UK prime minister Sir Keir Starmer is meeting Ukrainian president Volodymyr Zelenskyy in London today (17 March), with the latter keen to ensure Western support for his country’s war with Russia doesn’t wane due to the US-Israeli conflict with Iran.
How far up Ukraine now sits in the US president’s priorities is now unclear, with tensions rising between Europe and the White House. Nato allies have so far declined Donald Trump’s demands for help to reopen the Strait of Hormuz.
Aside from the increasingly fragmented geopolitical picture, chancellor Rachel Reeves will this afternoon deliver her much-anticipated Mais economic lecture, largely focusing on the UK-EU reset. Chartered Institute of Export & International Trade director general Marco Forgione shares his thoughts on the importance of the UK-EU relationship.
Zelenskyy in London
Zelenskyy’s trip to London comes as the British government announces a new UK-Ukraine defence partnership and funding for a new AI centre in Kyiv. Nato chief Mark Rutte is also meeting with Starmer today.
The meeting comes as US-Europe relations fray over the war in Iran. EU high representative Kaja Kallas has said that “this is not Europe’s war, but Europe’s interests are directly at stake”. Regarding Trump’s demand for European nations to send warships to help “police” the Strait of Hormuz, Kallas said “nobody wants to go actively in this war”.
The UK has so far ruled out sending British warships to the Gulf, but Starmer did say that “we have to reopen the Strait of Hormuz to ensure stability in the market”. He added:
“We are working with all of our allies, including our European partners, to bring together a viable, collective plan”.
“If we are to send our servicemen and women into harm’s way, the very least they deserve is to know that they do so on a legal basis and with a proper, thought through plan,” he added, defending his decision for the UK to not become actively involved in the war.
He also said, however, that “it’s vital that we continue to focus on supporting Ukraine – we cannot allow the war in the Gulf to turn into a windfall for Putin”.
With Trump saying that a failure to support US efforts in the Strait of Hormuz could lead to a “very bad” future for Nato, there are now fears that the US could withdraw attention from peace talks in Ukraine.
“Clearly America’s attention right now is on the Middle East,” said Kajas to the FT.
Zelenskyy has also called out the US’ recent decision to relax sanctions on Russian oil in response to the Strait of Hormuz crisis and its decreasing of pressure on Indian purchases of Russian oil. The Ukrainian President said this action “certainly does not help peace”.
Kajas also said yesterday that world leaders could look to replicate aspects of the Black Sea deal, that allowed Ukrainian exports of grain to continue in the aftermath of the start of the war in Ukraine, as part of efforts to resume normal levels of energy exports from the Gulf.
Oil prices continue to rise due to Iranian attacks on infrastructure, with brent crude climbing 4% to US$104 today.
UK-EU reset
Reeves’ Mais lecture this afternoon will reiterate that the UK-EU ‘reset’ remains the government’s “biggest prize”.
However, amid an ongoing dispute over tuition fees for European students in the UK as part of the youth mobility scheme negotiations, EU trade commissioner Maroš Šefčovič has called for the UK to make concessions.
“I know that it’s challenging and it’s difficult, but I believe that on both sides of the Channel there is a strong wish from elected representatives of the people that we should solve this problem,” he told the EU-UK Parliamentary Assembly yesterday.
“We should have youth experience and we should be able to tackle also the issue of tuition [fees].”
Another bone of contention in the reset negotiations is the potential damage that the EU’s proposed ‘Made in Europe’ scheme could cause to various British manufacturing sectors, particularly automotive.
Chartered Institute director general, Marco Forgione, who has also been in Brussels this week for an Open Trade event hosted by the UK Mission to the EU, said:
“I spoke with representatives from the UK auto sector last week, who’ve got real concerns that, under the current interpretation, their cars will be excluded from the Made in Europe programme which could make them uncompetitive in the EU and have huge implications on the UK’s automotive manufacturing capabilities in the future.
“This week, we’ve also heard from the PM about the support that’s being provided for consumers with regards to the spike in energy prices caused by the war in Iran. The relationship and united response from the UK and EU is really important.
“Businesses need to understand what’s going to be done, not just relating to energy prices, but also in regard to the disruption of vital chemicals, commodities and components that would normally transit through the Middle East.”
He also said that he was looking to understand the details of the sanitary and phytosanitary deal being negotiated to reduce friction for agrifoods trade.
Read analysis from Reeves’ much-anticipated Mais lecture in tomorrow’s Global Trade Today newsletter.
UK expected to raise steel tariffs
A new strategy for the British steel sector is also expected to be published later this week, with sources telling Politico that the government will slash steel import quotas and raise tariffs on non-quota imports to 50%.
“The tariff will be doubled to 50% in line with what the Europeans have done, the Canadians have done, the Americans have done,” a person familiar with the plans said, adding that there will “be some exemptions” for products British steelmakers don’t make.
The measures are designed to protect the UK market from becoming a dumping ground for cheap Chinese steel and would bring the UK in line with other similar countries.
Come back to Global Trade Today later in the week for details of the plans, once they are officially published.
Apprenticeship drive
The government yesterday announced a new £1bn “major youth employment drive” that it hopes will create 200,000 jobs for young people, “alongside the biggest transformation of apprenticeships in a decade”.
Work and pensions secretary Pat McFadden said the ‘new deal’ for young people includes:
- A new Youth Jobs Grant of £3,000 for every 18–24-year-old businesses hire who has been on universal credit and has been looking for work for six months.
- Expansion of the Jobs Guarantee to a wider age range of 18-24-year-olds, to create more than 35,000 extra subsidised jobs
- An Apprenticeship Incentive of £2,000 for each new employee aged 16-24 taken on by an SME
- Further reforms to the Growth and Skills Levy to prioritise young apprentices
- · An Apprenticeship Incentive of £2,000 for each new employee aged 16-24 taken on by an SME
· Further reforms to the Growth and Skills Levy to prioritise young apprentices
The Chartered Institute’s learner services manager and apprenticeships champion, Steve Horrell, welcomed the measures.
“The recent rise in youth unemployment should concern all of us. Investing in the skills and talent of the next generation of workers is essential for sustainable economic growth.
“The range of incentives available to fund apprenticeships continues to expand, which is good news for businesses. Apprenticeships are a great way to back young people and to enhance your workforce without incurring costs.
“The apprenticeships provided by the Chartered Institute allow businesses to get the supply chain and customs skills needed for successful international trade growth. Get in touch if you’d like more information.”
Develop your team with an international freight forwarding apprenticeship from IOEx Ltd, the apprenticeship subsidiary of the Chartered Institute.
Other news
- Australia and the EU are closing in on a new trade deal after a “productive” call between Šefčovič and Australian trade minister Don Farrell earlier today, Reuters reports
- Belgium’s foreign affairs minister distanced himself from comments by the country’s prime minister, Bart De Wever, suggesting that Europe should normalise Russia relations
- Hungary is pressing the EU to scrap tariffs on Russian and Belarusian fertilisers, Politico reports
And, to mark St Patrick’s Day, a news story showing that UK-Ireland ties remain strong.
The British government announced last week, at the annual UK-Ireland Summit, that it had secured £900m in new investment from Ireland. The two neighbours also welcomed progress towards completing two new energy interconnectors as part of efforts to boost energy security across the British Isles.
A happy St Patrick’s Day to all our Irish readers.
Yesterday in trade
- Trump demanded Nato allies support US efforts in ‘policing’ the Strait of Hormuz
- A UK-EU row emerged over tuition fees for European students in Britain
- The much-anticipated Trump-Xi meeting looked set to be delayed due to the war in Iran
You can read yesterday’s trade news here.
