An automotive parts manufacturer based in the Gumi National Industrial Complex in North Gyeongsang Province, South Korea, filed for court rehabilitation yesterday, on 31 March, after failing to honour promissory notes.

In spite of its £17.3 million annual turnover, and holding innovation certification, the company cited a “sharp decline in order volumes” as the primary cause of its distress.

This case exemplifies broader challenges facing Korean manufacturers, with two automotive parts suppliers in the country declaring bankruptcy in March alone. The sector’s troubles come before US President Donald Trump’s tariffs have fully taken effect – a 25% levy on imported vehicles starts 2 April, with component tariffs following in May.

Manufacturing production had already contracted by 4.2% year-on-year in January, with the Business Survey Index (BSI), which measures the economic sentiment of the top 600 South Korean companies, remaining below the 100-point threshold for thirteen consecutive months. 

The Business Survey Index (BSI), which measures the economic sentiment of the top 600 South Korean companies, is at 92. A BSI below 100 means companies have a negative outlook on the economy. The BSI currently stands at 92, indicating that many businesses are pessimistic about future growth and economic conditions. 

“Exports are expected to fall from April,” said Chun Kyu-yeon, an economist at Hana Securities, as a result of reciprocal tariffs on automobiles. While South Korea’s total March exports increased by 3.1% in March, this fell short of the expected 3.5% growth.

South Korea’s steel exports dropped 10.6% in March, in correlation with the US imposition of a 25% tariff on steel last month.

This extends beyond automotive parts: after Trump unveiled a 25% tariff on automobiles last Wednesday on 26 March, shares in Korean imported vehicles were rattled. Hyundai Motor lost 11.2% in the three sessions following the annonucement, and Kia Corp fell more than 3% after Trump’s announcement. South Korea’s Industry Minister Ahn Duk-geun warned of the “considerable difficulties” this uncertainty would bring.

The stakes are significant: South Korean automotive parts exports to the US reached £6.3 billion last year, representing 36.5% of the nation’s total component exports. South Korea’s exports of automobiles to the United States stood at $34.7 billion in the same period, accounting for 49% of its total auto exports. South Korean brands (Hyundai and Kia) also make up two of the eight top car brands in terms of auto sales in the US. 

The Korean government plans emergency measures for the automotive sector in April, with further initiatives for petrochemicals and component manufacturing to follow.

Industry representatives are calling for subsidies and tax relief comparable to those offered by competitors such as the US and Japan to weather what they describe as an “unprecedented crisis” for key industries.

While a significant share of media attention is diverted towards the rhetoric and ideological implications of tariffs, such cases reiterate that tariffs will harm the businesses – often small and medium-sized enterprises (SMEs) – which make up the foundation of international supply chains. As such, these bankruptcies portend a far weakened structure upon this foundation.

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Academics, parliamentarians, healthcare professionals, and charitable organisations have sent a letter to Rishi Sunak’s administration. The letter argues that the current UK stance could jeopardise access to affordable, essential medications.

The communication comes on the heels of leaked documents revealing the UK’s interest in extending patent protections for pharmaceuticals beyond what India currently maintains. This is a move apparently supported by significant figures in the UK pharmaceutical sector.

Those opposing this position have conveyed to the government that the National Health Service (NHS) could see rising costs as a result. The NHS often relies on ‘copycat’ medicines, versions of drugs no longer patented in India due to shorter protection periods.

The letter is addressed to both Prime Minister Sunak and Business and Trade Secretary Kemi Badenoch. Among those who have endorsed it are charities like Oxfam and Médecins Sans Frontières, in addition to Labour MPs Richard Burgon and Kim Johnson.

Earlier this year, the Telegraph disclosed that Indian negotiators had turned down the UK’s call for more stringent intellectual property regulations on generic medicines. 

“Britain wants India to accept so-called TRIPS-plus arrangements, which offer longer patent protection for drugs than normally applies under the international agreements to which India has signed up, according to a leaked draft of the free trade agreement,” the newspaper stated.

An Indian official closely involved in the discussions informed the Telegraph that it was improbable the UK would see this particular request included in any final agreement.

