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BREXIT: Supply chains crucial to trade deals

BREXIT: Supply chains crucial to trade deals

As news of the UK Government’s efforts to strike new trade deals emerge, for example, with China and Australia, Dr Christos Tsinopoulos, Senior Lecturer in Operations & Project Management at Durham University Business School, questions how the free trade deals will operate across increasingly sophisticated supply chains.

“As we move closer to Brexit, it remains to be seen how new bilateral trade deals will be able to provide an environment where supply chains both across service industries and manufacturing can remain competitive.

“Modern supply chains are highly integrated. Such integration allows the sharing of ideas, market data and innovation. Over the past few decades both the UK’s approach to globalisation, and its membership to the EU have provided a fertile environment where companies, employees, and products can be easily moved across borders.

“Although manufacturing supply chains are global, common legal frameworks and efforts for standardisations at the EU level have enabled companies based in Europe to establish relationships quickly and efficiently. This, and the highly educated workforce, has often allowed the high value end to be located in the UK despite the relatively high operating costs. The result has been some highly efficient and innovative supply chains, such as those of the automotive and retail sectors, which work and compete globally.

“Leaving the EU will have an effect on our ability to be a valued member of this broader EU supply chain and we could miss out as a result

“New trade deals outside the EU could boost manufacturers willing and able to export to countries such as China and Australia.  However, given the already global nature of other existing supply chains it is difficult to see how such an agreement will balance the impact of losing our position with what we already have with the EU. At the same time, we will need to agree separate trade agreements with the EU or member states, which could potentially increase the bureaucracy and ease of doing business.

“In my opinion, the most pressing trade agreement should be one that prioritises access to innovation.  Although access to markets for trade is essential, a longer sustainable competitive advantage will come from ensuring that UK businesses and the associated supply chain benefit from developing innovative products.”

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