What 2019 global trade trends should you be looking out for? Here’s a preview of what could be dominating the headlines and your work conversations throughout the next 12 months.

1. Will the new USMCA be ratified?

After over two years of anti-NAFTA rhetoric from President Trump and many rounds of negotiations, a replacement deal to govern North American trade, the US-Mexico-Canada Agreement (USMCA) was finally signed by the leaders of Canada, the U.S. and Mexico on November 30, 2018.

Before coming into effect, however, the deal must be ratified by the legislatures of all three countries. This step could be particularly challenging in the U.S., where a newly elected Democratic Congress may object to some aspects of the deal or simply be unwilling to give Trump a victory on the issue.

While the general sentiment is hopeful for a full ratification in 2019, a significant roadblock in any of the three countries could leave the issue open-ended for at least several more months.

2. Brexit is coming

With a March 29, 2019 date set for the UK to officially leave the EU, Theresa May’s government has little time left to gain domestic support for the Brexit deal she has negotiated. While a December vote was postponed due to a lack of support, May has survived a non-confidence vote and re-scheduled the Brexit vote for the week of January 14.

If a deal is not reached by the March 29 deadline, the UK will face a “hard Brexit” with no guidelines determining significant UK-EU issues like the Irish border, migration, travel, and trade. Despite UK government plans for this contingency, a no-deal Brexit could send the British economy spiralling downward with negative implications for the global economy as well.

3. Is your data safe?

As major corporate data breaches become increasingly common headlines, and the value of data seemingly increasing every day, companies face a conundrum: how can they gather the data they need, but also keep it safe?

Adding extra levels of online security and authentication for customers, as well as changing internal processes to improve passwords, store data more securely and eliminate potential security gaps may all need to be added to your 2019 to-dos to ensure a high level of trust between you and your customers, suppliers and partners.

4. Addressing gender inequality to improve economic opportunities

Despite a growing awareness and focus on the importance of women’s entrepreneurship, studies show that many challenges remain. According to a policy research paper published by the World Bank, the “gender gap in business ownership remains high in many economies around the world”, and “the gap in female entrepreneurship is especially apparent in low-income economies, where women are much less likely than men to start a new business.”

New research from PayPal Canada and Barraza and Associates also indicates that in Canada, “on average, women-owned businesses earn $68,000 less than men who run similar businesses.”

As issues like access to venture capital and corporate procurement opportunities continue to face women-run businesses, one area of success is in e-commerce businesses. 50% of new e-commerce businesses started in the last two years in Canada are run by women, compared to just 34% 10 years ago.

5. AI tools becoming increasingly commonplace

AI has several applications in international trade, from analyzing metrics and economic trends or optimizing warehouse and inventory management to linguistic translation and online sales or chat services, not to mention exporting AI tools themselves.

As technology is refined and these tools are more widely understood, questions regarding data security and IP protection are starting to come to the forefront. But for businesses willing to take the leap, AI has the potential to transform some of their business practices and give them a competitive advantage in their industry.

6. The CPTPP comes into effect – how could it affect you?

As of December 30, 2018, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) comes into effect. This trade deal replaced the TPP after President Trump withdrew the U.S. from that agreement in January 2017 but still includes the other eleven countries from that deal: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The agreement removes the vast majority of tariffs and other trade barriers, and enforces new standards for human rights and environmental and labour practices.

Will there be a noticeable increase in trade between businesses in these countries? And with opportunity for new countries to join the deal at a later date, could early successes entice any other countries to take steps towards entering the agreement?

7. The fading appeal of Bitcoin and other cryptocurrencies

A year ago, the potential for Bitcoin or other cryptocurrencies to serve as a transformative tool in global finance seemed high. Bitcoin’s value had never been higher, and increasing numbers of banks and other financial institutions were taking steps into the cryptocurrency arena.

What a difference a year can make.

After a December 2017 high of $20,000, Bitcoin is currently valued around $3,500. Other major cryptocurrencies are also valued at 85-90% below their all-time highs. Public excitement has turned to skepticism in some corners, or concerns about fraud and scams in others.

Even if values increase in 2019, significant changes will be needed to restore trust and support in cryptocurrencies before its wider acceptance in international trade can be re-considered.

8. Accelerated growth of service export industry should continue

Service exports can cover a multitude of areas: international customer service, financial, legal or consulting services, research and development, online services and platforms, and more.

