You’ve probably already heard of the major effects Brexit has had on Britain: political unrest, social divide and a severe drop in the value of their currency (the pound). While its effects on the U.S. are slightly less dramatic, Britain’s exit from the European Union (EU) is just the tip of the iceberg in a much bigger supply chain matter: the Trans-Atlantic Trade and Investment Partnership (TTIP).
What is the TTIP? The TTIP is a companion agreement to the TPP currently being negotiated between the U.S. and the EU with the goal to remove, or at least reduce, barriers to commerce.
What’s the big deal? If passed, it will create the largest regional free-trade agreement in history covering close to half of the world GDP.
Why should businesses care? This is the first trade deal between the two unions that will answer to challenges for small and medium-sized business whose supply chains include international shipping to a European nation. Those challenges include the regulatory differences and contradictory registration requirements between the U.S. and EU.
So, why is Brexit a threat to the TTIP? There are two main reasons:
1. The UK's advocacy for TTIP no longer stands.
2. Time will be the death of the TTIP.
TTIP aside, Brexit will complicate shipping into the EU regardless. Global supply chains will have to rebuild their distribution channels to match new trade maps and regulations. These complexities are already taking their toll on the US transportation and logistics industry. XPO Logistics who receives 12% of its revenue from the UK experienced a 14.9% drop in shares, and supply chain management provider, C.H. Robinson is reconsidering European expansion and acquisitions.
What other complications do you see arising in the wake of Brexit? Are you rooting for TTIP’s success or failure? Share your thoughts!