The WTO’s revised forecasts project modest growth in global trade, driven by easing inflation and interest rates, but caution remains due to geopolitical tensions and unresolved regional conflicts. Emerging markets, particularly in Asia, the Middle East, and South America, are set to lead growth, while advanced economies navigate persistent inflation and evolving supply chain dynamics.

From the potential impact of U.S. trade policies under the incoming Trump presidency, to the continued growth of e-commerce and technological innovations in trade finance, the year promises to reshape global commerce.

Risks such as economic downturn, supply chain disruption, and geopolitical instability create an atmosphere that highlights the need for agility, adaptability, and diversification in 2025.

Read on for our 10 2025 trends.

Curious about our past predictions? Check out what we thought 2017-2024 had in store.

• 10 global trade trends we’ll be watching in 2024
• 10 global trade trends we’ll be watching in 2023 
• 10 global trade trends we’ll be watching in 2022 
• 10 global trade trends we’ll be watching in 2021 
• 10 global trade trends we’ll be watching in 2020
• 10 global trade trends we’ll be watching in 2019
• 10 global trade trends we’ll be watching in 2018
• 10 global trade trends we’ll be watching in 2017

1. Global trade growth expected amidst transition and uncertainty

In October 2024, the WTO released their revised global trade outlook for the remainder of 2024, and looking ahead at 2025. In it they increased the growth forecast for world merchandise trade in 2025 by 0.3% from the previous estimate, bringing it to 3.3%.

The WTO clearly pointed out that the risks to this forecast were for growth to be slower, rather than higher. Meaning that uncertainty in geopolitical tensions, policy (this was before the results to the U.S. federal election were known), and regional conflicts could end up reducing growth, despite the predicted increase.

However, the WTO does see gradual trade recovery continuing in 2025 among declining inflation and therefore lowering interest rates, which generally stimulate consumer spending and investment.

Overall, it looks like 2025 will be another active and transitional year for trade.

2. Stubborn inflation and uncertainty in 2025 global economic outlook

Global inflation is slowly coming down from the global peak of 9.4% in 2022 during the pandemic. The global inflation rate is expected to come in around 4% during 2025 according to the IMF.

Most of the advanced economies will come in under 2% in 2025, with developing economies averaging just under 6%.

The major central banks including the Federal Reserve, Bank of England, Bank of Canada, and the European Central Bank are all expected to continue to ease their interest rates over the course of 2025.

While the supply chain disruptions that brought inflation up to its 2022 high have mostly been resolved, new risks remain in play, as we’ll discuss in more detail later in this article. The above-mentioned geopolitical and trade tensions could have an upwards impact on inflation as well.

Modest growth is the overall prediction when it comes to the global economy in the year ahead, particularly in emerging markets. The caveat being that challenges remain, and there is still a significant amount of transition and uncertainty in the global environment that throws risk at any solid economic prediction.

3. Enhanced customer service in e-commerce delivery

The pandemic accelerated a shift in consumer behaviour, driving widespread adoption of e-commerce, particularly for “big and bulky” items like furniture and appliances. Today, online shopping continues to dominate with consumers expecting streamlined delivery experiences, including real-time tracking, timely scheduling, and exceptional service.

For retailers, delivery is no longer just about price but providing seamless customer experiences. This trend has intensified competition, especially as giants like Walmart and Amazon are projected to dominate 60% of online retail by 2027, prompting smaller retailers to prioritize affordability, speed, and personalized service.

Technological integration is key, and many retailers are bringing in platforms and tools that can enable real-time visibility, automated operations, and flexible scaling for peak periods. Companies are also enhancing services, such as pre-assembly and installation, to meet evolving consumer expectations. However, challenges remain, including rising operational costs, workforce shortages, and the need for advanced supply chain solutions.

Despite hurdles, the last-mile delivery market is poised for growth, driven by increasing online sales of bulky goods. Companies focusing on consumer trust, technological innovation, and efficient operations are likely to thrive in this competitive landscape.

4. Threats of supply chain disruptions continue in 2025

Many of the supply chain disruptions that plagued shippers throughout 2024 continue to threaten operations into 2025, including Red Sea diversions, the risk of labour disruptions, and tariff threats. This means fluctuating demand and high rates are likely for the year ahead.

To mitigate the risk of delays and disruption companies are turning to “frontloading”, filling their warehouses early to ensure they have access to the inventory they need to serve their customers, ahead of any incoming tariffs.