Trade talks between the UK and India were initiated on 17 January 2022. Both nations appear eager to finalise the deal ahead of anticipated national elections in the coming year. 

However, a comprehensive agreement by the close of 2023 seems unlikely. Instead, partial agreements could be announced, according to Telegraph reports.

Further complications in the trade discussions include India’s request for more visas for skilled IT and healthcare professionals, as well as regulations concerning the origin of UK automotive exports. 

Ahead of the G20 summit in Delhi this past September, Sunak told the media, including Sky News, that a swift deal with India was “not a given” and he would not impose an “artificial deadline” on the negotiations.

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This week, the World Trade Organization (WTO) published the World Trade Statistical Review 2023, providing an in-depth analysis of the global trade landscape in the midst of worldwide turbulence. 

This report, encompassing a wide array of data and insights, offers a snapshot of the current state of world trade, highlighting key trends, challenges, and opportunities.

Global trade overview

In 2022, global merchandise trade volume experienced 4.7% growth, a figure that underscores the resilience of the international trading system amidst ongoing global challenges. This growth, however, was not evenly distributed across regions and sectors, reflecting the complex interplay of economic, political, and social factors.

Developed economies saw a growth of 4.2%, while developing economies and Least Developed Countries (LDCs) witnessed a more pronounced increase of 5.3% and 5.8%, respectively. Asia continued to be a driving force in global trade, with China maintaining its position as the world’s largest exporter.

Trade in goods

The report delves into the trade in goods, highlighting the recovery in sectors such as automotive and electronics. The commodities market, particularly energy and metals, experienced significant price fluctuations, influenced by geopolitical tensions and supply chain disruptions.

Agricultural trade remained resilient, with a growth of 3.5%, driven by increased demand and favourable weather conditions in key producing regions. However, the report also emphasises the ongoing challenges in ensuring food security and equitable access to essential commodities.

Trade in services

Trade in services showed a mixed picture, with some sectors recovering faster than others. Travel and tourism continued to face challenges due to pandemic-related restrictions, while sectors such as information technology and financial services saw robust growth.

The digitalisation of services emerged as a key trend, reflecting the growing importance of e-commerce and digital platforms in facilitating international trade. The report calls for greater cooperation and harmonisation of regulations to ensure that the benefits of digital trade are widely shared.

Trade policy landscape

The review provides an insightful analysis of the trade policy landscape, highlighting the continued use of trade-restrictive measures by some countries. While acknowledging the need for targeted interventions to protect domestic industries, the report emphasises the importance of a rules-based trading system and warns against protectionism.

The role of regional trade agreements (RTAs) is also explored, with a focus on the potential for RTAs to complement multilateral efforts and foster regional integration.

Sustainability and inclusion

A notable aspect of the report is its emphasis on sustainability and inclusion. The WTO recognises the urgent need to align trade policies with environmental goals and the broader Sustainable Development Goals (SDGs).

The report highlights initiatives to promote green trade, such as the reduction of tariffs on environmentally friendly goods and the promotion of sustainable supply chains. It also underscores the importance of gender equality and the empowerment of women in trade, calling for targeted policies to address existing disparities.

Challenges and outlook

The World Trade Statistical Review 2023 does not shy away from outlining the challenges facing global trade. The ongoing impact of the COVID-19 pandemic, geopolitical tensions, and the risk of economic imbalances are identified as key risks that could dampen future growth.

However, the report also identifies opportunities for collaboration, innovation, and reform. It calls for a renewed commitment to multilateralism, greater transparency, and a focus on inclusive growth that benefits all stakeholders.

Read the entire report here.

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Today, J.P Morgan’s 2022 edition of the Working Capital Index report finds that the global economy’s recovery has led to a 20 percent increase in sales across S&P 1500 companies, resulting in an inventory reduction. 

The Working Capital Index was launched in 2019 to provide insights into the working capital performance of some of the world’s largest and most influential companies. 

The annual report, which analyses the working capital metrics of companies listed on the S&P Composite 1500 Index, also shows cash levels amongst corporates reducing in 2021 compared to 2020. 

