Today’s (13 November) news includes reports that the EU will require payment to re-link its electricity markets with the UK’s, while Brussels is also considering an earlier-than-planned end to its duty-free regime on small packages.
Elsewhere, there are reports that negotiations are about to open on a UK-Mercosur trade deal.
UK-EU reset payment request
The UK’s efforts to reset relations with the EU could come at a price, according to reports, as the bloc seeks payment in return for the easing of trade frictions in the energy sector.
The demands, led by a French contingent at Brussels, form part of the negotiating mandate for the EU’s planned discussions over a reset. The French argue that the UK should contribute to “cohesion funds” in order to link up its electricity markets with those of Europe.
Speaking to the FT, three EU diplomats said that the text of the mandate says the EU “will reflect” on the level of contribution requested from the UK. Germany and the Netherlands are said to have resisted demands from France on strengthening this language.
Another diplomat told Politico that “at the end of the day, if you sit in London or sit in Westminster, and you're looking at that text, I'm sure you'll be thinking 'this we can work with.’”
UK prime minister, Sir Keir Starmer, said, following a call with European Commission (EC) president Ursula von der Leyen, that “deals must result in tangible benefits to the British public”.
The report follows another earlier this week suggesting that the UK has rejected EU demands for payment to join its defence fund, SAFE. You can read our coverage of that story in Tuesday’s edition of Day in Trade.
Mercosur move
South American nations in the Mercosur grouping are set to launch trade talks with the UK, according Bloomberg.
In a meeting on Tuesday (11 November), UK foreign secretary, Yvette Cooper, and Brazil’s foreign minister, Mauro Vieira, discussed kicking off negotiations in the new year.
Tatiana Prazeres, Brazil’s foreign trade secretary, said yesterday (12 November) that “Mercosur is experiencing a historic moment of expansion in its network of trade agreements” owing to a “more challenging global context”.
Mercosur is also poised to start negotiations with Vietnam and Indonesia. Prazeres visited India in October to explore trade possibilities there.
Chris Bryant, the UK’s trade minister, called the Mercosur-UK deal a “no brainer” at an event hosted by the Chartered Institute of Export & International Trade at Labour’s annual conference in September.
De minimis
The EC is calling for a handling fee on cheap shipments from China to be implemented across the EU two years ahead of schedule, according the FT.
A letter to Europe’s finance ministers from trade commissioner, Maroš Šefčovič, argues that the fee “is a crucial step in ensuring the EU bolsters its position in the face of rapidly changing trade realities” and is “ensuring fair conditions for its businesses”.
The existing plan is to scrap a de minimis threshold of €150 before customs duties are levied on in 2028, when a €2 fee per package is also set to be introduced. But Šefčovič argues that “this timeline is incompatible with the urgency of the situation”, with the vast majority (80%) of packages purchased by EU consumers coming from China in 2024.
This year, the US brought forward the end of its own de minimis scheme. You can learn more about that decision and what it means for exporters with this Chartered Institute explainer.
UK GDP
The UK economy unexpectedly contracted in September and overall Q3 GDP grew by only 0.1% in the latest release by the Office for National Statistics.
The recent Jaguar Land Rover cyber-attack, which halted UK production by the auto firm, weighed on the September figure, with production downstream from the company also affected.
The numbers come ahead of a budget announcement at which chancellor Rachel Reeves is expected to raise taxes after a ‘scene setter’ speech last week. She has since reiterated to the BBC that the budget will be “difficult”, with tax rises and spending cuts on the cards.
Elsewhere in the headlines
- US treasury secretary, Scott Bessent, has promised “substantial measures” on cutting tariffs for household goods like coffee in a bid to ease cost of living pressures
- Retail boss Nick Glynne said that he expects AI to lead to cuts in the workforce at his company Buy It Direct by two thirds, adding in remarks to the BBC that “the future for employing UK people is very bleak for someone like us”
- Reeves has been urged to take measures to lower electricity bills in her upcoming budget by a group including Octopus Energy, Eon UK, Greenpeace and Citizens Advice
- HMRC has issued an update on the Customs Declaration Service, with a free service now available for managing customs data.
Yesterday in trade
- The Houthi Yemeni rebel group announced it was halting attacks in the Red Sea
- The US suspended a raft of sanctions on Syria after a meeting in the White House
- Oil demand appears set to continue rising until 2050, according to a report from the International Energy Agency
