Today’s (16 June) international trade news is led by the latest round of sanctions on Russia, possible tensions between London and Washington DC at the G7 summit and insight from recent polling on how a new referendum on UK membership of the EU would affect voter intentions at the next election.
Russia sanctions
The UK has announced its latest sanctions package on Russia, targeting its “decrepit shadow fleet, military procurement supply chains and illicit finance networks used to circumvent sanctions”.
A Foreign, Commonwealth & Development Office (FCDO) notice outlined 70 new sanctions. This includes targeting over 20 oil tankers with “new and enhanced powers”.
In order to dismantle the network of financial actors supporting Russia’s oil trade, the FCDO said the UK was “further sanctioning ship insurers and other shipping services”.
The package was announced during the G7 summit, currently being held in Evian, France, with the FDCO writing that “allied support for Ukraine tops the G7 agenda”.
Prime minister Sir Keir Starmer said that:
“Working with our G7 allies, we will continue to increase the pressure in Putin and his circle of collaborators until Russia’s war machine is brought to a halt and peace returns to our continent.”
The UK’s full list of Russia sanctions, with further guidance on compliance, is available here.
Trump-Starmer tensions
Less harmony expected at the G7 between Starmer and US President Donald Trump, as Politico Morning Trade reports that tensions could rise over UK defence spending.
Trump has repeatedly demanded Nato allies spend the equivalent of 5% of GDP on defence, and the UK’s recent defence setback – after defence secretary John Healey resigned over the government’s failure to fully fund the delayed Defence Investment Plan – has the potential to strain relations.
US undersecretary of defense Elbridge Colby, who has led reviews of US joint military programmes like the AUKUS plan, wrote that there was “great need for more British military strength in this critical time” in an social media post on Friday (12 June).
EU offers Labour election hope
Offering voters another referendum on EU membership is the most effective way for Labour to increase its potential support in a future election, polling from Ipsos Mori has found.
The polling was carried out as part of a 10-year anniversary Brexit panel event last night (15 June), jointly hosted by Ipsos, UK in a Changing Europe (UKICE) and the Policy Institute at King’s College London. The research surveyed 2,245 Britons aged 18+ and was carried out in May.
Only 31% of those polled said that they “would consider” voting for Labour at the next election, with 62% saying that they “would not”. However, if Labour offered another EU referendum, this potential support jumped to 45%. This equated to two thirds of the 2016 ‘remain’ voters polled.
Reflecting on voting trends in elections since 2016, experts noted that there was a tendency for winning parties to have successfully united either ‘leave’ or ‘remain’ voters.
UKICE director, Professor Anand Menon, commented that “in our last two elections, the electorate basically broke into ‘Leave’ and ‘Remain’ camps and the side that won was the side that managed to be united”.
Trade imperatives
Improved trade with the EU drove most of the pro-Brussels sentiment. Ipsos research director Kieran Pedley said that “there is significant public appetite for a stronger or a closer relationship between the UK and EU, particularly when it comes to trade”.
Trade was the area most frequently reported as a “top priority” by those polled. Given a selection of 18 different issues and asked to pick the two they care about most, 33% of those surveyed selected trade, the highest of any issue.
However, it was noted that among those polled, ‘sovereignty’ – as in 2016 – remained a significant issue. 52% of those asked said that they would prioritise sovereignty over the benefits of being a part of the EU, if rejoining meant adopting EU rules and standards.
Applied to trade issues, it was found that when it comes to adopting EU standards and rules on animal and plant health – underpinning the planned ‘reset’ sanitary and phytosanitary (SPS) agreement – 38% of those polled were in favour, while 24% were opposed.
Stumbling negotiations
Reflecting on why negotiations to deliver Labour’s European ‘reset’ promises are taking so long, panellists said the UK was negotiating from a position of weakness.
Menon said that Brussels “has more pressing priorities” and, while many members can see the benefits of the UK returning to the bloc, the now see the UK “as a third country… and will negotiate with us as a third country”.
UK Institute for Government senior fellow, Jill Rutter, suggested there was a fundamental imbalance between the parties.
“The UK has quite a lot of asks,” she said, “and the EU doesn't actually have that many, and that's quite a bad position to be negotiating from.”
Several panellists said that so-called “middle ground” positions between being out of the EU and rejoining were less desirable that a “compromise” would otherwise suggest. However, it was noted that rejoining the EU was unlikely to be politically palatable to Labour leaders – even if appealing to potential supporters.
Menon said you’d be hard-pressed to find a politician prepared to “take loads of political flack for the rest of [their] tenure in Number 10 for making a decision, the benefits of which will be felt by [their] successor two-removed”.
Other news
- Rolls-Royce’s recent pivot into nuclear energy has now yielded a nuclear export contract with Switzerland
- Japan has raised its interest rates to the highest level for 31 years in response to inflation stemming from increased energy costs
Yesterday in trade
- The US and Iran announced a peace deal framework set to be signed on Friday (19 June)
- The G7 summit kicked off in Evian, France
- The UK signed an investment agreement worth £18bn with Japan
You can read those stories here.