This is a result of companies deploying funds strategically after a period of cash preservation; companies typically conserve cash in times of crises or uncertainty to ensure ample liquidity. 

Meanwhile, the report estimates that $523 billion of liquidity was trapped within the supply chains of S&P 1500 companies at the end of last year, up from $507 billion in 2020.

Gourang Shah, global advisory head for payments at J.P. Morgan, said, “We are seeing working capital of corporates returning to pre-pandemic levels. 

“However, 2022 has brought on new challenges including the Ukraine-Russia conflict and rising interest rates, which are further disrupting global supply chains and increasing the costs of financing. 

“A key focus for finance practitioners will be to enhance their working capital management to ensure their businesses endure near-term uncertainties.” 

The report indicates that nearly 70 percent of the S&P 1500 companies experienced an improvement in their working capital efficiencies in 2021. 

Pharmaceuticals, apparel and accessories, and automotive sectors are among the industries improving the most. 

Conversely, the aerospace and defence, technology software and media sectors are the least optimal.

With the focus on environmental, social and governance (ESG) principles increasingly guiding funding decisions of lenders, the report also explores how ESG risk ratings are impacting access to external financing across industries. 

Industries with lower ESG scores, including oil and gas, airlines, pharmaceuticals and utilities, are expected to prioritise ESG in their strategy. 

These sectors are also predicted to explore tapping internal sources of funding through optimising working capital and liquidity management.

Gourang Shah, added, “ESG has become a key area of focus for corporates from a funding perspective, as the extent to which they are perceived to be socially responsible is increasingly impacting their ability to access external sources of funding. 

“We are seeing companies re-evaluating their business models, operations and supply chains to improve their ESG scores.

“Oil and gas firms diversifying into renewable energy, automakers shifting to electric vehicles production, and metals and mining companies pivoting towards recycling are some clear examples.”

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That may change, however, with China developing the world’s largest electric vehicle (EV) production capacity, and some industry players touting China’s first-mover advantage. 

In 2021, for example, half of the 6.5 million EVs sold were sold in China.

On the other hand, China becoming an EV-exporting powerhouse isn’t a clear pathway.  

In terms of sales, Europe’s market is strong, with 2.3 million EVs being sold in Europe mostly by European owned companies, compared with 3.3 million in China in 2021.

Europe has an export surplus, exporting more EVs than it imported in 2021.

This suggests that while China does have a large productive capacity among manufacturers, it still faces tough competition in the international trade of EVs.

China’s EV sprint

It’s not yet clear whether Chinese manufacturers’ exports will come to dominate the EV market in Europe, but it is clear that multinational automakers are already moving manufacturing to China.

The Chinese government has made it easier for foreign companies to set up operations in China, after relaxing rules on joint venture’s for EV manufacturing.

For example, Tesla’s venture in Shanghai is solely owned by Tesla, whereas previously this sort of foreign direct investment (FDI) would have to be a joint venture and would have to be 50% Chinese owned.

BMW has also set up production in China, with different partners for different models. 

Multinational companies and joint ventures already account for 30% of China’s total automotive exports (excluding Tesla), and in the EV sector, Tesla alone accounted for 57.5% of China’s total EV exports.

There are trade-offs, however. If multinational companies use China as an export hub, China benefits from manufacturing jobs and local suppliers’ demand increases, while the multinational company retains profits, R&D and service jobs, such as sales and after-sale services. 

Despite 10% EU tariffs on EVs from China, logistic costs, and other international trade risks, multinationals still decide to locate manufacturing in China, demonstrating its efficiency and low-cost EV value chain. 

With the basis of the low-cost EV value chain, Chinese manufacturers aren’t only focusing on domestic operations, but are engaging in a variety of strategies to boost exports as well. 

Mercator Institute for Chinese Studies (MERICS) suggests that Chinese manufacturers have set up R&D centres in Europe to build market and regulatory knowledge and connections, build partnerships with European Union (EU) manufacturers, set up overseas operations, and potentially their own production.

Mapping the trajectory of the international EV trade will be difficult, however, given the idiosyncratic strategies of EV manufacturers. 