Canada just weathered a difficult holiday season with the Canada Post strike impacting deliveries during peak season. This labour disruption is estimated to have cost more than $1billion dollars in damages to small Canadian businesses, according to the Canadian Federation of Independent Business.

In the U.S., the USMX – the union representing container shipping lines and port operators along the East and Gulf Coast ports – are currently on a short-term contract extension that is set to expire on January 15, 2025. If they fail to reach an agreement with the International Longshorement’s Association (ILA), any resulting labour action could disrupt almost 50% of U.S. ocean freight volumes.

Between political, environmental, and labour disruptions, things remain uncertain in the international supply chain industry in 2025.

5. Trade Wars & Tariffs & Trump

Donald Trump’s second presidential term may bring significant changes to global trade policy, including increased tariffs and retaliatory measures. These actions are expected to heighten global economic uncertainty, disrupt supply chains, and strain international trade relationships. Analysts predict tariffs could be used as leverage in negotiations on issues like immigration and foreign currency policies.

Europe, already grappling with internal political challenges, faces particular risk with U.S. tariffs. These measures could reduce European exports, hamper economic growth, and complicate efforts to stabilize the eurozone economy.

China, a primary target of U.S. trade policies, may retaliate by targeting American agricultural exports and diversifying its trade relationships. Countries like Mexico and Vietnam could benefit as companies seek alternative supply chain locations.

U.S. corporations dependent on global supply chains are preparing for potential disruptions, while economists warn of unintended consequences, including higher consumer costs and distorted production networks.

The possibility of widespread retaliatory measures raises fears of a global trade war, with Europe, China, and North America among the most affected regions. But going into the start of 2025, it remains uncertain whether Trump will follow through on these threatened tariffs and to what degree.

6. Digital transformation in trade finance technology

Despite an incredible amount of work being done, the digital transformation of trade finance is a slow process. The complexity involved in creating and standardizing policy, regulations, systems, and languages presents enormous challenges. But progress continues to be made.

According to Euromoney, major financial institutions including DBS, ING, Lloyd’s and Santander are seeing 30-70% of trade transactions initiated digitally.

Among TradeReady’s most-read articles of 2024 were 2 articles focused on TradeTech and electronic trade documentation. So we know this is a topic to keep up with in 2025.

We’ll be checking in with CITP Craig Atkinson, an active member of the WEF’s TradeTech community, throughout the year for further developments in digital tools that will help businesses trade more easily, effectively, and efficiently.

7. Growing focus on skills-based hiring and retention in global trade roles

“Skills-based hiring”, or hiring based on evidence of a candidate’s specific skills rather than years of experience or formal education, has been a growing trend since the term was first coined back in 2012.

The upsides include a decrease in turnover, reduction in training time and cost, increased productivity, and universality (a more standardized process of finding a vetting candidates makes hiring easier and increases inclusivity).

For international trade roles especially, the complexity and specificity of skills needed to successfully complete trade transactions and processes makes this hiring strategy particularly useful.

And this trend is growing worldwide:

• This study found that 79% of companies now look for skills when hiring, vs. 21% that prioritize experience and education.
• Between 2017 and 2019, 46% of middle-skill and 31% of high-skill jobs moved away from requiring job applicants to have a formal college education.
• In India, where 50% of recruiters use skills as a key factor when searching for candidates, skills-based hiring is also on the rise.
• In 2022 the US government released new guidelines on applying a skills-based approach to hiring for federal positions.

In 2025, “right-skilling” will be a top trend in talent acquisition as companies continue to focus more on finding the right people for the job, rather than the right degree, or years of experience.

Secure, verifiable digital credentials will continue to play a key role in the finding and hiring of individuals with the right skills to do the job in the year ahead.

8. Regional trade growth

In 2025, global trade growth is projected to be led by emerging markets in Asia, the Middle East, South America and the CIS region. As a result of expected incoming tariffs for goods entering the U.S. market from major trading partners like China, many companies are looking for new manufacturing locations. This could continue to benefit other manufacturing regions like Vietnam.

Overall, according to the World Bank and the World Trade Organization (WTO), global trade is expected to increase in 2025, with the following regional trade forecasts:

• Asia: The fastest growing region for exports and imports, with a 4.7% increase in exports and a 5.1% increase in imports
• Middle East: The fastest growing region for imports, with a 9.0% increase
• South America: A 4.6% increase in exports and a 5.6% increase in imports, but a small decline in exports (-0.1%)
• CIS region: A 4.5% increase in exports and a 1.1% increase in imports
• Africa: A 2.5% increase in exports and a 1.0% increase in imports
• North America: A 2.1% increase in exports and a 3.3% increase in imports
• Europe: A -1.4% increase in exports and a -2.3% increase in imports

Friendshoring, nearshoring, and supply chain diversification will likely continue to transform global value chains in the year ahead.

