After a difficult and reported all-night intense set of negotiations, U.K. Prime Minister Theresa May managed to make an initial deal with the European Commission regarding the Brexit separation from the European Union.
This week’s deal includes a set of initial agreements that will now allow negotiations to advance toward negotiations related to specific trade issues.
The initial agreement addresses the rights of EU citizens residing in the United Kingdom along with a financial exit settlement requiring Britain to pay a reported $53 billion sum spread over several years.
The most contentious issue, that being avoidance of a hard border between Ireland, an EU member, and Northern Ireland, appeared to reportedly be “papered over” with ambiguous language. Initially, there was a proposal floated within U.K government ranks on the notions of a virtual border among Ireland and Northern Ireland, supported by advanced Cloud-based technology. That proposal met with considerable skepticism.
With time becoming critically important to meet the March 2019 deadline for full exit, there is growing skepticism that a new trade pact can be negotiated, outlined, and ratified by all EU nations by the early 2019 deadline. There further remains discord within political factions in London, Northern Ireland, and the rest of the U.K. as to what these negotiations ultimately lead to in trade practices, regulations and customs practices.
In its reporting, The Wall Street Journal indicates that throughout these ongoing negotiations, the EU has consistently been several steps ahead of Britain., with the implication that terms will remain dictated, and attempts by the U.K to foster a different soft exit agenda will remain challenging.
Businesses require certainties and this initial Brexit will likely provide companies some optimism. None the less, specific industry manufacturers will continue to face difficult strategic investment and product sourcing decisions in 2018.
The U.K. serves a vital link in commercial aerospace, automotive, retail, and other industry supply chains. Currency, potential for added tariffs, labor and/or taxation provisions are prominent as is a sense of whether there will ultimately be a soft or hard exit.
Supply Chain Matters advises industry supply chain leaders to continually monitor and assess Brexit developments and plan for additional management assessments at mid-year.
Bob Ferrari
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