The Day in Trade: Effectiveness of UK-India deal could be limited by support staff cuts, committee report says

The UK’s expected economic boost from its trade deal with India could be dampened should the government proceed with cuts to export support staff, according to a report out today (21 January), while India’s non-tariff trade barriers remain an issue.

Elsewhere, the saga between US president Donald Trump and European nations over Greenland continues, with Trump set to speak at the World Economic Forum meeting in Davos, Switzerland later today.

UK-India deal boost challenges

The UK’s Business and Trade Committee has warned that cuts to export support staff in government could affect the delivery of the UK-India trade deal, agreed last year.

The Comprehensive Economic and Trade Agreement (CETA) with India is the UK’s “most economically significant bilateral free trade agreement” since leaving the EU, the report says, but planned 40% cuts to staffing could limit its effectiveness in boosting the UK economy.

Liam Byrne, chair of the Business and Trade Committee, said:

“Parliament is being asked to ratify a deal promising billions in tariff savings while the Government is simultaneously cutting nearly 40 per cent of the export staff needed to help exporters make the most of this new bargain. That is a serious delivery risk.”

The new report from the trade committee also highlights a range of challenges that remain in place for UK exporters, not least “India’s extensive non-tariff barriers”, which include “regulatory opacity, inconsistent implementation, state-level frictions, export health certification requirements and the expanding use of Quality Control Orders”.

It adds:

“Although tariff reductions can deliver real commercial benefits, long staging periods, complex rules of origin and administrative burdens risk limiting their use in practice, especially by smaller firms.”

Byrne added that “ministers must now table a clear plan backed with real resources to make access on paper into exports in practice”.

Starmer to visit China

UK prime minister, Sir Keir Starmer, is to visit China next week for a meeting with Chinese leader, Xi Jinping. Starmer is seeking to revive talks initiated during the “golden era” for ties under former PM Theresa May, according to Reuters.

A range of major UK and Chinese companies are also set to join a new-look "UK-China CEO Council", with firms from AstraZeneca and Rolls Royce to the Bank of China and BYD to take part.

Sources speaking to Reuters said that discussions over a visit by the PM had been held up pending the approval of China’s new embassy in London, which Starmer gave yesterday (21 January). It would be the first visit by a sitting UK PM to China since 2018.

EU to phase out Chinese tech

One reason UK-China relations have cooled in recent years is the decision by the UK to ban Chinese tech firm Huawei from its 5G networks at the start of the decade.

Now, the EU plans to phase out equipment produced by Huawei and other China companies as part of a new drive on cybersecurity.

The EU’s new package of regulations on cybersecurity will work to phase out components and products from companies designated as higher-risk. The European Commission (EC) says the revised Cybersecurity Act responds to “recent cybersecurity incidents”, which have highlighted “the major risks of vulnerabilities in the ICT supply chains, which are essential for critical services and infrastructure”.

A spokesperson for Huawei said the restrictions on non-EU suppliers “based on country of origin, rather than factual evidence and technical standards” violated “the EU's basic legal principles of fairness, non-discrimination, and proportionality”.

Chinese foreign ministry spokesperson, Guo Jiakun, said Chinese firms “have never endangered Europe's national security”, and warned the EU against “going further down the wrong path of protectionism”.

Greenland saga continues

French president, Emmanuel Macron, reiterated his belief in the need for a strong response to Trump’s threats yesterday, telling an audience at Davos that the prospect of US tariffs over the issue of Greenland was “unacceptable”.

That was followed this morning by remarks from EC president, Ursula von der Leyen, who said that the change in the international order represented by Trump’s pursuit of Greenland "is not only seismic but it is permanent". Echoing Macron, von der Leyen called Trump’s tariff threats “simply wrong”. She also called it “imperative” that Europe “speed up our push for independence” and secure “new levers of power”.

UK chancellor Rachel Reeves said today at Davos that the UK "won't rule anything out" with regards to a response to US tariffs.

Later today, the European Parliament is likely to confirm a planned decision not to ratify last year’s tariff deal with the US. Stocks have been on the slide in both the US and EU since Trump’s initial tariff threats, while the prices of gold and silver have continued to rise.

Trump is to speak in Davos later today after his arrival was delayed by a technical fault with Air Force One.

Elsewhere in the headlines

• The government announced a number of new trade envoys and issued a trade remedies notice instructing HMRC to register the importation of boom lifts originating from China, which are the subject of an ongoing investigation, with anti-dumping duties possible
• It also published an arrangement aimed at establishing an ‘Economic Growth Partnership’ with Indonesia
• UK inflation rose to 3.4% in the latest figures, outpacing economists’ predictions of a 3.3% rate. Reeves said her “number one focus is to cut the cost of living”

Yesterday in trade

• Trump confirmed he would hold a meeting at Davos with European leaders over Greenland
• He also threatened 200% tariffs on French wine should Macron fail to join the US’ ‘Board of Peace’ for Gaza
• UK business and trade secretary, Peter Kyle, dismissed talk of a new UK-EU customs union as “foolish”

You can read the full rundown of yesterday’s events here.