9. WEF’s top 10 global risks

The World Economic Forum puts together an annual list of the most urgent global risks that organizations face in its Global Risks Report. As we await the release of the 2025 report in January, we can expect a continuation of many of the risks expected to be forefront in the time period of 2024-2026 listed in last year’s report.

These risks included, in descending order:

1. Misinformation and disinformation
2. Extreme weather events
3. Societal polarization
4. Cyber insecurity
5. Interstate armed conflict
6. Lack of economic opportunity
7. Inflation
8. Involuntary migration
9. Economic downturn
10. Pollution

As you peruse the list, you’ll see that several of them are already included in the top international trade trends we’ll be watching in the year ahead. We’ll be ready for updates in January.

10. AI use-cases for trade activities

Artificial intelligence is ubiquitous, groundbreaking, a timesaving gamechanger, a cybersecurity and intellectual property nightmare, it’s good, it’s bad, it’s ugly. It’s everywhere. And it’s certainly not going away in 2025, despite some backlash.

Within the international trade environment we’ll be following along with AI developments and use cases in the following areas:

• AI in hiring processes
• AI in supply chain visibility
• AI in supply chain management & sustainability
• AI in customs & documentation
• AI in inventory management
• AI in demand forecasting
• AI in trade finance

The post 10 global trade trends we’ll be watching in 2025 appeared first on Trade Ready.

In this three-part series, digital trade expert Craig Atkinson, CITP addresses key questions and practical considerations related to technology-enabled cross-border interaction among buyers, sellers, intermediaries, and governments. Article based on an interview by FITT’s Pamela Hyatt.

Craig Atkinson is the Founder and Director of Lexmerca International Trade and a Trade Development Specialist with the International Trade Centre (ITC), the joint agency of the United Nations (UN) and the World Trade Organization (WTO). His roles focus on addressing legal-technical challenges that affect global trade.

Active in the field of digital trade, Craig participates in the World Economic Forum’s TradeTech community and in projects with multiple international organizations, academic institutions, technology foundations, and standards bodies.

Academically, he is a Non-Resident Fellow with the World Trade Institute (WTI) as well as a Research Affiliate with the Singapore Management University (SMU) Centre for AI and Data Governance and the SMU Centre for Computational Law. Professionally, Craig has been a FITT Certified International Trade Professional (CITP) since 2011.

What is a ‘Single Window’ for trade regulation?

In the first article in this series, ‘Single Windows’ were described as exemplifying the digitalization of goods trade. Aside from being known as the most impactful class of ‘TradeTech’, what is a Single Window?

The answer is found in the ambitions of ‘digital trade facilitation’: government measures to simplify, harmonize, and modernize trade formalities and procedures to allow for cross-border paperless exchange between actors in international supply chains.

According to United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) Recommendation 33, a Single Window (SW) is a ‘facility’ that “allows parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfil all import, export, and transit-related regulatory requirements”.

An electronic SW environment links government bodies – Customs and other government agencies (OGAs) like ministries of health, agriculture, and finance – for online application, issuance, and exchange of trade-related permits/certificates.

Private stakeholders include traders, agents, customs brokers, carriers, forwarders, ports, freight terminals, and commercial banks. As documents (or data) is in electronic form, they only require ‘single’ submission and leading systems utilize ‘rules engines’ for compliance automation.

While Singapore is credited with deploying the first SW in 1989 – TradeNet for Business-to-Government (B2G) exchange and the more recent Networked Trade Platform (NTP) extension to facilitate Business-to-Business (B2B) transactions – other countries have implemented projects for paperless trade via Single Window.

Note: Singapore is not a typical case. Above, ‘Trade Permit’ is used for Customs declarations. Yet, if goods require permits from other OGAs when submitting a ‘Trade Permit Application’ to TradeNet, the application is a ‘single’ submission for other OGAs to process and provide permits. Unlike the SWs of most countries, traders/agents using TradeNet do not have to apply for each permit separately.

How do Single Windows solve problems?

Borders represent a ‘labyrinth’ of paper that must be exchanged between private actors and government agencies through manual processes.

In reaction, Single Windows lower certain barriers to trade compliance – identifying, preparing, submitting, and coordinating documents – by creating a public-private interface to overcome what the Organisation for Economic Co-operation and Development (OECD) calls “sludge”: unjustified friction that affects satisfaction, trust, and access to government services.

