A turning point in the UK’s post-election “reset” in its relationship with Europe, US-China engagement and a grim new chapter in the Red Sea crisis lead this week’s trade news.
The Big Picture: This week’s headlines have been dominated by prime minister Sir Keir Starmer’s visit to Berlin, where he hailed a potential new agreement with Germany that could deepen cooperation on trade, defence and other issues.
This is part of what Starmer’s government has dubbed a “reset” of relations with continental Europe, a spokesperson said:
“A treaty of such magnitude has never been agreed between the UK and Germany. Alongside the longstanding Lancaster House Treaties that underpin the UK’s relationship with France, this new agreement will bring [all three countries] in line as our governments work in lockstep on key geo-political issues, such as the conflict in the Middle East and war in Ukraine.”
This agreement could be reached within six months, according to the Telegraph.
Starmer followed his Germany visit with one to France, where he attended last night’s Paralympics opening ceremony. He has emphasised on both visits that the outreach effort does not presage a reversal of Brexit, nor does he intend for the UK to join an EU youth mobility scheme – which the EU has set high on its agenda for a reformed post-Brexit deal.
Good week/bad week: It’s been a positive week for US-China engagement, as US national security adviser Jake Sullivan has been in China for discussions with President Xi Jinping.
Xi told Sullivan that “in this changing and turbulent world, countries need solidarity and coordination...not exclusion or regress”. The White House, meanwhile, also said that Sullivan’s discussions with Chinese foreign minister Wang Yi during the visit were "candid, substantive, and constructive discussions", while a call has been scheduled between Xi and US President Joe Biden.
It was also a week in which the Red Sea crisis escalated further, as Houthi rebels detonated explosives on an oil tanker in a move that an EU task force said “could lead to a severe ecological disaster with potentially devastating effects on the region’s biodiversity”. We reported on the incident in this week’s member-exclusive Commodity in Focus feature.
The Houthis have agreed to allow the tanker to be salvaged after being contacted by “several international parties”, the FT reported yesterday (29 August).
The week in customs: The government committed this week to £10.5m in new funding to support the port of Dover, the Eurotunnel at Folkestone and the Eurostar St Pancras with the implementation of checks required under the EU’s new Entry/Exit System (EES).
The system, which enters force on 10 November, will require those entering the EU to provide biometric data.
Transport minister, Lilian Greenwood, said of the change:
“Since coming into government, we have been reviewing plans and closely supporting ports to make sure they have the right processes in place so that EES registration can be smooth and queue times kept to a minimum.”
How’s stat: 9% – the fall in the production of cars in the first seven months of 2024 compared with the same period of 2023. The CEO of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes, said “an ongoing degree of volatility is likely as the industry restructures to transition to zero emission vehicle production”.
Quote of the week: “[Investment will create] good jobs across the country, which will put more money in people’s back pockets – meaning British taxpayers can reap the benefits of our economic growth.”
Business and trade secretary, Jonathan Reynolds, writing in the Guardian to set out the government’s approach to trade.
What else we covered this week: Our member-exclusive digest of trade news from China looked at how export controls imposed by the Asian nation are hitting global tech supply chains, as well as a new tariff hike on the country’s manufacturing exports from Canada.
The SMMT was in focus again yesterday with a Trade Insights interview with the organisation’s trade chief, Alessandro Marongiu, examining what the UK motor industry might gain from the country’s accession to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) as well as how it should respond to Chinese competition.
It was also confirmed that the accession will take place by 15 December this year, yesterday. Marco Forgione, director general of the Chartered Institute of Export & International Trade, said it represents “a great opportunity for UK businesses to grow”.
True facts: The Wednesday just gone was the last of August – meaning it was also the day of La Tomatina, the world’s largest food fight, where tens of thousands come to the town of Buñol – normal population 9,000 – to pelt each other with over-ripe tomatoes.