58.The aerospace sector is a global one, characterised by integrated cross-border just-in-time supply chains, a high degree of concentration, and continent-spanning economies of scale. The success of UK aerospace is founded on participation in this global system, since it specialises in a number of areas of civil aviation, and is not able to construct entire large civil aircraft.
59.Tariffs are not a significant threat to aerospace, since the UK and other major global aerospace markets are parties to the WTO Agreement on Trade in Civil Aircraft. This also means that the sector has little to gain from the UK making free trade deals beyond the EU, since it expects to trade on tariff-free terms with the major worldwide aerospace markets in any case.
60.Non-tariff barriers are a concern. Given the just-in-time supply chains operated by the industry, even border delays of a few hours could materially undermine UK competitiveness. Therefore, the Government should prioritise securing as frictionless a customs arrangement as possible for this sector.
61.The UK aerospace sector’s route to the global market is founded on participation in a harmonised global regulatory system. The sector has nothing to gain from regulatory divergence, since that would lock it out of global trade. In the case of aerospace, there is no trade-off between close harmonisation with the EU and access to markets beyond the EU. Instead, the two goals are complementary.
62.It is in the UK’s national interest to remain a member of EASA, and the Committee welcomes the Government’s indication that it will seek to do so. Leaving the European Aviation and Safety Agency (EASA) without any kind of deal would be highly disruptive for the UK, the EU and global aerospace and aviation. The Government and its negotiating counterparts in the EU should rule this out as soon as possible by making firm arrangements for a transition or implementation period. Even a smooth transition out of EASA could be protracted and costly, while giving no practical benefit over continued membership. The Government should give clarity about the future relationship between the UK and EU in order to improve conditions for investment in the sector.
Published: 19 March 2018