And chief executive Joachim Lang has warned Brexit is already “casting its shadow” – more than year before the UK officially leaves the EU on March 29, 2019.
In a press release issued today, the BDI set out a number of ideas in advance of the crucial summit meeting, which will be attended by leaders from across the bloc, including UK Prime Minister Theresa May.
However, Mrs May is unlikely to be particularly impressed by the BDI’s suggestion that the new arrangements should be a combination of a single market and a customs union.
This arrangement would be much like the existing relationship between the EU and Norway, which is part of the European Economic Area but not a member of the customs union.
Such an arrangement would mean Britain would be required to continue to allow the the unhindered movement of goods and persons, while British tariffs and laws would also need to be aligned with EU standards.
While the BDI touts the idea as allowing for a “comparatively gentle Brexit”, it acknowledges the political hurdles were “considerable”, not least because such a model would most likely mean Britain would be blocked from duty-free access to countries within the EU.
Alternatively, if Britain signed up for a straightforward customs union, Britain and EU countries would not impose tariffs on trade on one another and the same tariffs on other countries. This arrangement would be similar to the EU’s relationship with to Turkey.
However, the BDI regards this as a ”significant deterioration compared to the status quo”.
There would still be a need for some customs controls within such a union – albeit simplified ones, with more bureaucracy and delays, especially at the port of Dover, where more than 2.5 million freight vehicles pass through each year.
The BDI is concerned at the prospect of these delays, suggesting that most companies were expecting a loss of between 24 and 72 hours per delivery at the ports – delays which would be especially damaging for the German auto industry.
Mr Lang said: ”We demand a corresponding fundamental decision by the EU and the British government at the meeting of the European Council.”
“We call for a landmark decision by the EU and the UK government at the European Council meeting, otherwise some companies will be forced to put their contingency plans into action – the worst-case scenario that nobody wants and harms everyone.
“For German companies, duty-free and quota-free trade in goods is the minimum requirement, ideally within the framework of a customs union.”
Mr Lang pointed out that last year the UK slid two places to fifth of Germany’s most important trading partners.
He added: “This is an alarm signal that London must hear.”
(Additional reporting by Monika Pallenberg)