Britain’s exit from the European Union, otherwise known as “Brexit”, was controversial. Leaders in manufacturing, particularly in chemical-related industries in the United Kingdom foresee new obstacles for trade and regulatory complexity between the United Kingdom, the European Union, and the United States.
The United States’ commercial relationship with the United Kingdom and the European Union comprise 40% of the global economy. Most trade takes place as intercompany transfers, so the barriers to trade are low compared to trade with other countries. According to Jim DeLisi, President of Fanwood Chemical and Chair on the SOCMA International Trade Committee, Brexit will be detrimental to the UK and EU, especially since the UK has a significant trade deficit with the EU for chemical products.
“It is likely the UK will end up with a trade deal with the EU that is similar to what Norway and Switzerland have negotiated, allowing the free movement of goods,” predicts DeLisi, who thinks it will take several years for the UK and the EU to rectify any trade problems resulting from Brexit.
DeLisi also predicts that US goods will be very expensive in UK, and goods from the UK will be relatively inexpensive in the US. Which will make it more difficult for US companies to compete.
DeLisi isn’t the only one who spoke about rectifying trade problems. In an article on Chemical Watch, Steve Elliott, chief executive of the UK’s Chemical Industries Association, acknowledged the present need for new trade agreements and called upon the UK government to establish these.
One such trade agreement that was in the works until Brexit upset its progress is the Transatlantic Trade and Investment Partnership (TTIP). Brexit makes it unlikely that the TTIP will be finalized in 2016. This is disappointing news for the chemical manufacturing sector, which would have experienced a multi-billion dollar reduction in tariffs and increased regulatory coherence between the US and EU.
A C&EN article summarizes the opinions and concerns of several other industry leaders in the UK pertaining to the pharmaceutical sector of the chemical industry and science research and progress:
Mike Thompson, CEO of the Association of the British Pharma Industry, says Brexit will immediately impact the UK’s pharmaceutical industry in terms of creating challenges for future investments, research, the industry’s job outlook, and drug regulation.
Steve Bates, CEO of the UK’s Bioindustry Association, emphasized that the voters’ decision to leave the EU is not what the Bioindustry Association wanted. This group is concerned about medicine regulation, market access and talent, intellectual property, and the future of the relationship between the UK and the EU.
President of the Royal Society, Venkatraman Ramakrishnan, says that Brexit will have significant impacts on science including funding, the ability of people in the EU to work in the UK, and international collaboration.
The true tale of Brexit will unfold over the next 6 months and beyond, and will depend on the willingness of government leaders to work together to mitigate adverse trade impacts down through the supply chains, and as the UK redefines its role in global commerce.