The last eight months have been an unprecedented time for global trade. Growth in global trade began to slow down in 2019. But in an April 2020 forecast amid the pandemic, the World Trade Organization estimated that world merchandise trade could fall between a staggering 13 and 32 percent in 2020 against the same period last year. The forecast was later revised to just 9.2% decline in October 2020, as trade growth in COVID-19 related products compensated for the decline in demand of other product categories. This, indeed, showed that trade is a global necessity. 

But the COVID 19 pandemic revealed that to trade successfully, it is critical for businesses to embrace digitization, comply with dynamic tariff structures, and diversify their supply chains. Whether countries embraced contactless airports or small businesses turned to online payments, governments and businesses with the agility to make these transitions were the most successful. Let us look at the significant new ways in which global trade continues to adapt to the new normal.

Accelerating the Digitization of Global Trade: For small businesses, which network through exhibitions, the restriction on travel meant digital networks and online meetings replaced physical ones. By April 2020, Zoom reported 300 million people were using its video conferencing app, a 50% surge in just three weeks. Online exhibitions became the new norm. It also now became essential for business to automate end-to-end processes and introduce features such as live chat. In a fast-changing world, accurate and real-time data was the only constant. Having the information technology systems making this available were now non negotiable. Businesses quickly began the transition from barcodes to RFID tags, making it possible to relay data and track shipments through the Internet of Things, without any human intervention. Across the world, governments and organizations relied on a strong, modern Internet infrastructure to support retail supply chains during quarantine. For the first time, in such a world, it became possible to envisage a future where design files could be sent across the world, which could then be printed into a product using 3D printing. But all these huge strides forward were only possible through immediate digitization. Digital transformation for every business had truly arrived. 

Redrawing the World Trade Map: As the pandemic continues to transform the world, world trade maps are being redrawn. Apart from destabilizing world economies, the current crisis has deepened geopolitical friction while revealing the weaknesses of modern global manufacturing and supply networks. Among the sharpest shifts, we are expecting a dramatic shrinkage in two-way trade between the US and China by 2023 by around 15%, or about $128 billion, from 2019. Yet, alongside this, Southeast Asia has emerged as one of the strongest gainers, with projections of increasing two-way trade by around $22 billion with the EU, $26 billion with the US, and $41 billion with China by the end of 2023. Clearly, new manufacturing hubs could emerge as global supply chains are reshaped. The best time for seizing new business opportunities could be now.

Revising Tariffs vs. Connecting Countries: Across the world, governments can also be seen alternating between protectionism and open boundaries for collaboration. This is also impacting developments in global trade. For instance, the European Union is considering carbon tax on imports. This could impact the competitiveness of non-European trading partners. Yet, amidst these reports, examples have also emerged of countries forced to adopt innovative measures to ensure the openness of their borders for global trade. For example, in South Asia, governments have adopted digitization to bypass bureaucracy, move cargo faster and make trade easier in a socially distanced world. India now has a ‘faceless assessment’ program so that cargo declarations for any port of arrival can be assessed online. Bangladesh moved to electronic copies for assessing imported goods and waived import duty on essential medical supplies. Bhutan pioneered zero contact clearance procedures to release consignments with minimum interference. Clearly, global trade will have to navigate through compliance with new tariffs and regulations, while also leveraging new trade arrangements.

Building Supply Chain Resilience: The new focus is on building strong supply chains, with the resilience to withstand severe shocks, as experienced in the current pandemic. Global lockdowns have made organizations see the necessity of building larger inventories. In addition, businesses are also ready to nearshore manufacturing, albeit at a higher cost. This could both change old ways of doing business and open new opportunities. Businesses are rethinking approaches to outsourcing manufacturing, supplier diversification, and inventory management. The impact could be structural and long lasting. 

Facilitating the Flow of Information: In this new world, information has emerged as a key resource, where the shortage of goods needs to be connected to the surfeit of supplies in other regions. Recognizing this, the Asian Development Bank’s (ADB) Trade & Supply Chain Finance Program maps supply chains for medical products. Using interactive maps, it identifies impediments to these goods being produced and distributed, while also pinpointing areas from which these can be supplied. This is just one of the ways in which information will continue to be an enabler and facilitator in these times.    

Countries and organizations are also finding that global collaboration is essential. A case in point is the Covid-19 vaccine, currently being developed by the British company AstraZeneca and the Oxford university. The vaccine is currently undergoing clinical trials across the world. Next, AstraZenaca will have to build global supply chains to expand manufacturing capacity and ensure seamless delivery. The success of the development, manufacturing, and distribution of the vaccine rests firmly on open channels of global trade. Clearly, the nature of global trade may change, but it is here to stay. To know more about the trends in global trade industry, 

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