The immediate impact on energy costs is being felt by businesses and consumers in both countries and the relationship between the leaders looks bumpy.”
For commentators, political advisors, policy wonks and other interested parties, it is hard to see past the crisis in the middle east at the moment, as this new war is well into its third week. BAB members will have their own views about the decision made by the US and Israeli governments, (and this is outside of the policy remit of BAB), but the impact and implications if the conflict continues much longer, or widens into a regional war, or worse, are profound for both the US and the UK and the businesses that operate in and between them.
Again, we make no comment on the level of support offered by the UK, but the US President has made no secret about how he feels, and there is genuine bemusement about the limited military resources that the UK has available to contribute if it wanted to. In this context, we are working on a paper looking at the opportunities for US UK Defense capability collaboration which we will publish later in the spring.
The immediate impact on energy costs will be felt by businesses and consumers in both countries where inflation and affordability are right at the top of voters’ concerns (and perhaps provide the motivation for a speedy resolution). In the UK, especially, this crisis puts UK energy policy directly under the spotlight. BAB has argued consistently for a sensible and pragmatic approach to energy. Yes, by all means encourage a transition to renewables, but to do this in a way which makes the UK one of the most expensive energy markets in the world, by replacing gas and oil from the North Sea with product shipped from Qatar, and to tax North Sea producers to the point of unfeasibility, feels like an act of self-harm that should be reviewed and reversed.
On a positive note, we were pleased to see that the UK government is accepting the proposals made by the Nuclear Regulatory Taskforce to update the planning and regulatory framework for civil nuclear power. There is clearly a big opportunity here but the speed of delivery of new projects is currently too slow and the nuclear piece, while important, is only part of the solution for the UK’s uncompetitively high energy costs.
In the USA, where there is an ‘all the above’ market approach to energy provision, the price that people pay for gas at the pump remains a totemic political issue. Regardless of what the other data may say, going into midterm elections with elevated gas prices will not be a strategy that the administration will be comfortable selling.
Separately, and somewhat lost in the noise surrounding the war, is the Supreme Court’s decision overturning the ‘reciprocal’ tariffs introduced by the administration under IEEPA. As expected, the now defunct tariffs have been replaced with new levies at 10% under section 122 of the 1974 Trade Act. There are also several new and ongoing investigations under section 301 and 232 which will report this summer and likely result in further or renewed Tariffs later this year. This includes an investigation into whether countries, including the UK, have an effective ban on the importation of goods produced with forced labor. BAB will be providing a submission to the consultation on this topic.
And the five-year moratorium of the long-running Large Civil Aircraft dispute is also coming up this June. This dispute between the US and the EU and UK about different subsidies made to Airbus and Boeing resulted in compensatory tariffs on entirely unrelated industries, particularly the alcoholic drink producers, and there is a risk that this dispute re-emerges this summer.
Quite where all this leaves the various US UK trade discussions is hard to tell. The appointment of Varun Chandra to the additional role of special trade envoy to the USA, is a positive move and we know that Varun has been regularly in Washington and is trying to protect the UK’s advantaged tariff position from the Economic Prosperity Deal as well as make progress on the Tech Prosperity Deal and confirm the details of the Pharma Deal. But it is a big agenda at a time when the administration’s focus is, inevitably, elsewhere.
These trade issues are at the top of the BAB agenda and I will be exploring the current status of the negotiations with HM Trade Commissioner for North America, Oliver Christian at the British Chambers of Commerce Trade Summit in London on March 26th.
Our convening program continues apace in London, New York and Washington throughout the spring. With major events scheduled in all three locations which you can see here.
As ever, we are excited to be presenting our Transatlantic Business Awards at our Gala in New York City on April 14th. This year our recipients will be Bob Sulentic, Chair and CEO, CBRE Group, Ambassador Jane Hartley, former US Ambassador to the UK, and Paul Taylor, President and CEO, Fitch Group. There are still places available at this important Gala so if you would like to support the Honorees and BAB, please let Julia Greenberg know.
And finally, BAB will be heading to Los Angeles for the US UK Greater Together LA business mission, from May 19 to 21, led by UK Business and Trade Secretary, Peter Kyle, at which both our Board Chair, Alastair Borthwick of Bank of America and Board Vice Chair, Sean Doyle of BA, will be speaking. Details of the program and how to apply to be included can be found here.
With all good wishes