Dive Brief:
- Theresa May, Prime Minister of Britain, will invoke Article 50 on Wednesday, March 29, to begin the formal Brexit withdrawal negotiations between the United Kingdom and the European Union, CNN reported.
- The EU Commission has reacted with negativity, stating that the U.K. will find itself in an unrewarding position as a result of its withdrawal.
- Scotland's First Minister Nicola Sturgeon is not only against the withdrawal, but is seeking a second referendum vote to secede from the U.K. as a result. May has called that request poorly timed.
Dive Insight:
Trade deals: so easy to take apart, so difficult to negotiate.
The anti-trade sentiment that has taken over the Western world seemingly began nine months ago when the U.K. voted to leave the European Union, and supply chains must now prepare for what was previously unthinkable. Fortunately, the process will boil slowly, providing supply chains two years to prepare accordingly. (Article 50 notes the parties have two years to settle terms).
While the initial hype has calmed down, many industries based in the U.K. have threatened to leave the country depending on the terms of the deal. The financial industry, for example, is considering relocating; the pharmaceutical industry, too, is concerned.
Much is at stake for both parties, however. The EU is looking to stem further defections, and will drive a hard bargain with its former partner. Meanwhile, the U.K. is in the tough spot of negotiating favorable terms while maintaining its globalized status. Politics, it seems, is now a supply chain risk.
Like the renegotiation of NAFTA, and any bilateral trade deal, significant noise will surround each round of talks. All that is certain is the U.K. will leave the EU, but how different state of affairs will be is very much in question. Industry leaders should begin to consider the pros and cons of taking action and relocating operations, albeit knowing it may not be necessary in the long-run.