This includes supplier choices and production location, which will affect the economic success of regions and manufacturers differently.

One example of this is NIO, a Chinese luxury EV manufacturer that manufactures in China, but 70% of its suppliers are foriegn companies, according to MERCIS.

Socio-economic effects 

Regional green transition policies will also affect the automotive industry differently.

As of 2021, EVs produced in the EU are allowed to emit 95g of carbon per km driven, but this will be gradually scaled down to 0g by 2035.

If Europe follows this policy, the FT has reported, 500,000 jobs related to internal combustion engine (ICE) automotive production and technologies associated with it could be put at risk.

On the other hand, China’s policy on ICE vehicles is more lenient, looking to take on any overflow of demand for ICE cars after bans. 

The FT also points out that PwC found that 250,000 jobs could potentially be added in the EV industry.

These potential jobs from a thriving EV industry base in the EU are politically important, in that they would provide jobs aligned with a green transition. 

This makes it important that the EU can build a value chain within the EU that multinational companies can leverage.

The battery supply chain battle

The US, EU, and China have all made public statements about the importance of localising the global value chain (GVC) for the production of electric vehicles. 

In February 2021, US President Joe Biden announced a strategic review of critical supply chains that includes large capacity batteries for vehicles and semiconductors.

Lithium-ion battery supply chain capacity and resilience will be important in building a localised GVC for EVs.

This is because lithium-ion batteries can account for over 30% of the cost of EVs, and are therefore a valuable part in the overall EV supply chain to capture.

In 2020, China had a 77% share of global battery manufacturing capacity, according to S&P Global Platts.

China built this strong position from its consumer electronics industry and government subsidies focused on building the EV market . 

China’s other advantage is that its battery supply chain in Shenzhen and Dongguan is all within a 500km radius. 

In 2020, Europe had 14 gigafactories and 30 announced or under construction.

S&P Global Platts projected gigafactory capacity (GW/h) by 2030:

• Europe: 845
• Asia-Pacific: 1,286
• North America: 190

However, the building of gigafactories focuses on battery cell manufacturing – the late stage of the battery supply chain. 

This is insufficient, because a localised supply chain would need to include raw materials suppliers, components suppliers (cathodes and anodes), and a closed loop that includes recycling. 

Reuters has reported that Eramet, a mining group, found it difficult to partner with local chemical groups that would be willing to build refining capacity in Europe.

Eramet currently has a partnership with BASF focused on its nickel and cobalt reserves in Indonesia.

Berger Consulting from Germany has also suggested that 40%-50% of current investment in Europe’s battery supply chain is made up of battery cell manufacturing, which ignores other key components within batteries such as cathodes.

The EU is targeting 100% of sourcing to be from within Europe by 2027, and this will only be possible with recycling capabilities.

The EU is also hoping that recycling will take off the reliance on mining for new materials. 

However, there are barriers. For example, at present, the different types of batteries and different types of cathode material make it difficult for recycling plants to process, thus making recycling uneconomical.

The US and Europe do have government-backed lithium-ion battery research programmes looking into recycling and more efficient use of high-value materials. 

And the EU has set requirements for minimum levels of recycled content in batteries for 2027, 2030, 2035.

The race is on

The EV and green transition will continue to prove to be a complex industry to follow. 

Each region will be competing for jobs, and, within these regions, each EV manufacturer will be competing for market share.

In sum, the EV sector will continue to have major political and economic consequences throughout Europe, the US, and Asia.

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Imported goods, for example, can enter with simplified customs documentation and without paying tariffs.

Businesses operating within a freeport zone can therefore manufacture goods using these imports, thereby adding value to the goods before exporting them – again, without ever having to pay the full customs tariffs or go through the full customs procedures.

Background to UK freeports

The Free Ports Opportunity, authored in November 2016 by Rishi Sunak MP – then a backbencher and now Chancellor of the Exchequer – set out the government’s vision for increasing UK trade.

At the time, Sunak was writing in the aftermath of the Brexit vote in June that year, on the assumption that leaving the European Union (EU) would provide a unique opportunity to revisit customs procedures and other trade policy measures. 

