ILMA Compoundings - November/December 2020 - 31

World Affairs
Parallel with Brexit talks, the U.K. is crafting trade agreements with countries across the globe. A trade deal with the
U.S. is likely and could be mutually favorable because of
the two nations' shared culture and U.S. President Donald
Trump's Anglophile tendencies, inspired by his Scottish
mother, Wright said.
" He was always quite keen to be first in the queue to do
a trade deal with the U.K., and the talks are progressing
quite nicely, " he said. " Any North American manufacturer or
supplier of products coming into the U.K. from abroad will
be fine. They will be better placed to service the needs of this
country. "
Schiefer agrees that complicated and expensive documentation and taxation arising from the final Brexit arrangement
could benefit businesses not tied to the U.K. or the EU.
" Some of our U.K. clients might buy directly from the U.S.,
as the relation between Trump and Johnson is much better
than theirs with the rest of the world, " he said.
Jarquin advises close examination of the " overarching
theme " of trade wars, of which Brexit is simply one part.
" Watching how the U.K. is going to create trade agreements
with all these countries around the world certainly will be
interesting, " she said. " We're learning in general how companies can find a way to be resilient through trade wars. "

Finding Agility
The 11th hour is creeping up, but even the 1998 Good
Friday Agreement ending strife in Northern Ireland " was
completed on the Tuesday after Easter Monday, " said
Wright. " In these political negotiations, they could come up
with a deal on Jan. 5, because these things do tend to go to
the last minute. "
The drawn-out negotiations aren't helping companies
trying to plan their way out of COVID-19 and into a postBrexit world. Some companies have postponed investments
for more than a year and are stopping production in the
U.K., said Schiefer. " Car manufacturers are heavily affected,
as well as all subcontractors, " he added.
Jarquin sees some companies returning to themes from
pre-COVID-19, pre-Brexit acceleration days. Those with
the liquidity are doubling down, even amid downturn and
uncertainty. " They're taking a risk, " she said. " A competitor
may be laying off, and they sweep up those people. Through
any financial crisis, it's always about how financially stable
you are - and your risk appetite. "
As Brexit rolls out, sustainability will be a refrain. Some
wonder if the U.K. would loosen the strict sustainability
goals and regulations set by the EU. But as Jarquin noted,

suppliers must be aware of the demands of end users farther
along the production chain, even if it's an electric car
manufacturer demanding use of sustainably manufactured
lubricants in mining the lithium that powers its batteries.
" All these trends are only going to be accelerated by Brexit
and COVID, " she said.
The EU is concerned that the U.K. could turn into " a
low-regulation, low-taxation economy like Singapore, sitting
just off the coast of the EU and diverting investment and
resources away from the EU and having an unfair competitive advantage, " noted Wright. " Although, at the moment,
the U.K. has said it will be a global champion of environmental issues. It will adopt the regulations of the EU as
much as possible. "
Despite the upheavals of 2020, lubricants have been
" relatively resilient, " said Jarquin.
She expects more of the same post-Brexit: " The lubricants
business is an old player. Independents in the U.K. are
founded on strong values and knowledge. It's not like they're a
flash-in-the-pan business. There's a strength and a resilience in
the lubricant industry that may not exist in other industries.
Decades and decades of experience will help these people
through. That's not to say they should minimize the gravity of
what's about to happen, but these guys know their stuff. "
McCormick is a Pennsylvania-based freelance writer.

ILMA Compoundings - November/December 2020

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