The Week in Trade: BTOM on radar, climate qualms over US gas and UK-Ukraine digital trade

Thu 18 Jan 2024
Posted by: Danielle Keen

news with coffee

Trade news continues to be dominated by global shipping disruption in the Red Sea, while closer to home UK businesses working with EU suppliers are navigating incoming Border Target Operating Model (BTOM) rules.

This was the topic of 2024’s first IOE&IT webinar, which saw experts share tips for businesses preparing for BTOM alongside discussion of how new measures could benefit UK exporters.

The big picture: McKinsey has released a report on geopolitics and global trade, including new data that supports the ‘near-shoring’ and ‘friend-shoring’ trends that emerged during the Trump-era ‘trade wars’ with China and the pandemic.

Among many nuggets of wisdom, McKinsey found that despite stark growth in the number of trade restrictions imposed in recent years – more than 3,000 in 2023, compared to juts 650 in 2017 – no single economy had lost more than a two-percentage-point share of global exports in a given value chain since 1995.

Good week/bad week: We brought you several good trade news stories this week to combat ‘Blue Monday’, but if that wasn’t enough to brighten up your day, the UK also announced a new digital trade partnership with Ukraine this week. The UK-Ukraine TechBridge aims to support Ukrainian economic resilience while promoting growth across priority industries, such as healthtech, agritech and fintech.

It’s been a bad week for CEOs leading some of the US’ biggest chipmakers, as Reuters reports that China’s military, government and universities have managed to circumvent US export controls on semiconductors to purchase chips made by Nvidia.

Although the report states that neither the tech giant, nor its approved retailers, were among the suppliers, the news won’t bode well ahead of a panel convened by the US House of Representatives’ China committee. Having never held a panel since its creation to investigate Chinese threats almost exactly a year ago, Intel, Nvidia and Micron CEOs have been called to testify, as per the FT.

How’s stat? Up to 86m tonnes a year. The amount of liquified natural gas (LNG) the US’ seven export terminals produce per year – enough to meet the gas needs of both France and Germany.

This makes the US the world’s largest exporter, overtaking Qatar. Whether this will remain the case is uncertain, as the Biden administration is wavering on new projects under pressure from climate activists.

The week in customs: We began the week with an overview of recent government updates. This included updates to requirements for exporters that will need to migrate to the customs declaration system (CDS) and an invitation to contribute to a new consultation on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Quote of the week: “We have about US$1.7trn in subsidies that are not helpful, that are distorting trade… Why can’t we phase out the subsidies and direct those resources to helping developing countries finance the transition to net zero?”

WTO director general Ngozi Okonjo-Iweala, suggesting a new approach to sustainable global trade at the Cato Institute, from Politico.

What else we covered this week: Phil Adnett has continued to update you on events from the Red Sea, as Houthis continue to attack commercial vessels bound for the Suez Canal and US military strikes on Yemen sites have continued.

Benjamin Roche offered an alternative perspective to Yemen on the world stage, speaking to coffee exporters about their ambitions for a product steeped in cultural history.

With his eyes back on the crisis, Richard Cree spoke to supply chain experts to find out how businesses might look to circumvent disruption in the long term.

And executive editor Will Barns-Graham focused on affected imports – specifically the UK’s new Critical Import Strategy which aims to address how vital sectors such as healthcare and manufacturing can continue to receive the goods they need amid the challenges.

True facts: It’s ‘baby bust’ according to recent headlines, as China reported a second year of population contraction, registering a drop of 2m in 2023.

From East to West, Europe’s broodiest nation - France - also published stats showing a historically low year for births. The 678,000 births recorded last year reflect a 7% fall on 2022 and the lowest figure since World War II.

The news not only creates a generation of disgruntled, would-be grandparents but a future slue of economic problems, namely a smaller workforce to support an ageing population.

After the carnage caused by last year’s pension protests, it’s no wonder Macron is already beefing up childcare provision.