The report argued that an extensive and ambitious network of UK freeports would not only provide domestic manufacturers with a wealth of tangible benefits, but would also send a clear message to international markets that Britain’s new global role will be open, innovative, and outward looking.

The report provided indicative figures based on job creation in freeport zones based on US data, which suggested a UK freeport policy could create as many as 86,000 jobs in the UK. 

In 2018, Mace Consultancy estimated that “supercharged freeports”, whereby freeports were integrated with enterprise zones, could boost international trade by nearly £12 billion and create 150,000 jobs in the north of England. 

In 2019, the Conservative Manifesto committed to reintroducing UK freeports as a high priority, with three main objectives:

1. Establish Freeports as national hubs for global trade and investment across the UK, intensifying the economic impact of our ports by enhancing trade and investment and generating increased economic activity across the UK

2. Promote regeneration and job creation, creating high-skilled jobs in ports and the areas around them, prioritising some of our most deprived communities to level up the UK economy

3. Create hotbeds for innovation, creating dynamic environments, capitalising on new ideas and fostering the conditions that will attract new businesses, investors and innovations

The Freeports Bidding Prospectus was published in November 2020, and marked the opening of the bidding process for freeports in England.

From the original 40 bids received, HM Treasury announced the eight winning locations at the Spring Budget in March 2021, namely:

• Felixstowe and Harwich
• Humber Region
• Liverpool City Region
• Plymouth
• Solent (Southampton)
• Thames
• Teesside
• East Midlands Airport 

These successful freeport bidders will benefit from government incentives relating to customs, tax, planning, regeneration, infrastructure, and innovation. 

They will also be able to access a share of the £175 million seed capital funding in mid-2022 on the submission and approval of successful business cases.

Map break: Freeport structure and logistics

The diagram below illustrates how a freeport customs site can “move” the border inland as far as customs procedures are concerned, easing the flow of goods. 

There are five specific customs benefits to support international trade:

1. Duty deferral available while goods are on the freeport site
   
   
2. Duty inversion available where the tariff on the finished goods is lower than on the component parts
   
   
3. Duty exemption where goods are imported into a freeport for processing and subsequently re-exported
   
   
4. Suspension of import VAT
   
   
5. Simplified import procedures 

Beyond direct support for import and export activities, freeports will become special economic areas where a broader range of general tax relief will be available for businesses. 

Those measures will include the following:

• Enhanced capital allowances – Companies in freeport zones that invest in qualifying plant and machinery will be able to offset the cost against any taxable profits in the first year. That gives them an immediate increase in post-tax profit and helps improve cash-flow. With the abolition of the original enhanced capital allowances scheme, it provides a replacement in freeports and an added incentive for businesses to invest.
  
  
• Enhanced structures and buildings allowances – Capital spent on renovating non-residential buildings and structures will attract an annual 10% relief against taxable profits spread over 10 years. This is much better than the relief currently available nationwide, which is set at 3% p.a. over 33 and a third years. The new relief will be available on defined expenditure, providing building contracts are signed and the qualifying assets are brought into use between 1 April 2021 and 30 September 2026.
  
  
• Employer National Insurance (NI) contributions rates relief – Freeport employers won’t have to pay any employer NI contributions on their staff salaries, provided these employees spend 60% or more of their working hours in the freeport.
  
  
• Business rates relief – Up to 100% relief on business rates will be available on certain business premises in freeports. Local authorities will be given the power to set the details of this scheme in their own freeports.
  
  
• Stamp duty land tax relief – For purchases of land and buildings within a freeport tax site, subject to a ‘control period’ of up to three years, and the land being acquired and used in a ‘qualifying manner’.

Freeport aims and objectives

The first objective is clear: to establish freeports as national trade hubs and play an ever-increasing role in accelerating the UK’s international trade and investment strategies. 

Additionally, the government has also said that freeports will be significant “in boosting international trade, attracting inward investment and driving productivity across the UK”. 

All freeports will be targeting industries and sectors that are driving the development of advanced logistics, manufacturing, and research and development activities that will exploit the region’s existing strengths and trading partners.