As institutional arrangements, networks, and platforms, SWs generate observable results that make trade faster and less costly as well as more safe and secure. In offering the highest standard of public service delivery, a Single Window for trade is considered a ‘beau ideal’ by the World Customs Organization (WCO).

As SW is a ‘whole-of-government’ facility, Customs is just one of the involved regulatory agencies and its authority is limited to import/export approval and permitting.

Though Customs is often a lead agency for SW, it does not have legal power to override other OGAs. Even if a SW neither eliminates nor diminishes the role of any regulatory agency, simplification through a single point of entry mitigates duplication, ‘re-keying’, and other data-related issues while enabling consistent data reuse.

Significant benefits arise for trade logistics and economies: across studies on the impact of Single Window, costs fall for all actors (i.e., traders, intermediaries, and governments), trade grows between countries with SWs, and the public sector improves its revenue mobilization/collection capacity.

For example, in the United States, government agencies and traders have realized benefits with the Automated Commercial Environment (ACE). In 2021, the platform reduced transaction processing by 795,000 hours for private actors, assisted process automation for 269 forms/document types, and led to $2.7 billion USD in efficiencies.

How can Single Windows contribute to inclusive trade?

Single Windows are inclusive because, as a whole-of-government interface that is usually free (or low cost), they allow for micro, small, and medium-sized enterprises (MSMEs) to interact with governments with less or no need for intermediaries (e.g., agents and brokers).

A single channel of interaction lowers effort and administrative costs of compliance with documentation and increases accuracy/speed of submission and processing, helping small businesses to better participate in international trade.

For example, In Costa Rica, a study by Volpe Martincus et al. estimated the impact of the gradual phase-in (2007-2016) of an electronic SW, Ventanilla Única de Comercio Exterior (VUCE CR). Adoption of VUCE was associated with increased and more frequent exports by businesses using the system, larger shipments, and greater numbers of exporters, especially MSMEs located in non-central areas.

Such outcomes are particularly important in industries and sectors with specific or complex regulations. For instance, to meet Sanitary and phytosanitary (SPS) requirements for food safety, pest mitigation, or disease prevention, SW facilitated trade in agricultural goods has moved toward processing of electronic SPS certificates.

Are there different kinds of ‘Single Windows’ for trade regulation?

The short answer: no. The term ‘Single Window’ is frequently mis-used. In digital trade facilitation, it’s important to follow UN/CEFACT standard terminologies. Five ‘must’ features differentiate SWs for national trade regulation.

Source: Adapted from UN/CEFACT 2017

Given the strict criteria provided by Recommendation 33, true SWs are realized by a country as a ‘National Single Window’ (NSW).

At their core, NSWs are a B2G interface, but some systems have evolved to further allow for B2B transactions. Under Article 10.4 of the World Trade Organization (WTO) Trade Facilitation Agreement (TFA), member governments “shall endeavour to establish or maintain” a NSW. Article 10.4 is also the most frequently requested area of TFA-related technical assistance.

Under Article 23.1, a national trade facilitation committee (NTFC) is usually the appropriate cross-government agency/mechanism to guide and monitor NSW establishment.

Going beyond the scope of UN/CEFACT Recommendation 33, NSWs can be interlinked for Country-to-Country exchange as a ‘Regional Single Window’ (RSW).

However, these systems are not ‘facilities’ in the same sense as the Single Window definition: RSWs are Government-to-Government (G2G) focused and implemented under international frameworks as a collaborative system of NSW networks.

Additionally, and not to be conflated with a SW for trade regulation, there are many ‘sector-specific’ platforms, such as an airport Cargo Community System (CCS) or a maritime Port Community System (PCS).

The International Maritime Organization (IMO) defines a Maritime Single Window (MSW) as a “one-stop service environment”: a vessel operator-to-port interface for maritime procedures (e.g., port entry/departure declaration and security reports) between private and public actors. The amended Annex to the IMO FAL Convention makes MSW mandatory for ports.

In some cases, a ‘unified’ PCS can be considered MSW.

Which governments have established a Single Window?

Hundreds of Single Windows have been deployed and are at different stages of maturity. With more than ten years in operation, some SWs are relatively mature and cover all the OGAs in their respective country, such as Indonesia (Indonesia NSW, INSW), Singapore (NTP/TradeNet), and South Korea (UNIPASS/uTradeHub).

