Today’s trade news includes a stark warning from the US and Qatar to the EU on its planned new climate and human rights regulations, as well as rumblings of an end to the UK’s ‘de minimis’ duty rate exemption on small package imports and a shift in Germany’s trade with China.
EU warned over green rules
The US and Qatar have issued a warning to the EU over its proposed Corporate Sustainability Due Diligence Directive (CSDDD), a set of new climate-focused rules that both countries say present an “existential threat” to Europe’s economy and energy supply.
Under the CSDDD, the EU will be able to fine companies with more than €450m net turnover in the EU whose supply chains either harm the environment or infringe on human rights. These fines can be as large as 5% of global turnover.
The FT has seen a letter, jointly issued by Washington and Doha, that argues that both nations “are striving not only to sustain but to significantly increase the reliable supply of [liquefied natural gas] LNG to the EU”.
“Beyond the direct energy security risks, the CSDDD also threatens to disrupt trade and investments across nearly all the EU’s partner economies. Its implementation could jeopardise existing and future investments, employment and compliance with recent trade agreements.”
One agreement that could come under particular pressure as a result of the new rules, the US has said, is the tariff deal it agreed with the EU in July, which secured a 15% import rate on EU goods exported to the US. Crucially, it also included a commitment from the EU to purchase US$750bn in US energy before 2029.
US energy secretary Chris Wright told the FT last month that the CSDDD could “significantly threaten the ability to implement the trade deal that was agreed to”, and the US has raised concerns over possible litigation from its companies. He added that the EU’s drive for “net zero 2050” is “a monstrous human impoverishment programme”.
UK-EU reset speedbump?
The UK government’s EU ‘reset’ could face a challenge over Brussels’ demands for participation in an uncapped youth mobility scheme, Politico reports. A commitment to a new version of the scheme was outlined in the UK-EU summit in May.
The government’s Migration Advisory Committee has warned the government would be in “very clear breach” of a manifesto commitment to cut net migration should it agree to a programme without a cap, something for which Brussels has called.
Prime minister Sir Keir Starmer and EU relations minister Nick Thomas-Symonds have pledged to secure a cap on the number of EU citizens able to come and work in the UK under any agreement in the next step of their reset.
Economics professor at King’s College London Brian Bell told Politico that, while an agreement to an uncapped scheme could prove challenging, a “balanced scheme” would have “essentially zero” effect on net migration while allowing young UK citizens to work and live in the EU.
De minimis dumped?
A government official speaking to the FT has said that an end to the ‘de minimis’ regime, under which packages worth less than £135 imported to the UK incur no import duties, is “nailed on”.
“You can expect to see some movement on this,” another told the publication. It follows the launch of a review into the measure earlier this year.
At present, China is the main beneficiary of the rule, with £3bn in Chinese goods exported to the UK without incurring duty in the latest financial year, according to data seen by the BBC. These shipments comprised over half of all small parcels sent to the UK over the year.
The US already scrapped its version of the scheme earlier this year, as the Trump administration moved forward plans already put in place under President Joe Biden.
China and Germany draw closer
The US has been overtaken by China as Germany’s top trade partner, according to preliminary data from Germany’s statistics office.
Total trade between China and Germany hit €163.4bn in the first eight months of this year, while trade with the US reached €162.8bn. It marks a return to the top for China, which was knocked off the spot by the US last year as Germany tried to move away from reliance on business with Beijing.
The US’ tariff policy has hit German exports, which dropped 7.4% from January to August compared with the same period in 2024. The year-on-year drop in August was greater still, with exports to the US down 23.5% compared with August 2024.
What else is in the news
· South Africa has argued that the US is using trade policy to place it under political pressure over “domestic” issues, particularly a law allowing expropriation of land without compensation
· India’s Mint newspaper reports that a US-India trade deal is imminent, with US tariffs on Indian goods set to fall to 15-16% from their current rate of 50%
· The Chartered Institute's graduation ceremony takes place tomorrow in London, celebrating those who have attained new qualifications with the Chartered Institute and the UK Customs Academy
· The price of oil rose 2% today over hopes for the US-India deal, as well as for a cooling in trade tensions between China and the US over the former’s rare earth export restrictions
Yesterday in trade
· A new deal was struck on critical minerals between the US and Australia as Washington looks to boost supplies beyond China
· The US reiterated its support for the Australia-US-UK (AUKUS) defence pact
· The UK hosted a regional investment summit, with speeches from chancellor Rachel Reeves and business and trade secretary Peter Kyle
You can read more on those stories here.
