A new report has highlighted the barriers faced by smaller firms in reaping the financial benefits of trade facilitation programmes, while the UK government is calling on industry to offer its thoughts on joining an EU trade pact.
Elsewhere, the Chartered Institute of Export & International Trade marks its 90th anniversary ahead of its third annual Import Export Show.
The Chartered Institute turns 90
The Chartered Institute today (18 November) celebrates 90 years of supporting businesses to trade – a historic milestone and an opportunity to reflect on both past achievements and future opportunities.
Our director general, Marco Forgione, has done the latter in a commemorative blog looking ahead to what the next decade in trade holds, and where the organisation can make the most meaningful impact to advance its mission of empowering global trade.
MSME mission
Aligned with the Chartered Institute’s mission, a new report by a coalition of multilateral trade bodies has highlighted the barriers micro, small and medium enterprises (MSME) face in gaining Authorised Economic Operator (AEO) status and accessing other trade facilitations programmes.
The World Customs Organization, World Trade Organization and the International Chamber of Commerce note that these schemes are too complex for MSMEs to benefit from, hindering their participation in international trade and harming global GDP growth.
The report said that encouraging MSMEs – which make up 95% of companies worldwide and account for 60% of global employment – to attain AEO status or other trade facilitation programmes “is essential to building a more inclusive and resilient global trading system”.
Currently MSMEs represent a significant portion of trade – 36% of exports and 41% imports in developed nations, while direct exports are estimated to account for over 10% of MSME income in developing nations.
AEO status, which reduces regulatory requirements for firms with a demonstrable track record of compliance and supports greater trade, was found to be inaccessible to many micro and small businesses.
Initial hurdles include lack of awareness and difficulty navigating AEO application processes. The report suggests integrating AEO programmes into national trade strategies across relevant governmental agencies, providing simplified, digital processes for application and offering training to MSMEs.
In addition to challenges within MSMEs, such as not having sufficient capacity to direct towards gaining AEO status, the report notes that a change in culture within customs agencies is also needed. Currently, AEO programmes tend to be neglected in favour of key capacities like law enforcement and revenue collection. By aligning AEO programmes with risk management targets and “piggybacking” on these objectives, the report suggests customs agencies could better advance AEO.
You can read the full report here.
PEM consultation
The government has announced a new consultation with industry on joining the Pan-European-Mediterranean (PEM) Convention on Rules of Origin.
The convention is an EU initiative: a multilateral agreement between 25 countries across Europe, the Middle East and North Africa that allows EU states to source from PEM members while still being eligible for preferential EU rates.
If the UK were to join PEM, it would increase the number of countries that UK firms could source from, while still being eligible for preferential rates when exporting to EU members.
The Chartered Institute of Export & International Trade advocated for the UK to join PEM in its recent report on improving UK-EU relations. Reports earlier this year suggested that the European Commission is resistant, as the UK would then qualify for low-tariff access to the bloc despite leaving.
The government states that it aims to gain “business and partner input on the opportunities and risks that might flow from joining PEM”. The call for evidence closes on 15 December.
The Chartered Institute will be submitting its own response, which members can contribute to by sharing their thoughts at publicaffairs@export.org.uk.
India ups US LNG purchases
India is set to dramatically increase its purchases of US liquified petroleum gas (LPG), the FT reports. India’s oil minister Hardeep Puri announced a contract to buy 2.2m tonnes of gas – roughly 10% of its annual LPG imports – yesterday.
While Puri hailed the agreement as an “historic first”, external experts based in New Delhi told the publication that the benefits would be “political rather than economic”, advancing hopes of a trade deal with the US.
Amid ongoing negotiations throughout the year, US President Donald Trump has repeatedly called for India to buy more US energy products.
Back in February a deal was struck between the US and India, after Indian prime minister Narendra Modi agreed to greater oil and gas purchases ahead of Trump’s tariff threats.
The LPG contract fulfils this agreement, though trade relations have been further strained since then, with Indian goods subjected to 50% tariffs by the US, a combination of both reciprocal rates and a punitive rate for purchasing Russian oil. Trump also embarked on a campaign of attempting to convince allies to follow suit and hit India with increased trade measures for Russian energy purchases.
Elsewhere in the headlines
· In another challenging energy development for India, the EU is set to reject its call for an exemption from its Carbon Border Adjustment Mechanism
· There’s an opportunity for industry and academia to collaborate with the Maritime and Coastguard Agency in order to make the sector safer and greener
Yesterday in trade
· Talks between the US and Saudi Arabia could yield greater bilateral investment, while Germany’s talks with China could secure greater critical mineral access for the European nation
· US trade representative Jamieson Greer hit out at the EU over tariffs
· Criminal gangs are increasingly using haulage firms as a veil for large-scale goods’ theft, the BBC reported
You can read those stories, and more, here.
