EU, UK trade deal gives grace period to eco cars

The European Union and the United Kingdom have agreed on a six-year grace period before placing full tariffs on hybrid and electric vehicles made with parts from outside of the two areas.

In a free trade deal struck between the two on Thursday, there will be basically no tariffs on goods traded between Britain and the EU from January 1.

But sufficient local content is needed to qualify for the zero tariffs. For cars, tariffs are imposed when the ratio of parts from outside the region used for finished vehicles exceeds 45 percent.

The UK and the EU have agreed on a 6-year-phased approach for hybrid and electric vehicles.

Until 2023, cars with up to 60 percent of parts from outside the area will be tariff-free.

It will be 55 percent from 2024 to 2026 and up to 45 percent beginning in 2027.

Japanese carmakers such as Toyota Motor and Nissan Motor assemble hybrid and electric vehicles using major components imported from Japan.

The eco-friendly vehicles are main pillars of their local production.

The companies will need to raise their local content to avoid future tariffs.