The trend towards using national security to protect domestic industry has hit the UK, with the government rolling out procurement targets set out in its National Security Strategy.
The World Trade Organization (WTO) is also hosting its biennial Ministerial Conference in Cameroon this weekend, with a coalition of EU members and Indo-Pacific trade partners keen to save the organisation and the rules-based order of trade from increasing protectionism.
UK procurement drive
The UK has pushed forward targets set under its National Security Strategy, published last June, which will require British suppliers to be prioritised in public contracts.
The Guardian reports that the strategy identifies four sectors – including steel production, AI, energy infrastructure and shipbuilding – as being vital to national security, and subject to an “insourcing” drive.
Other initiatives set out in the strategy include requiring departments spending over £100m to create an “insourcing” strategy, designed to drive UK procurement. All departments will need to review whether contracts worth over £1m could be better delivered by UK suppliers.
The move follows similar steel-specific guidance set out in the government’ strategy for the sector, published last week, which has set out targets of up to 50% procurement of steel parts from domestic suppliers.
While the UK is still bound by WTO rules designed to create a level playing field with international firms and to protect free trade, national security exemptions facilitate the domestic drive without undermining adherence.
WTO Ministerial Conference
The 14th Ministerial Conference of the WTO will get underway in Yaoundé in Cameroon today, with sessions running until Sunday (29 March).
Politico reports that the event, which has for several years been run in the shadow of US President Donald Trump’s attempts to undermine the multilateral organisation, will see EU members and nations party to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) attempt to preserve the rules-based trading order the WTO represents.
Canadian prime minister Mark Carney is spearheading the effort, having called on the two blocs to unite in an anti-Trump coalition last month. UK trade minister Chris Bryant, who will be in Yaoundé for the event, said Carney has “added a bit of oomph into this conversation”.
For more insight on what the conference has in store, you can read this analysis by the Chartered Institute’s executive editor William Barns-Graham.
Middle East latest
Progress towards peace between the US and Iran appears to be no closer, with both sides making different claims about talks between their leaderships.
Tehran continues to insist that no talks have taken place with US officials, with Iranian strikes reported across several Middle East countries today, including Israel, Kuwait, Saudi Arabia and the UAE, where two people were reported dead in Abu Dhabi.
However, Trump has repeated claims that Iran is negotiating with the US. At a Washington DC fundraising dinner last night, he told attendees that the Iranian leadership “badly” wanted to make a deal but are afraid “they’ll be killed by their own people”, if they do.
In reports from the ground, the BBC spoke to young Iranian men claiming they’d be killed if they did not serve in the military. Currently all men over 18 are required to serve.
US-China summit delay
The war has continued to dominate the White House political agenda, with other international issues put on the back burner. The Trump-Xi Jinping summit initially set for the end of this month, has now been rescheduled to May.
Trade remains a point of tension between the two countries. Following the US Supreme Court’s ruling that Trump’s ‘reciprocal’ tariff regime is illegal, the US Trade Representative began investigations under Section 301 of the US Trade Act into overproduction and labour rights abuses in a number of trading partners, including China.
More recently, the US banned imports of consumer internet routers on security grounds, after the Federal Communications Commission cited “unacceptable” risks, with China estimated to enjoy a 60% share of the US market for the tech.
UK impacts
In the UK, ongoing energy market volatility and impending bill increases this summer, when the cap on energy prices set by regulator Ofgem is reset, has spurred changes in consumer and government behaviour.
UK energy provider Octopus’ chief, Greg Jackson, told the BBC there’s been a “huge jolt” in sales of solar panels and heat pumps since the US-Israel campaign in Iran sent oil prices rising.
Although he said households would “very likely” see higher energy prices when the cap changes in the summer, he added that the UK saw “a much more dramatic” rise in energy costs in 2022 following Ukraine’s invasion of Russia.
While it takes the stopgap between price cap reset to mull the best way to target bill relief, the UK government is also reviewing ways to mitigate supply chain disruption caused by the Middle East war.
A Teesside CO2 plant is set to reopen with the government investing £100m in the facility. The plant will produce bioethanol which is required for a number of processes within food and drink manufacturing, including packaging, carbonation and during slaughter.
The plant closed last year not long after the UK struck a trade deal with the US, in which it removed tariffs on US bioethanol on a quota whose volume matched the UK market.
UK business and trade secretary Peter Kyle said investing with the plant served to “boost the resilience of our supply chains and protect critical UK sectors like food production, water and healthcare”.
UK sanctions ruling
A UK Supreme Court ruling has illustrated the breadth of application of Russia sanctions legislation.
Three Irish firms leased civilian aircraft to two Russian airlines using letters of credit. When those firms asked for payment from the bank that issued the letters, the bank argued it would be required to obtain an appropriate licence before making the payment, according to 2019 Russia sanctions regulations.
The Supreme Court overturned a lower court decision which found a licence wasn’t required, stating in its judgement that the regulation casts a “wide net” due to the “vital public interests” involved.
Reviewing what the ruling means for sanctions compliance, law firm Hausfield wrote that:
“The effect of this is that parties cannot assume that the end of an underlying transaction (such as the termination of an aircraft lease) severs the sanctions risk.”
Elsewhere in the headlines
· The UK has a new trade commissioner for eastern Europe and central Asia – David Reed, who has served as a diplomat since 2003, was announced as the new appointee by the Department for Business and Trade today
· Green Party leader Zack Polanski has surprised commentators with more business-friendly rhetoric, saying it’s important the UK doesn’t “strangle” business with regulation
Yesterday in Trade
· The UK pitched to host a summit of thirty nations aiming to protect the Strait of Hormuz from attack and support commercial shipping in the region
· The US and EU are exchanging barbs on trade as the deal they agreed last year makes slow progress towards implementation through Brussels
· Brent crude dipped back below US$100 per barrel after Trump announced his 15-point Peace Plan for Iran
You can read more on those stories here.