In Liverpool City Region Freeport, for example, the key target market sectors have been identified as:

• Aerospace, maritime, energy and automotive – Building on the existing key prime manufactures in the region, with a specific focus on the transition to electric vehicles and low-carbon energy production, including hydrogen and offshore wind projects.
  
  
• Bio manufacturing and chemicals – Building on key prime manufactures with a focus on pandemic resilience, vaccine supply chain, and advanced chemicals manufacturing.
  
  
• Food and drink and fast-moving consumer goods (FMCG) – Focusing on packaging and population-centric logistics.

Investment begets investment

The accumulation of the freeport focus in the above areas is expected to drive significant demand for professional services, international trade finance, and create upstream clusters in associated sectors and supply chains across Liverpool City Region. 

Since the announcement of the freeport, discussions have progressed with a range of global ports and manufacturers looking to invest in the region. 

A key focus of all freeports will be to target high-value, high-tariff markets and partner countries who will find the customs and tax measures of most interest.

The eight English freeports are currently preparing to launch in early 2022, and it is expected that the devolved administrations will follow in 2023. 

If the initial rollout proves successful, it is expected that the government will look to undertake further bidding rounds to extend the benefits to more UK ports. 

A testament to their success so far is that many of the English freeports report being inundated by interested developers and businesses even before their launch. 

This bodes well for the planned levelling up of the UK economy by boosting jobs, trade, and regional investment. 

Read our latest issue of Trade Finance Talks, Spring 2022

Read here

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The Global Trade Update, published today by the United Nations Conference on Trade and Development (UNCTAD), found that the total value of global trade hit $28.5 trillion in 2021.

Overall, the value of global trade increased 25% on 2020 and 13% on 2019, before the COVID-19 pandemic began. 

While most global trade growth took place in H1 2021, progress nonetheless continued – albeit at a slower rate – into H2 2021.

A stellar Q4, or just more inflation?

Among its findings, the report notes that all major trading economies saw imports and exports rise above pre-pandemic levels in Q4 2021, with trade in goods increasing more strongly in the developing world than in developed countries.

After a relatively slow Q3 2021, trade growth picked up again in Q4, when trade in goods increased by almost $200 billion, achieving a new quarterly record of $5.8 trillion.

Exports from developing countries were about 30% higher than during the same period in 2020, compared with 15% for wealthier nations.

Growth was higher in commodity-exporting regions as commodity prices increased, and South-South trade growth was above the global average, with a 32% year-on-year increase.

Also in Q4 2021, trade in services rose by $50 billion to reach $1.6 trillion, just above pre-pandemic levels.

Except for transport equipment, all economic sectors saw a substantial year-over-year increase in the value of their trade during the final quarter of 2021.

However, the report notes that “high fuel prices are behind the strong increase in the value of trade in the energy sector, and trade growth was also above average for metals and chemicals.”

As a result of the global shortage of semiconductors, trade growth in communication equipment, road vehicles, and precision instruments was subdued.

Forecasts for 2022

Going forward, UNCTAD’s latest report indicates that trade growth will slow during the first quarter of 2022.

Positive growth rates are expected for both trade in goods and services, albeit only marginally, keeping trade values at levels similar to that of Q4 2021.

“The positive trend for international trade in 2021 was largely the result of increases in commodity prices, subsiding pandemic restrictions, and a strong recovery in demand due to economic stimulus packages,” says the report.

“As these trends are likely to abate, international trade trends are expected to normalise during 2022.”

Headwinds to trade growth in 2022

Trade growth in 2022 is likely to be lower than expected, given the macroeconomic trends.

The International Monetary Fund (IMF) has revised its global economic growth forecast down by 0.5 points, due to persistent inflation in the US and concerns around China’s real estate sector.

UNCTAD’s report also looks at ongoing logistic disruptions and rising energy prices, saying that “efforts to shorten supply chains and to diversify suppliers could affect global trade patterns during 2022.”

On trade flows, the report projects the trend of regionalisation to accelerate due to trade agreements and regional initiatives, in addition to an “increasing reliance on geographically closer suppliers.”

