Almost everyone has heard of Brexit, but few know exactly what it means — or understand what its consequences may be. One pressing issue is how the British government will maneuver and negotiate trade deals.
Brent Nelsen, professor of politics and international affairs at Furman University, says there may be thousands of points of friction.
“Every little thing has got to be negotiated, and these are very intertwined economies,” he explains. “So there’s going to be this long process of trying to figure out what their [U.K. and EU] arrangement is after Brexit.
Sound complicated? That’s because it is. Nelsen says Brexit is unprecedented in modern history.
Duane Dingle, CEO of Greenville’s OpTek Systems, a global supplier of laser-processing tools, says what’s happening between the U.K. and EU does have some commonalities with the situation between the U.S., Mexico and Canada.
One similarity is the minimal tariffs between the three North American countries, he explains.
“We can ship FedEx into Canada or down to Mexico and it arrives the next day,” Dingle says. “So North America is treated as a European Union in some regard.”
Imposing or changing tariffs would be comparable to Brexit, he says.
“If a similar Brexit were to occur here, then we could see everything that ships into Canada have a 15% increase,” Dingle says. “That’s a problem.”
Brexit and the Upstate
International trade is vital locally. According to the Greenville Chamber of Commerce, British companies have created more than 2,700 jobs in the Upstate since 2004. More than 107 companies from the United Kingdom are located in the state and employ nearly 11,600.
Although statistics suggest Brexit will impact the Upstate economically, some people aren’t certain.
Jay Rogers, a Nelson Mullins partner who provides corporate counsel to U.S.-based and international businesses, says that Brexit will likely have no ramifications here unless there’s a “Lehman effect” from the U.K.’s withdrawal.
The Lehman Brothers collapse in 2008 is considered one of the first “dominos” that led to the financial crisis. “They were one of the largest investment banks in the world,” Rogers explains. He says it’s possible that Brexit could have a similar effect.
“The U.K. could weaken the EU, and the EU could weaken other countries in turn and could potentially reach us,” he says.
Dingle says companies doing business with or based in the U.K. should be fine as long as they don’t manufacture there, but he says it’s important to have options. “[OpTek] can manufacture here, we can manufacture in the U.K., we can manufacture in China. So we’re pretty well-positioned … We can leverage the currency,” he says, “and that’s a big, big deal.”