tech industry, has written to the European Commission twice in recent months warning that EU TVs could face UK import tariffs that would more than wipe out profit margins after Brexit on a business worth more than €900m. The group represents manufacturers including Samsung, Panasonic and LG.
Most televisions sold in the UK are made in the EU. EU27 countries exported 3.7m of them to the UK in 2019, according to data from Eurostat — products worth some €931m.
Industry representatives told the Financial Times that this business was under threat in part because of the EU’s own stance in the post-divorce trade negotiations. Brussels has pushed a tough line on the percentage of a product that must be either European or British for the good to qualify for the benefits of any deal — a restriction known as “rules of origin”.
Brussels’ general stance in the negotiations has been that content from outside the UK and EU used in a manufactured good should be limited to 45 per cent of the total, if the product is to benefit from the future trade agreement. TV manufacturers are concerned their products would not qualify, upending supply chains and the model of assembling in Europe to export to the UK.
“The EU-UK negotiations . . . are hugely significant for the future of Europe’s digital and tech sectors,” Digital Europe said in a letter to EU chief negotiator Michel Barnier dated October 9, and seen by the Financial Times.
The letter notes that appropriate rules of origin “will be vital to allow tech products assembled in Europe, such as TVs, to take advantage of zero tariff trade between the EU and the UK”. It calls for an approach that will allow “the widest possible use of the preferential terms of the [Free Trade Agreement]”.
Digital Europe declined to comment when contacted by the FT.
The commission has also rejected British proposals to allow content from other countries with which Britain and the EU both have trade deals to count as local — despite support from the tech industry for such an approach because of the volume of components sourced from Asia.
EU customs rules allow some television components, notably LED display panels, to be imported tariff free into the bloc where assembly of the TVs then takes place, often at plants located in central and eastern Europe. Samsung has factories in Hungary and Slovakia, for example, while Panasonic has one in the Czech Republic.
The industry’s concerns have also been fuelled by the UK’s decision to set a 14 per cent tariff on imported TVs — a relatively high duty for an industrial product — despite limited local manufacturing of televisions. The UK has one domestic manufacturer for LED TVs: Cello Electronics, which has a production line in Bishop Auckland, County Durham.
“This tariff could cost hundreds of millions for the TV-manufacturing industry, and place a significant burden on companies as they seek ways to avoid it,” Digital Europe warned in a letter to the commission in July.
The UK government said that the country’s post-Brexit system of tariffs was “tailored to the needs of the UK economy and UK businesses, and reflects UK interests and our free trade ambitions”.
Britain has also “proposed modern and appropriate rules of origin that work for UK-EU trade”.
Digital Europe has called for “a derogation or exemption” in the rules of origin “for components that can’t be found in either the EU or the UK”. Manufacturers note that this includes the screens used in cutting-edge TVs.
Industry representatives have also called on negotiators to explore a similar solution to one used for cars in the EU’s trade deal with Canada, where a temporary quota was established of vehicles that could have a higher percentage of foreign components.
The lobbying signals EU businesses’ increasing anxiety about the talks. Tech industry representatives contacted by the FT expressed frustration at the public and political attention devoted to the question of future EU fishing rights in British waters — a big source of tension in the negotiations — when far larger economic interests are at stake. EU carmakers are also among those to have urged Brussels to take account of their interests.
Companies contacted by the FT declined to comment and referred queries to Digital Europe.
A commission spokesperson declined to comment on the letters, saying the institution would “reply in due course”.
The spokesperson also referred the FT to previous statements by Mr Barnier, who has repeatedly warned of the need for prudence in setting rules for trade in goods so as to prevent the UK becoming a “manufacturing hub” on the single market’s doorstep.