Moreover, trade patterns in 2022 are expected to reflect the increasing global demand for products that are environmentally sustainable.

However, in a word of caution, the report warns that record levels of global debt will put increasing pressure on debt sustainability, especially when combined with rising inflation.

“A significant tightening of financial conditions would heighten pressure on the most highly indebted governments, amplifying vulnerabilities and negatively affecting investments and international trade flows,” the report notes.

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According to the figures released today by the Society of Motor Manufacturers and Traders (SMMT), UK consumers registered more battery electric vehicles (BEVs) in 2021 than in the previous five years combined.

Meanwhile, new registrations of petrol and diesel cars increased just 1% in 2021 to 1.65 million, which is the second worst year (after 2020) for new cars since 1992.

Moreover, despite the low baseline of 2020, this means that the rate of new car registration in the UK is still down by more than 28% below its pre-pandemic level.

Mike Hawes, CEO of SMMT, said: “It’s been another desperately disappointing year for the car industry, as COVID-19 continues to cast a pall over any recovery. 

“Manufacturers continue to battle myriad challenges, with tougher trading arrangements, accelerating technology shifts and, above all, the global semiconductor shortage, which is decimating supply.”

But the SMMT’s data on EV registrations in 2021 does offer something for automakers to be cheerful about.

Over 190.000 new BEVs joined Britain’s roads in 2021, along with over 114,000 plug-in hybrids (PHEVs), meaning that 18.5% of all new cars registered in 2021 can be plugged in.

This is in addition to the more than 147,000 hybrid electric vehicles (HEVs) registered, which took a further 8.9% market share in a bumper year for electrified car registrations, with 27.5% of the total market now electrified in some form.

Fortifying the EV market

In response, auto industry representatives have called for increased incentives for consumers to go electric, and for mandated charging points, to ensure that the UK remains competitive against foreign EV markets.

“The biggest obstacle to our shared net zero ambitions is not product availability but cost and charging infrastructure,” said Hawes.

“Recent cuts to incentives and home charging grants should be reversed, and we need to boost the roll out of public on-street charging with mandated targets, providing every driver, wherever they live, with the assurance they can charge where they want and when they want.”

In 2021 the UK was the third largest European market for new car registrations, but the second largest by volume for plug-in vehicles and the second largest for BEVs.

It came in at ninth in Europe for BEVs by market share, however, despite its ambitious target to end the sale of new petrol and diesel cars by 2030.

The SMMT noted that the slow pace of growth in on-street public charging in the UK could stifle EV demand and undermine the UK’s attractiveness as a place to sell electric cars.

On average, the SMMT said that, in the UK, one standard on-street charger is shared by 16 EVs.

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Your Monday morning coffee briefing from TFG. UK-EU Brexit talks continue, with the UK prime minister Boris Johnson and European Commission president Ursula von der Leyen agreeing to extend talks on the future UK-EU relationship beyond the previously announced deadline of yesterday. The US has seen hospitalisations due to COVID-19 and intensive care occupancy reach new records as the impact of the virus is felt acutely in the world’s largest economy, whilst vaccines continue to be distributed around the world..

Brexit talks until New Year’s Eve as deadline missed

Brexit trade talks could go on until the end of the year after the EU abandoned the negotiating deadline, which was on Sunday, amid rising expectations that a deal could now be done. Negotiators from both the UK and the EU will bein pushing to reach an agreement on what trade looks like post-Brexit, after both agreeing to “go the extra mile”.

Read more →

WTO Package of declarations and recommendations adopted to help small businesses trade globally

The Informal Working Group on Micro, Small and Medium-sized Enterprises (MSMEs) officially adopted at its meeting on 11 December a package of six recommendations and declarations aimed at addressing challenges smaller businesses face when they trade internationally. Read more →

UK announces new approach on US tariffs

The UK announced an independent approach to the longstanding trade conflicts between the EU and US around steel and aluminium and aerospace tariffs. Read more →

WTO report shows marked decline in trade restrictions by WTO members amidst COVID-19 pandemic

The Director-General’s latest annual overview of trade-related developments shows a marked slowdown in the number of trade-restrictive and trade-facilitating measures adopted by WTO members related to goods trade over the past year. Read more →

Launched: ICC SME Climate Hub – Action tools for small and medium-sized businesses

The SME Climate Hub has joined forces with Oxford University to provide small and medium-sized enterprises (SMEs) with tools and resources to help them take climate action. Ahead of the 5th anniversary of the Paris Agreement signing, the freely available tools and resources are specially selected for SMEs to reduce carbon emissions, build business resilience and gain a competitive advantage, and help them achieve the Paris Agreement goals.

