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As the summer winds down, things are hotting up in Canada as strikes at its two largest rail firms threaten to derail trade. There’s also an interesting new approach from China to circumvent US controls preventing it from accessing advanced tech, while the Department for the Environment, Farming and Rural Affairs (Defra) has defended the Common User Charge (CUC) after criticism from importers and customs agents.
The big picture: North America could be set for major trade disruption as workers at two of the biggest Canadian rail firms have gone on strike following failure to reach a new pay agreement.
As Canadian National Rail and Canadian Pacific Kansas City account for 80% of Canada’s rail service, experts warn that this transport disruption is likely to hit trade in wheat, energy, timber, wine and cars for weeks to come.
Elsewhere, China and the EU’s trade dispute also rumbles on. The EU published its draft proposal for tariff values to be applied to Chinese EV firms from October – if voted for by enough bloc countries, these duties would remain in place for five years.
While lower than expected, China was still perturbed and continued its retaliatory campaign of hitting the bloc’s food exports, launching an investigation into a raft of subsidy measures across eight EU countries' dairy industries.
Good week/bad week: A good week for Scotch whisky as Brazil has granted the product protected status.
Scottish distillers exported £90m of Scotch to Brazil in 2023, which is one of the world’s five fastest growing markets for alcohol.
The Department of Business and Trade (DBT) has hailed the UK’s Geographical Indication status, which confers special status on products with strong regional links, as well as helping protect products from counterfeits and boosting confidence among producers.
Business and trade secretary Jonathan Reynolds said the news should “give Scottish distillers the confidence they need to export to one of the world’s largest economies without having to compete with fake knock-offs and pale imitations”.
Bad news for household energy bills, as Ofgem announced it will raise its price cap by 10% from 1 October.
In addition to bad weather, geopolitical events such as Russia’s ongoing war in Ukraine were held responsible for the hike. Gas prices have risen due to uncertainty about the extent of Russia’s remaining supply to Europe.
Ofgem’s chief executive, Jonathan Brearley said:
“Ultimately, the price rise we are announcing today is driven by our reliance on a volatile global gas market that is too easily influenced by unforeseen international events and the actions of aggressive states.”
While the UK has sanctioned Russian oil, imports of liquified natural gas (LNG) are still permitted. The Energy and Climate Intelligence Unit recently highlighted the UK’s continued “reliance on gas” as a point of vulnerability.
How’s stat? 11/50. That’s the number of Chinese tenders, recently viewed by Reuters, that showed Chinese firms sought access restricted US cloud computing technology.
With US export controls in place on semiconductors, Chinese firms are using the cloud to gain access to chips and generative AI models. Accessing them though the cloud is not prohibited under US regulations, because it’s not classed as commodity, software or technology.
Amazon’s cloud service Amazon Web Services was cited in four tenders. A spokesperson told Reuters the firm complies with all US laws and regulations “regarding the provision of AWS services inside and outside of China”.
The week in customs: Defra has defended the new CUC for importing bringing sanitary and phytosanitary (SPS) goods into the UK. Introduced 30 April and first invoiced this month, the charge funds the Sevington Border Control Facility in Kent that processes the goods.
This follows customs agents complaining of a “chaotic” implementation of new border controls and firms being charged for checks that never took place.
Quote of the week: “It would only take half a day to teach someone to put together a basic free circulation entry, but once sat in a brokerage department, that’s not what every shipment will look like, day in, day out.”
Mark Lamming, trade and customs expert at the Chartered Institute of Export & International Trade, discusses learning the ropes as a freight forwarder amid significant industry upheaval and a new wave of professionalisation.
What else we covered this week: Following last week’s first What’s the Deal? feature explaining the African Continental Free Trade Area (AfCFTA), we have a Trade Insights article looking at what the deal means for UK trade.
We have a pair of Trade Explained pieces digging into dual-use goods, one explaining the how dual-use goods are defined and the export controls that apply to them, and another looking at the difference between a standard physical good and an ‘intangible good’, such as software or even information communicated via conversation.
This week’s Commodity in Focus is gold, which has seen an historic price surge in response to the geopolitical tensions rising in the Middle East and the Balkans.
True facts: China’s setting its sights on EU dairy, which includes three of the world’s largest milk exporters: Germany, the Netherlands and Belgium (only the latter is subject of the Chinese probe). However, the world’s largest exporter of dairy products is New Zealand, responsible for over a fifth of the world’s milk exports in 2023.
The number of cows in New Zealand vastly outstrips the human population, with 10 million cows versus only 5.3 million people according to recent estimates.