In Euler Hermes’ 2019 forecast, they predict service exports to be the fastest-growing trade economic sector, with an estimated global growth of $365 billion USD, similar to 2018 growth levels.

As service export opportunities continue to grow in the world’s largest economies and emerging economies alike, businesses should look for ways to expand their service offerings through methods like servitization, or service exports directly connected to your existing product exports.

9. Personalizing is key to reach new customers or businesses

With the increasing numbers of ads, emails and content out there competing for attention, more businesses are trying to apply the personal touch in an effort to stand out.

From using increasing amounts of data to target specific ads to personalizing email offers and even web pages around user behaviour and interests, there are more ways than ever to make someone feel like your efforts were created just for them.

On the other side, businesses are increasingly turning back to old practices that had fallen by the wayside. Personal calls, direct mail and printed media like magazines or booklets are returning to the marketing playbook, as what was once cliché is now a novel or unique approach again.

10. Small businesses need employees ready to help grow and expand to new markets

According to a Business Development Bank of Canada (BDC) survey, about 40% of small businesses are unable to find the right employees to grow. EDC also noted fewer Canadian businesses are newly exporting or planning to export to new markets in the near future.

To overcome these challenges, small businesses require employees able to research international markets, assess potential risks, create and implement market entry strategies and manage the international logistics, finance, marketing and sales, and other areas.

Looking for practical, flexible training to take your business into new international markets with confidence? Check the full list of EDC-FITT online courses and workshops to see which options work best for you.

We face an eventful year ahead, full of innovation, political risks, and important new opportunities for business growth.

What trends will you be most interested in throughout 2019?

The post 10 global trade trends we’ll be watching in 2019 appeared first on Trade Ready.

Whatever interests you most, we hope this gives you a chance to catch up on some of the most popular articles you may have missed, or re-read some favourites as we head into 2019.

10. 3 types of green technology that will change the future of international trade

As global warming and climate change continue to serve as threats to humanity, increasing numbers of people want to see green technology used more heavily in global trade. Those involved in an industry that could soon be radically changed by developments of green technology should know about the latest developments and how they will affect your business.

Here are some of the most exciting ways that green technology could change the future of international trade.

9. Global trade outlook 2018: What are the biggest trends, technologies, opportunities and challenges?

We wanted to hear from the experts on what trends, technology, opportunities and challenges they had their eyes on. In this month’s #TradeElite Twitter chat, we gave our knowledgeable panel the chance to provide some of their best tools and tips for SMEs going into what is sure to be another big year for international business.

8. 4 ways to protect your intellectual property in foreign markets

It is critical for organizations to recognize IP as a valuable corporate asset and to mitigate potential risks associated with IP infringement in order to ensure business viability within both the domestic and international target markets.

7. Top 10 websites you can use to find your dream international trade job

International business-related jobs pay an average of 13-18% more than domestic-focused positions. And with more trade happening than ever before in history, there are new opportunities opening up all the time. So, where do you find these lucrative jobs?  Here is a look at 10 of the best online sources trade professionals can use to find their next job.

6. 7 examples of how product liability laws change from country to country

As with other aspects of both public and private international law, there is a need to govern or harmonize disparate national laws and proceedings more uniformly with respect to product liability. This includes evidentiary standards, uniform reward of damages and punitive actions.

Many governments have passed legislation to limit the occurrence of product liability. The following examples provide a brief description of some the legislative measures implemented by various governments around the world.

5. Top 5 North American conferences you don’t want to miss if you are in freight forwarding or logistics

The logistics, freight forwarding and transportation industry has some incredible conferences which help to educate, inspire, and connect people involved in the field. These conferences are a great way for industry members to network and develop key knowledge for success.

Here are some of the top conferences in North America for freight forwarders and logistics.

4. How Bitcoin could shake up international trade

After years of skepticism about their security, value, and staying power, it seems that cryptocurrencies like Bitcoin are ready to take on the world markets. There’s serious speculation that central banks will begin to hold cryptocurrencies in 2018. Investment firms such as Goldman Sachs have released information to clients about investing in Bitcoin, and CBOE Holdings has begun to sell Bitcoin futures.

This means the time has come for those in international business to look at how Bitcoin and other cryptocurrencies will affect global finance.

3. 4 ways to identify and mitigate the political risks of global business

As human beings have developed self-defence mechanisms that help them make safe choices, businesses must also protect themselves during expected (and not so expected) times of political challenges. To ensure successful operation overseas, business managers should take time to understand potential and plan for risks.

