Brexit – The implications
There can be few involved in shipping that do not know by now that the UK has voted in a referendum to leave the EU. The departure will not be immediate as the Prime Minister David Cameron has announced his resignation and left the negotiations to his successor who will not be chosen by the governing Conservative party until October. Quite clearly the UK will continue to import and export goods and commodities globally including in and out of the EU and in the short term will do so on the basis of trade deals agreed as a member state of the EU. In the longer term, the UK will be obliged to negotiate trade deals independently with individual states. There is no reason for the basis of trade or tariffs to change unless one or other party wishes that to be the case. The biggest possible effect of Brexit which the EU is desperate to avoid is for other member states to take action to leave or attempt to alter membership conditions. This is said by observers to be a possibility in several states including France, Netherlands, Finland, Denmark and Czech Republic. The billionaire investor George Soros has said that Brexit could signal the break-up of the EU in which case all member states are likely in the first instance to agree to leave trade deals in place and to abandon the political and economic integration the is at the core of the EU project. Several observers see Brexit as the beginning of a reversal of globalisation with disaffected populations in Europe taking the lead in forcing governments to change tack. On Sunday, Huang Yiping, a member of China's central bank monetary policy committee, said Brexit could mark a "reversal of globalisation", which would be "very bad" for the world. Globalisation has had a big effect on shipping over the years with production of goods of many types and particularly heavy industry having shifted from Europe and the US to Asia altering trade routes and creating inbalances in liner trades. While corporations have profited from cheaper labour, displaced workers in the west have not received the promised trickle down benefits and this has led to great dissatisfaction among populations. There are many who believe – including the US Republican presidential candidate Donald Trump - that the time has come to repatriate some production and industries. If this happens, it is conceivable that the volume of goods on liner trades moving westwards will diminish further but on the plus side eastbound movements could increase. This could make the new generations of ultra large container ships obsolete while at the same time increasing imports of iron ore and coal into Europe and the US as steel production returns. Not an immediate prospect but something that operators of ships may need to consider when thinking of future fleet make up.