Last updated on July 4th, 2016 at 10:36 am
This is part three of a five part series on B2B leaders and their opinions of Brexit.
Part two here.
One of the luxuries of being in the EU, is that the U.K. has a free trade agreement with other countries in the union. It is easy to have materials from various parts of the supply chain from different countries. The U.S. is also the U.K.’s largest trading partner, outside of the EU, accounting for 14.5% of total U.K. exports.
With the UK potentially no longer being part of the EU, a trade ministry would need to be established and a lot depends on what the UK government can negotiate on independent terms. Will there be a UK/ EU free trade agreement established? Only time will tell, which takes us back to the subject of uncertainty. Obama expressed that a Brexit trade deal with the U.K. could take upwards of 10 years, and the U.K. will have to get at the back of the queue for a U.S. trade deal.
The good news is countries like Norway, Iceland and Liechtenstein who are outside the EU but in the European Economic Area still have established free trade relations with the union. Norway and Switzerland are able to determine their own trade policy and arrangements with third party countries, and the U.K. could also choose to have a deal with the EU that resembles their current one.
“The long-term impacts are still unclear, but on the short-term, it’s clear how the markets feel about the result of the Brexit vote. For B2B businesses, we’ll see increased trade barriers,” says Dana DiTomaso, President of Kickpoint.
A question on the top of a majority of Canadian’s minds is what will happen to the Comprehensive Economic and Trade Agreement (CETA), which removed most tariffs on Canadian goods entering Europe. Ditomaso says “working with the UK just got a lot more complicated and unclear, and if there’s one thing that businesses try to avoid, it’s complicated and unclear business arrangements.”
ITAC is taking a consultative approach. Robert Watson, President and CEO told B2BNN that the association will “engage with members to hear their concerns as things develop following Britain’s vote to withdraw from the European Union, and continue speaking with government on their behalf.” Watson stressed to Canadian tech companies that “ITAC is prepared for open consultations with the Canadian government to ensure the best possible outcome” for trade in tech goods and services with the UK.
Part 4 here.
