Key trends in international trade
After years of sustained growth, international trade was severely impacted by the Covid-19 global health crisis. Efforts to contain the spread of the virus slowed or even halted global trade. However, business quickly rebounded to its pre-crisis level as professionals demonstrated adaptability and resilience. However, it seems that the urgent measures that were adopted during the crisis remain in place.
Let's take a look at the current state of international trade and the actions that need to be taken to sustain the sector's growth.
International trade is getting back on the upswing
The Covid-19 global health crisis has impacted trade activity internationally mainly due to border closures, disruption of several production sites, lockdowns, economic protectionism measures, etc. According to the Banque de France, exports reportedly fell by 25% between April and May 2020 compared to 2019 data.
However, business started to recover in June 2020, and growth continued throughout 2021. The WTO had even revised up its forecasts: +10.8% in 2021 and +4.7% for 2022. This is consistent with the findings of the Euler Hermes survey, which indicates that international trade is expected to grow by 5.4% in 2022 and 4% in 2023.
Nevertheless, professionals are concerned about an imminent decline in growth. International trade will be confronted with production bottlenecks due to difficulties in the supply of raw materials and longer transport times.
4 key measures to boost international trade
While international trade has returned to its pre-crisis level, professionals must rethink their business and embrace new paradigms to stay the course.
#1 Transparent Communication
The WTO Trade Facilitation Agreement (TFA) has allowed professionals to inform and communicate transparently during the pandemic. Press releases and websites provided access to various documents on transit, import and export procedures.
In addition, mediators were assigned to work directly with importers of high priority products, and new communication channels were set up to adapt to remote working (emails, virtual meetings...). It is now crucial to keep up this transparent international communication.
#2 Unifying international standards
At the peak of the health crisis, controls and regulations were quickly tightened by government agencies to limit the risk of virus transmission through imported goods. However, such measures taken without consultation between countries were not always consistent.
The WTO Trade Facilitation Agreement (TFA) was set up to address these issues in an efficient manner. The challenge was to facilitate trade while respecting customs procedures for movement, clearance and discharge.
Clearly, cooperation between customs agencies is crucial, as they have played a key role in keeping international trade moving at the peak of the crisis. Through joint cooperation, it is possible to reduce costs and delays. And the same applies to the public and private sectors, as they must work closely together to meet the new trade challenges.
#3 Making the digital shift to facilitate trade
All industries are affected by digital technology, and international trade is obviously not spared. Digital tools, like online platforms, have been set up to automate some business procedures and replace "physical" processes that could no longer be carried out during the health crisis.
As a result, customs procedures have been simplified, streamlined and accelerated, allowing for smooth processing. In addition, these platforms, which operate as one-stop shops, make trade more transparent and provide optimal access to information for all international trade actors, including women and SMEs which have been particularly affected by the crisis. This momentum promotes inclusion as a catalyst for business recovery.
#4 Building Resilience in International Trade
International trade professionals have demonstrated great resilience in a particularly complex environment. Despite sustained growth, the economic climate remains uncertain. International trade is indeed intrinsically impacted by several factors:
- inflation, which can lead to social unrest
- the tightening of the US Federal Reserve's monetary policy, which makes access to the capital market more difficult for some countries
- the geopolitical situation with the war in Ukraine and tensions between the United States and China.
This is why government agencies must do their best to adopt sustainable trade facilitation measures.
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