The entire world will remember the year 2020 for obvious reasons and the pandemic continues to persist in the current times as well. With the resurgence of the coronavirus in major economies like India, there are a lot of questions that the international trade community needs to reflect upon. Well, global trade has been at the forefront of crucial points in history and will continue to dominate the international scene as the demand-supply dynamics evolve. If we tune into the forecasts by experts, the year 2021 has been perceived as a period of recovery for economies around the world. However, there are problems in international trade that we need to watch out for.
Current problems in International Trade: Learnings & Key Takeaways
The Brexit Deal
Dealing with the Brexit has been challenging right from the start. On April 28th, 2021, the deal was finally approved by the European Union. Although the outcome was never in doubt, concerns cloud over how well the current British government will carry out the two key documents of Brexit: The Trade & Cooperation Agreement and The Withdrawal Agreement.
Furthermore, the European Parliament has expressed doubts about the misuse or undermining of the complicated negotiations by Britain such as the one on fishing rights and the Northern Ireland Protocol.
“Everyone has to shoulder responsibility and respect what they have signed up to.”
With great emphasis, this entire event has put the spotlight on the larger issue of trade facilitation. This is one crucial aspect that will further determine the successful delivery of COVID 19 vaccines.
(Suggested Read: Brexit and its Impact on International Trade)
Digital Trade & E-commerce
One of the huge blessings of the modern world is digital trade and the rise of e-commerce. This digital revolution has not only made the world smaller but also helped us all thrive through the pandemic. However, some questions continue to pop up. How accessible is digital trade? Can people confidently share data? Is it safe to connect e-payment systems across borders? How safe? The trade community will need to find a way to help businesses explore more opportunities with digital trade and e-commerce.
Supply Chain Resilience & Diversification
We have observed how societies fear a shortage of most essential supplies such as food and medicine. With protectionist trade policies, this fear only screams louder and leads to countless frictions in the supply chain. With a conscious effort towards making the supply chain resilient and diverse, the risks can be managed. At the time when the world is in the grips of a global shared challenge, economies need to join hands and pitch in wherever they can.
Because the fact remains that increased demand combined with a disruption in a country’s supply has significant global dimensions. Many businesses are dependent on imports. This includes countries that are far behind in their vaccination drive and in some cases, even facing a more aggressive resurgence of the virus. One of the recent examples being India. Also, there is a whipsaw effect of the lockdown last year which was followed by an increase in demand worldwide.
Needless to say that there are many organizations that have transformed their operations during the pandemic and are more digitally empowered. Reopening is not a huge deal for them. But the problem remains that such companies are in the minority. The other companies will realise the high dependency they have on their supply chains and ecosystems.
(Suggested Read: How to Diversify Your Supply Chain?)
There is no doubt that the massive expansion of global trade due to technological developments have benefited the society. However, it is also important to note that it has contributed towards environmental issues. Businesses are now moving towards a greener supply chain as they realize the long-term benefits of green logistics. From bringing down the waste in the supply chain to minimizing the cost of production, a greener supply chain also adds immense value to the brand image in a global market.
“For too long, the traditional trade community has resisted the view that trade policy is a legitimate tool in helping to solve the climate crisis.
As we have so often seen with labor issues, there is a certain refuge in arguing that this is all a question of domestic policy and that we need not tackle the daunting task of building international consensus around new rules. But that dated line of thinking only perpetuates the chasm that exists between the lived experiences and expectations of real people on the one hand and trade experts on the other.”
The Big Picture continues to evolve
We can see new challenges and opportunities in the wake of 2021 as experts heralded it as the year of recovery in international trade. Problems in the context of business, policy, tax laws, logistics, and political turmoil, continue to persist. Industry experts are keeping a close watch on the evolving trends so as to signal the economies on problems in international trade, the ones they need to work upon. Collaboration will play a huge role in helping the global trade community to come up with effective solutions.
Stay tuned for more insights on global trade.