By Renee Chapline, Virginia’s Gateway Region
The completion of the $5.4 billion, nine-year project to expand the Panama Canal opens up the trade route to the East Coast for ships from Asia, shortening the trip to the U.S. by five days. Updates included a third traffic lane through the canal, which doubled its capacity. Since its opening on June 26, 136 ships have made plans to travel through the renovated canal.
Virginia now has the deepest port on the East Coast with the highest capacity for today’s largest trade vessels. The Port of Virginia is located only two and a half hours from open sea and is the only East Coast port with congressional authorization for 55-foot deep channels. On top of it all, Gov. Terry McAuliffe just announced a $350 million grant for expansion to the Port.
It seemed Virginia was on the cusp of a large opportunity to increase international trade previously dominated by the West Coast. But, then came the Brexit, the United Kingdom.’s departure from the European Union.
The U.S. exported over $56 billion worth of goods to the United Kingdom last year, making them our fifth largest importer. We’ve invested nearly $588 billion in all British sectors, where we employ nearly one million people. Equally, the U.K. has heavy investments and employs over a million in the U.S. With such far-reaching connections between the two, to what extent will Brexit affect the U.S. economy? More importantly, how will that change affect our lives at home in the Gateway Region?
Since the founding of the New World, ties between Britain and Virginia have remained strong. Roughly 4.7 percent of Virginia’s international exports went to the U.K. in 2015. Additionally, the U.K. is the Richmond area’s leading source of foreign direct investment, holding 29 of 160 foreign-based companies based in the MSA.
One such company located here in the Gateway Region, Rolls-Royce Plc., believes there will be few immediate implications. Following Britain’s announcement to withdraw from the E.U., Rolls-Royce issued a statement expressing little concern. The company said it expects no short-term changes in its business at home and across the pond. In turn, Rolls-Royce is looking to expand its operations in Prince George County, hoping to hire 50 more employees by the end of 2016.
A month following their split with the E.U., the international trade and economic ramifications of the Brexit remain unclear. With the British pound at a steady decline — down one-tenth in three weeks — the U.S. dollar continues to strengthen. While a strong dollar is beneficial while travelling, it makes American imports more expensive abroad, which harms our ability to trade internationally.
While its implications may appear unnerving, the Brexit presents U.S. businesses with a unique opportunity. Now as an isolated country, the U.K. must renegotiate trade procedures with the current members of the E.U. while its recent trade regulations with the U.S. remain unharmed. Virginia is globally competitive and offers advantages to companies looking for a North American location. We are fortunate that Virginia’s leaders have positioned the state to remain a premier location for business around the world.