Brexit buzz - Manufacturing giants split on impact of looming divorce deal
Two major manufacturers are upbeat that news of a tentative deal brokered between the United Kingdom and the European Union will calm international markets and give a lift to local exporters even though Jamaica’s main trading destination is the United States.
After 18 months of tough and at times acrimonious negotiations, the ‘divorce in principle’ was announced yesterday in Brussels. It still, however, needs to be ratified by the UK Parliament and the legislatures across Europe.
“I think this bit of news is really encouraging ... although we still have to wait and see how it unfolds,” said Don Wehby, chief executive officer of the conglomerate GraceKennedy Group.
“The uncertainty impacted the rate of exchange between the pound and the dollar, and that was giving us a challenge to manage our business over there. So I hope things will settle down having heard of this announcement and that their Parliament will approve it quickly,” he told The Gleaner yesterday afternoon.
GraceKennedy rakes in approximately 14 per cent of its revenue from the UK and European markets. Besides the UK, GraceKennedy’s products can be in Germany, the Netherlands, and France, among others.
Wehby said that GraceKennedy had planned to launch an aggressive plan to expand into Europe, a move, he said, that could have been impacted if an amicable Brexit pact was not forged.
“So we are happy by the news although the devil’s in the details, which I will have to look at keenly, but it is a very strong development,” said Wehby.
NO MAJOR IMPACT
However, Richard Pandohie, CEO of Seprod Group and president of the Jamaica Manufacturers and Exporters’ Association, believes that Brexit would not have much impact, in real terms, on the island’s trade relations with the UK.
He said that he was still somewhat cautious due to the complexity of the proposed deal, noting that the process was not fully understood by the British people.
“Our export to the UK is so minuscule that I don’t see a deal having a massive impact, and I don’t see us not having an opportunity to be in the market, whether through customs rule or the regulatory rules on this,” Pandohie said.
“Honestly, it will be like any other market, where you will have to make some adjustments around labelling, for example, or around whatever standard is adopted, but I can’t see any major impact this Brexit deal will have on us, being that we are not a major trading nation with the UK. So from where I sit and with the information I have, I don’t see a Brexit deal having any major impact.
Britain’s Prime Minister Boris Johnson has banked his premiership on getting Brexit done by October 31, a mere 13 days away.
Johnson will have to get the proposed pact passed by Saturday to avoid a third Brexit extension.
Britain’s High commission to Jamaica, Asif Ahmad, had said earlier this year that he did not foresee any disruption to trade agreements with the UK as a result of Brexit.