France, Germany agree deal on car emissions and UK special status

France & Germany Agree on Softer Car Emissions and Special UK Status

Franco-German Deal on EU Car Emissions and UK Status

By Philip Blenkinsop

Background to the Agreement

BRUSSELS, Oct 16 (Reuters) - France and Germany have struck a deal on cars to water down EU-wide CO2 emission targets for 2035 and open the door for Britain to be treated as a trusted partner under the EU's "Made in EU" rules, the two countries said on Friday.

The European Commission proposed last year that CO2 emissions from cars should drop by 90% from 2021 levels in 2035, but said automakers would have to close the gap to 100% by using low-carbon steel and alternative fuels.

Details of the Softer Emissions Target

Under the Franco-German plan, the target would be set at 90% without the need for any further compensatory measures. The softened target is broadly in line with the wishes of German automakers.

Local-Content and Low-Carbon Requirements

The joint plan also addresses an EU proposal that introduces local-content and low-carbon requirements for products bought through public procurement, public auctions or via subsidy schemes.

France vs. Germany: Scope of "Made in EU"

France has been pushing for these products to be limited to those manufactured in the European Union. Other EU members, including Germany, believe other countries, including those closely linked in automotive supply chains and free trade agreement partners, should be included.

Inclusion of Britain and Other Partners

The provisional Franco-German plan says that for the automotive sector "Made in EU" should cover the EU's 27 countries and other European partners that were part of the EU internal market on January 1, 2020. 

That would include Britain, which left the EU single market at the end of 2020.

Implications for the UK Automotive Sector

An official at UK Prime Minister Andy Burnham's Downing Street office said it would be good news for Britain's automotive sector if it was included in the "Made in EU" scheme. He said, however, that the Franco-German proposal would need European consensus and that details had yet to be seen.

Conditions for UK Inclusion

The Franco-German plan also says that this inclusion should be subject to an agreement on full reciprocity, along with "dynamic alignment with EU conditions for investment from third countries and with EU trade protection measures".

That could mean Britain having to adopt the measures the EU has taken to limit imports of Chinese-built hybrid and battery electric vehicles.

Next Steps and Remaining Challenges

Even with a Franco-German deal, the two countries still would need to convince other EU members and the European Parliament for their plans to enter into force.

(Reporting by Philip Blenkinsop and Makini Brice; additional reporting by Alistair Smout; Writing by Charlotte Van Campenhout; Editing by Xevi Fontdegloria)