2. 4 companies who succeed by focusing on ethical sourcing and manufacturing

In recent years there have been some major success stories of companies that have gone out of their way to make their sourcing and manufacturing both ethical and responsible. These companies not only boosted the reputation of their brands, but also ensured that workers on their supply chains were being treated well.

Here is a look four companies who earned outstanding reputations and found international success by going the extra mile to achieve ethical sourcing and manufacturing.

1. 10 global trade trends we’ll be watching in 2018

What should you look out for or expect in the international business world in 2018? Let’s take a look and see what could be dominating the headlines you read over the next twelve months.

The post Best of 2018 – the top 10 most popular TradeReady articles appeared first on Trade Ready.

After years of skepticism about their security, value, and staying power, it seems that cryptocurrencies like Bitcoin are ready to take on the world markets. There’s serious speculation that central banks will begin to hold cryptocurrencies in 2018. Investment firms such as Goldman Sachs have released information to clients about investing in Bitcoin, and CBOE Holdings has begun to sell Bitcoin futures.

This means the time has come for those in international business to look at how Bitcoin and other cryptocurrencies will affect global finance.

Cryptocurrencies are now predicted to disrupt the way people do business, and those buying and selling across borders stand to benefit.

The basics of cryptocurrency

Put simply, cryptocurrency is a digital financial exchange for goods and services, but cryptocurrencies like Bitcoin are so much more complex.

Bitcoin can be purchased as a basic money exchange and then used as currency. Every time money is exchanged through Bitcoin or a similar cryptocurrency, that transaction is recorded in a detailed public ledger. The ledger forms a long chain of verified transactions in chronological ordered. These ledgers are referred to as blockchains, and the blockchains are a big part of what excites people about the possibilities opened up by cryptocurrencies.

The benefits of cryptocurrency for international trade

For those buying and selling goods and services across borders, cryptocurrency offers a host of benefits. Some of the cryptocurrency and blockchain technology are poised to disrupt trade finance include:

• A lack of exchange rate. If you’re dealing with many international suppliers and buyers in a variety of countries, you have to deal with a myriad of exchange rates. If everyone is using Bitcoin, however, you’re all dealing in the same currency with the same value, without the constant hassle of monetary exchange.
• Fast money movement. Cryptocurrency transactions are near instantaneous. The transfer itself posts immediately, and it takes only about 10 minutes for payments to be validated in the blockchain.
• Secured payments. The money you receive when you take a Bitcoin payment is also secure. Users need to have the money available upfront, so there’s no chance of payments bouncing or credit transactions being canceled.
• Lower taxes and fees. Because cryptocurrency is a peer-to-peer monetary system, there are no taxes that govern them, and transaction fees are almost nonexistent.
• Detailed records. The blockchains created from cryptocurrency transactions create clear, secure records that can be tracked and verified. There’s talk of tying contracts and shipments to transactions within the blockchain to make business and logistics easier to track. With blockchain technology backed by cryptocurrency, processes could become more efficient, easier, and transparent. In fact, companies are so interested in the possibilities of blockchain technology that Danish shipper Maersk has partneredwith IBM to pilot a blockchain shipment-tracking system.

The drawbacks of cryptocurrencies

Of course, there are drawbacks to cryptocurrency that have slowed its adoption. First and foremost, the future of cryptocurrencies remains uncertain. While a single Bitcoin is now more valuable than an ounce of gold, economist and financial heads warn that cryptocurrency is another trend that will result in a burst bubble. From a daily user standpoint, there are problems with cryptocurrency as well. Bitcoin isn’t legal in all countries, and therefore can’t be used everywhere. And because users must have the cash on hand to make purchases, buying on credit — which businesses often do — isn’t yet a possibility.

The future of Bitcoin in international trade

While many are debating the future of Bitcoin as a tech bubble versus a viable long-term currency, it’s likely at least some of the technology created by Bitcoin is here to stay. From quick transfers to the thorough records created by blockchains, businesses and institutions are looking at how they can use cryptocurrency and related technologies to make doing business easier and cheaper.

Regardless of how the future pans out for cryptocurrencies, it’s clear that savvy business owners should be exploring cryptocurrency and blockchain technologies to see how they could benefit and make a move to capitalize on the technology.

