The week concluded with the possible postponement of the EU-UK summit initially slated for next month. As the leadership contest to oust beleaguered prime minister Sir Keir Starmer continues to dominate the headlines and Westminster, officials on both sides suggested Starmer’s waning authority could be behind the delay.
In better news for the PM, another UK trade deal was signed this week, as the government concluded a pact with the Gulf Cooperation Council (GCC), which it estimates will be worth 3.7bn per year to the UK economy.
The big picture: The maybe-impending Labour leadership content could have stalled progress on the Party’s much vaunted EU reset of relations, according to Bloomberg reporting this week.
A UK-EU summit anticipated next month, which held expectations of announcements on key reset pillars like a sanitary and phytosanitary (SPS) agreement and energy alignment, is reportedly being delayed until later in the year.
Officials from both sides gave the publication competing narratives to explain the postponement, among them that above deals won’t be finalised in time, as well as the PM’s lack of authority amid what appears to be a much drawn-out path to launching a contest to replace him.
That path has taken candidates back to the old ‘in/out’ debates on EU membership which proliferated in the wake of the referendum result.
This follows former health minister Wes Streeting’s declaration last weekend that he would seek to rejoin the EU if he became PM, forcing presumed rival Greater Manchester mayor Andy Burnham to dilute his past pro-Brussels sentiment. Burnham’s return to parliament to enter a possible leadership content depends on winning the seat of Makerfield in the upcoming by-election, a leave-supporting seat where Reform UK have done well recently.
Ironically, Burnham told a Leeds investment summit this week that, although Brexit has been “damaging”
“I also believe the last thing we should do right now is re-run those arguments.”
Good week/bad week: A good week for British exporters, as the UK completes its trade pact with the GCC.
The government says the deal will benefit aerospace firms, agrifood businesses, energy developers, tech firms and the UK’s financial hub, and will secure “better-paid jobs” and “raise living standards”.
Chartered Institute of Export & International Trade director general, Marco Forgione, welcome the deal, in an op-ed published this week he said it would “unlock substantial new markets for British exporters”.
“By reducing tariffs, streamlining regulations, and enhancing cooperation on standards and investment, the deal will drive sustainable growth, create high-value jobs across the UK, and strengthen supply chain resilience for both sides.”
However, the deal isn’t without critics, the Trade Justice Movement warned that the deal poses human rights and climate concerns, as well as opening the UK to corporate lawsuits from Gulf investors, if future UK regulations are perceived to have harmed their investments.
Less positive, a row back on global efforts to curb Russia’s war economy through oil sanctions.
The economic strife caused by the continued closure of the Strait of Hormuz appears to be weaking the resolve of some nations. The US extended a sanctions waiver permitting the import of Russian oil already in transit, something treasury secretary Scott Bessent had previously said he wouldn’t do.
The UK also delayed a proposed of ban diesel and jet fuel produced in third countries using Russia oil, citing concerns about supplies stemming from the Strait’s closure.
EU economy commissioner Valdis Dombrovskis criticised the decision, saying the UK’s licences “came as a surprise”, and adding that “now is not the time to roll back sanctions against Russia”.
Accounting for the decision before parliament in response to an ‘Urgent Question’ posed by shadow minister for energy security and net zero, Andrew Bowie, trade minister Sir Chris Bryant apologised for the communication around the licences, saying the situation had been handled “clumsily”.
UK diplomats have also been attempting to reassure officials in Kyiv, according to Guardian reports, while foreign secretary Yvette Cooper has made overtures to her Ukrainian counterpart, Andrii Sybiha.
How’s stat? At least three. That’s the number of companies European firms may be required to source materials from, under proposed EU plans designed to limit member state’s reliance on Chinese imports.
Amid increasing concern about the bloc’s trade deficit with China and weakening manufacturing base, EU trade commissioner Maroš Šefčovič has suggested legislation which would cap the amount of a components EU firms can buy from a single supplier at between 30 and 40%.
Quote of the week: “We don’t want bullies in the global trade playground putting pressure on British businesses, workers or families.”
Bryant, speaking to Global Trade Today about the need for the UK to develop its own tools to counter economic coercion and encouraging businesses to engage with the government’s consultation on the matter.
The week in customs: Traders should be aware of some planned downtime for the New Computerised Transit System (NCTS).
The Animal and Plant Health Agency (APHA) have warned that maintenance will take place for both NCTS XI and NCTS GB between 7am to 9am on 1 June.
APHA said that “data submitted during the period above will be held and processed once the maintenance activity has concluded and the service is available again”.
More information is available via GOV.UK.
What else we covered: Members received an update on the latest US tariff drama, following the rejection of the Trump administration’s interim legal route to enabling the levies, in this Trade Insight.
SME TT Instruments told Global Trade Today about their experience building a King’s Award-winning business in just five years, exporting precision instruments via e-commerce.
We also reviewed the likely contenders in the possible Labour leadership race, comparing stances on trade-related issues.
True facts: The Canadian province of Alberta is set to hold a referendum on whether to remain a part of Canada or move forward with a separation.
The move follows separate petitions for a referendum that gained 300,000 and 400,000 signatures respectively. Independence sentiment has strengthened in recent years amid clashes with federal government on oil policy - the western province’s major export.
While readers may be familiar with Canada’s recent tariff spat with the US, it’s worth noting that intra-trade wars have been a more regular staple, as provinces have the power to set their own trade policy.
It’s estimated that intraprovincial trade barriers add between 7.8% and 14.5% to the price of goods and services, and that removing them would boost Canadian productivity by 3.8%.
