How much influence does Brexit have on the plastics industry in each country?

Brexit has varying degrees of impact on its trading partners

Focus on the local: market price fluctuations

The former president of the British Plastics Federation said that investment in the plastics industry may be affected by the EU.

PhilipLaw, the current president of the British Plastics Federation, said the impact of the vote is not yet known. However, the association will continue to work with the government, and members and other shareholders must ensure the interests of the UK plastics industry and continue to grow.

Auto supplier Mike Matthews said it will focus on the possibility of rising logistics costs, while pointing out that the exchange rate of the British pound against the US dollar has fallen, and if it continues to fall sharply, it will lose its competitiveness.

How deep is the impact on China?

Trade and investment negotiations may face challenges. The EU is currently China's largest trading partner and is vital to China.

From an export perspective, the EU is China's second largest export-oriented economy. In 2015, China exported 356 billion U.S. dollars to the EU, of which 59.6 billion U.S. dollars, accounting for 16.7%, second only to Germany.

From the perspective of imports, the EU is China's largest import source economy. In 2015, China imported 208.9 billion US dollars from the EU, including 18.9 billion from the UK, accounting for 9%.

From the perspective of trade balance, the EU is China's net source of demand. In 2015, China's trade surplus with the EU reached US$147.1 billion. Even if the UK leaves the EU, the impact on China's existing trade is limited. The average tariff level of the current EU countries is 1%, which is at a very low level. Considering China's economic volume and international status, even if the UK leaves the EU, the EU and the UK are unlikely to raise tariff levels for China.

Due to the high trade deficit with China, the EU has been hoping that China will promote the opening of investment and service trade, and is also negotiating with China. Therefore, trade between China and Europe will be more liberalized in the future. The impact is limited. However, the progress of China-EU free trade and investment agreement negotiations may be affected in the future. Within the EU, the UK is a staunch promoter of free trade.

British Prime Minister David Cameron proposed in 2013 to support China and the EU to sign a free trade agreement, but other member states believe that China should first open the EU to open up investment and expand service trade, and then sign a free trade agreement. The current China-EU investment treaty negotiations are actively carried out. Once the UK withdraws from the EU, it will be difficult to influence EU decision-making. The progress of negotiations between China and the EU is affected or affected.

Can “Made in Germany” be safe?

As an important member of the European Union, Germany has close economic and trade ties with the UK. The UK is Germany's fourth largest trading partner and the third largest export market. In 2016 alone, the UK purchased about 86 billion euros of German products. The UK is also the fourth largest export destination for German machinery manufacturing, with exports of 7.4 billion euros last year. Schweitzer, chairman of the German Chamber of Commerce and Industry, said that German exports to the UK fell by 3.5% last year, and most of the decline occurred after the "Brexit" vote in June.

The German Economic Research Institute’s report also shows that the UK’s “Brexit” has seriously affected Germany’s export and trade balance with the UK. In the second half of 2016, German pharmaceutical industry’s exports to the UK fell by 19%, automobile manufacturing exports fell by 14%, and chemical industry exports fell. 11%, the overall export value to the UK fell by 7.2%.

However, some experts believe that the decline in German exports to the UK in the second half of 2016 is only a short-term impact. According to a report published by the Cologne Economic Research Institute, 90% of the 2,900 companies surveyed believe that the UK “Brexit” has no or only minor harm to them; only 2% to 3% of companies say that the UK “ Brexit will have a greater impact on its investment and employees, most of which are in the industrial sector.