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Blockchain is on everyone’s lips these days – nowhere more so than in the trade finance world. This technology has the potential to clamp down on fraud, streamline supply chains, and enhance companies’ liquidity. As the prime facilitators of trade, banks are as eager as any to bring the benefits to their corporate clients.

Making blockchain a reality, however, will take time and require a practical approach. Banks will have to identify targeted “use cases” – determining exactly how and where blockchain can bring improvements.

Strong collaboration between financial institutions and technology firms will be needed to bridge technical gaps, while success will depend on agreeing common standards and frameworks.

Back to basics: how blockchain works

Blockchain technology relies on a “distributed ledger” – a cache of digital information to which all users of a certain computer network have shared access.

As stages 1 & 2 of the diagram show, any addition to this record – created by a new trade or transaction – is logged as a “block” of data. All members of the network are notified of this action (stage 3), and at least one of the members must accept the change as valid (stage 4).  Once verified, this new block is “chained” to the previous blocks of data (stage 5).

Bulking up security in trade

This authenticated data chain results in high degrees of transparency and security most welcome in the trade industry. The ledger is visible and accessible (i.e. “distributed”) to all counterparties involved in trade – whether banks, buyers, sellers, shipping companies, insurers, forwarders, customs officers, inspection bureaus or regulators. Should a new transaction be attempted, this entire network must first accept any modification to the chain as legitimate.

Blockchain could thus form a key ally for banks in their fight against fraud. Banks must always be on the lookout for the risk of “double-financing”, for example – the chance that another bank has already been allocated the trade’s receivable, or that another transaction is already using the invoice presented for financing as collateral. The permanent and essentially tamper-proof record offered by blockchain would mitigate this threat.

Blockchain facilitates automation and risk mitigation

Yet the advantages do not stop there.

The distributed ledger would offer a bank comprehensive and real-time insights into its corporate customer’s entire supply chain – from the initial order of purchase, to assembly, inventory, payment and final delivery.

Without having to spend time and resources on manually processing and matching data, the bank could more efficiently identify positions in the supply chain where risk mitigation and financing are needed. Funds could be released in a timelier manner, and the risk of non-payment would be eliminated, enhancing  with the company’s liquidity as a result.

“Smart contracts” represent another exciting prospect of blockchain. These contracts are designed to carry out pre-defined actions automatically when set off by a particular event in the supply chain. For example, once the delivery of goods to an importer has been effected, a smart contract would ensure that funds are automatically released to the exporter.

At Commerzbank, we’ve already used the underlying concept of the smart contract when facilitating trade with the Bank Payment Obligation (BPO). The BPO is a new trade finance instrument positioned between open account and the letter of credit. It provides payment assurance on the automatic exchange and matching of digital trade data – without presentation of paper documents – to complete a transaction.

The journey to blockchain is far from straightforward

The application of the smart contract idea is certainly an important step towards realising the full potential of blockchain in trade. But a range of challenges will be met along the way.

For a start, banks must establish exactly how distributed ledgers can enhance their corporate customers’ trade. Whether they want to speed up provision of financing, improve a customer’s working capital, or mitigate payment risk, banks will need to identify the right use cases for blockchain, and find exactly where new solutions are needed. This will be much more productive than merely attempting to replace tried-and-tested trade solutions, such as the letter of credit or guarantee, with an alternative based on the distributed ledger.

There will also be technical challenges to overcome. Banks and companies will need to invest resources into developing blockchain’s digital interfaces, spend time getting to grips with the technology, and ensure that data security in their blockchain systems is up to scratch. They will also have to agree to standards that can ensure that the software underpinning new blockchain processes will work with legacy systems.

Meanwhile, the trade finance industry will require crucial harmonisation when it comes to offering and using blockchain platforms.

The standout advantage of blockchain is its interconnectivity. This would be wasted if different trade finance parties used various distributed ledger technologies, underpinned by incompatible systems.

Collaboration will be the key to integration

Progress, therefore, will rely on the banks, technology providers and all other stakeholders in the complex trade finance ecosystem being able to work together. They must not only agree to set standards, but also to share insights and useful experiences.

It is for this reason that the R3 consortium, a group of more than 70 financial institutions including Commerzbank, are committed to the research and development of distributed ledger technology. The Euro Banking Authority Working Group for Cryptotechnology for Trade Finance is another group which seeks to explore use cases for blockchain for corporate customers.

Blockchain has the true potential to enrich companies’ trade – but success will take time, collaboration, and hard work from the banks.