Read more →

VIDEO: Talking Heads of Trade: J.P. Morgan’s Reflections on Core Trade in 2020

We heard from Natasha Condon, Global Head of Core Trade at J.P. Morgan, on her take of how the trade finance market has fared in recent months, since joining the bank in 2020. Read more →

After Covid-19 disruption, hedging supply chain risks is a top priority; less than 15% of companies consider reshoring production

Covid-19 lockdowns have disrupted global supply chains across the board and placed the concepts of reshoring and resilience on every policymaker’s lips. A new report from Euler Hermes examines how the pandemic could push manufacturers to rethink their supply chain strategies. Read more →

The post TFG Weekly Trade Briefing, 14th December 2020 appeared first on Trade Finance Global.

Your Monday morning coffee briefing from TFG. The UK has approved the Pfizer-BioNTech vaccine for use. The first vaccinations are expected to start this week. Following a week of intense negotiations, UK and EU negotiators issued a statement saying that “conditions for an agreement are not met, due to significant divergences on level playing field, governance and fisheries”.

Electronics and automotive products lift global merchandise trade in Q3

The third quarter of 2020 saw a partial recovery of world trade in manufactured goods, led by electronics, textiles and automotive products, as production resumed and lockdown measures were eased in major economies, new WTO statistics show. However, despite substantial improvement in recent months, merchandise trade is still well below 2019 levels. Read more →

Deutsche Bank sees rebound in trade finance volumes post Covid-19

Deutsche Bank sees global trade finance volumes rebounding by more than 7 percent in 2021. Deutsche Bank’s Head of Trade Finance and Lending, Daniel Schmand forecasts that trade finance will be one of the winners in a post-Covid-19 environment. Read more →

Gunvor Launches New US $540 Million BioDiesel Borrowing Base

Gunvor Group Ltd has successfully closed a new US $540 million borrowing base facility to support the Company’s biodiesel trading activity. The Facility drew strong support among Gunvor’s banking partners, which aligned with its strategy to promote cleaner products with greener feedstock components complying with EU climate targets to reduce greenhouse gas emissions. Read more →

UK-EU talks to resume in final push for trade deal

Talks between the UK and EU are due to resume in Brussels in a final bid to reach a post-Brexit trade deal. Disputes over fishing and business competition rules are still going on, but the UK government said there was “still time to reach an agreement”. Prime Minister Boris Johnson will speak to European Commission President Ursula von der Leyen on Monday evening. Read more →

UK exporters to get extra aid to spur post-Brexit trade

British exporters will be given extra financial help by the government to encourage trade after Brexit and take advantage of new free trade agreements. Exporters will be able to apply for larger loans from the UK’s five high street banks backed by a partial state guarantee. This can be used to cover costs linked to exports but also to scale up business operations. Read more →

SMEs urge for preparation period on new EU-UK relations

The SMEunited General Assembly calls for an urgent agreement on EU-UK relations. They also insist on a phased implementation of any agreement of at least three months for SMEs to adapt to the new situation. Four weeks before the end of the transition period, SMEs still do not have clarity about the future rules. Read more →

SWIFT and Lloyds Banking Group announce world’s first go-live of gpi

SWIFT announced the activation of the world’s first live gpi Instant connection, a new service that enables consumers and businesses to send payments in seconds across borders, around the clock via their financial institutions. Lloyds Banking Group is the first to go live with the service and the UK is the first market where it is available. Read more →

The post TFG Weekly Trade Briefing, 7th December 2020 appeared first on Trade Finance Global.