The post Can the banks come together to bring the benefits of blockchain to their clients? appeared first on Trade Ready.

If corporations start working on blockchain projects, it will be for mission-critical (i.e., niche) applications, while waiting for the “big thing” to occur. Banks, in fact, may not have any role to play in their future plans for the technology.

Why are corporations showing little interest in blockchain?

Corporations are late to take on the blockchain debate, and their lack of awareness may be the symptom of a simple lack of interest. After all, banks are all over blockchain because bitcoin shook them up and made them keep their eyes wide open.

Another possible explanation for such slow corporate uptake is that one of blockchain technology’s value propositions, if not the main one, is that buyers and suppliers can connect directly and form online networks, removing the need for middlemen.

Smart contracts running on the blockchain should automatically detect trigger events along the trade value chain and instruct parties on actions to take to comply with contractual obligations. This sets the blockchain as the enemy of all intermediary operators in a business-to-business (B2B) environment.

A B2B relationship is made of a sequence of buyer and supplier pairs (Figure 1), with a relatively high level of trust between the two.

Figure 1: B2B Supply Chain Pairs

Source: Aite Group

While there can be very little trust between an exporter and an importer at the edges of the B2B value chain, this is certainly not the case between the paired parties. So if each pair on the B2B value chain intrinsically trusts each other, what additional contribution could a blockchain bring?

Furthermore, there is a clear shift to trade on open account terms, and open account business is increasing in market share. Open account occurs when a seller ships the goods and all the necessary shipping and commercial documents directly to a buyer, who agrees to pay the seller’s invoice at a future date.

Open account is typically used between established and trusted traders. That has compelled the banking industry to seek to re-engage with buyers and suppliers. They are doing this by developing a blockchain-based value proposition aimed at meeting the needs of traders operating on these open account terms.

But, if open account transactions are founded on trust and keep banks out of the picture, why should corporate trade partners want to get them back with a blockchain? Since open account transactions are based on the principle of trust between parties, why the need for a trust-free distributed ledger technology?

Challenges ahead of full blockchain implementation

Additional challenges present the need to examine prior use evidence before B2B partners can fully adopt blockchain applications:

• Nobody runs totally digital flows end to end. How does one manage the transition of ownership between data encrypted in a block in the chain and paper-based documents?
• Companies (e.g., logistics service providers) are making money on paper-based trade, so why should they change to digital?
• Trade finance is frequently referred to as the domain that would most benefit from blockchain applications. But trade finance partnerships are already established on trust, so why the need to change?
• Freight forwarders are taking care of paper-intensive customs business on behalf of their clients. The service allows the client to outsource a significant portion of logistics clearance and controls activities, making it a highly profitable business to the service provider. Since all parties are enjoying the benefits of a de facto situation, why should they replace that service with paperless blockchain applications?

Is secrecy the enemy of blockchain?

To summarize, the blockchain is presented today as the enemy of all intermediary business, as it eliminates the need to have a central controlling entity responsible for safekeeping trading records.

If there was to be industry-wide adoption of blockchain, the role of this controlling entity would be replaced by a decentralized ledger that no one single party owns or controls. This apparent advantage may backfire and be counterproductive to corporations.

The untold truth is that the last thing corporations may want is to give total visibility of their trade transactions. The existence of a publicly distributed ledger may not represent the best commercial interest for B2B partners.

There is the problem of revealing too much information: A company does not want its competitors to know where it’s getting goods. Commercial confidentiality is the most important element to preserve.

Blockchain adoption dependent on a wait and see approach

Innovation happens in bursts. When the Internet became popular, two “asteroids” hit the consumer world: email and the Web browser. Such a disruptive effect from blockchains has not yet occurred in the corporate world.

While the bitcoin has been the killer app (i.e., the asteroid) for banks, there is nothing for corporations with the same mass adoption scale as bitcoins – yet. If this is the case, then little or no demand for blockchain-based applications can be expected by corporate users.

Maybe those most aware of the technology within corporations are financial directors and corporate treasurers, for the simple reason that they are frequently exposed to banks and therefore absorb the inherent dynamics. These corporate representatives expect changes in payments, securities trade, and bank clearing.

All have concerns that the blockchain discussion is moving too fast, however. The corporate side of the equation needs to first see a consolidation of the different players that populate the crowded space of blockchain applications. The need for standards and regulation is the next call.

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