Those already deployed, but in in progress toward covering all OGAs, include Canada (Single Window Initiative, SWI), Chile (Sistema Integrado de Comercio Exterior, SICEXChile), Costa Rica (VUCE CR), Kenya (Kenya TradeNet), New Zealand (Trade Single Window, TSW), Pakistan (Pakistan Single Window, PSW), Peru (VUCE PERÚ), and the US (ACE).

Other jurisdictions are continuing to strengthen their bases for SW, including Australia, Bangladesh, the Maldives, and the United Kingdom (UK). For example, under the Single Trade Window (Preparation) Regulations and the Electronic Trade Documents Act (ETDA) (see FITT coverage), the UK is planning its NSW.

Taking stock of initiatives globally, the WTO Trade Facilitation Agreement Facility (TFAF) indicates that, at 56%, SW is the TFA measure with lowest ​implementation rate.

Source: Author based on WTO data (2024)

Regionally, Association of Southeast Asian Nations (ASEAN) members have established the ASEAN Single Window (ASW) and technical collaborations; the Pacific Alliance has connected its member NSWs; and the European Union aims to enhance ‘digital cooperation’ under the Single Window Environment (SWE) regulation.

Why do governments and the private sector need to work together?

More than a technology project, SW initiatives represent major ‘reform’ and require whole-of-government cooperation internally as well as collaboration externally with the private sector to realize a fully-fledged, evolved, SW environment. A Single Window and its suite of services truly represent a ‘virtual enterprise’.

Implementation of a SW requires planning and the creation of a legal-institutional framework, followed by business process analysis/design, document simplification/standardization, data harmonization, platform piloting, and phased deployment.

Despite the variety of implementation or operational models, all stakeholders should be aware of the types of decisions to be made at each phase:

• Develop internally: The public sector is made up of different agencies must coordinate the roll-out and functioning of SW with their own staff and resources. For governments, it’s important that services – Customs, finance/treasury, health, agriculture, – work harmoniously, regardless of the internal model(s).
• ‘Buy off the shelf’: Procure hardware, software components, and/or services.
• Engage in public-private partnerships: Any combination of options at different phases of implementation and/or operation of a Single Window.

What are some key resources for planning and deployment?

There are many implementation guides and even a ‘ChatGPT’ for Single Window. Key resources include:

• Under the auspices of the United Nations Economic Commission for Europe (UNECE), UN/CEFACT provides core standards and guidance, such as Recommendation 33 (establishing SW), Recommendation 34 (data simplification/standardization), Recommendation 35 (legal framework), the Reference Data Model White Paper, a technical note on terminology for SW, and the SW Assessment Methodology (SWAM).
• The WCO Compendium on Building a Single Window Environment (g., Volume 1 Part 1, Volume 2, and the supplement), WCO Data Model, and Data Harmonization Guidelines.
• The United Nations Trade and Development roadmap for building a SW.
• The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and its Network of Experts for Paperless Trade and Transport in Asia and the Pacific (UNNExT) provide a planning/implementation guide and expert Neelima Pamulapati has developed comprehensive case studies on legal frameworks for SW. Other important UNESCAP guides focus on Business Process Analysis and Data Harmonization/Modeling.
• The Asia-Pacific Economic Cooperation (APEC) SW implementation guide.
• With significance for Regional Single Window, UN/CEFACT Recommendation 36 provides guidance required for the interconnectivity and interoperability of two or more SWs, APEC has produced a study on SW systems’ international interoperability, UNESCAP provides a paper on ‘e-trade’ through the ASEAN Single Window, and UN/CEFACT is developing guidelines on establishing RSW.

How are you engaging with Single Window-related efforts?

Cross-border regulations are constantly changing and digital public infrastructure (DPI) must be agile. In certain situations, rules and requirements can change by the minute.

Taken as a whole, the contributions have been to advance Single Window design in support of greater engagement by software development and business communities.

Although ‘greenfield projects’ and ‘legacy system’ integrations face difficulties, prospects exist for SW ‘rules engine’ (re)design in the short-term and new thinking on the long-term viability of systems.

Everything is deeply interconnected and ‘global value chains’ (GVCs) depend on streamlined interactions between people through computer technologies. Single Windows should empower MSMEs to capture value in GVCs through ‘interlinking’.

Any trade professional, especially a CITP, may consider informing SW deployment and upgrading. The next article in this series examines relevant innovations and how a Single Window frontend/backend paradigm can be ‘flipped’ for optimal human communication, interoperability of systems, and impact.

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Every two years, the World Trade Organization (WTO) convenes a ministerial meeting, and its 13th installment – Thirteenth WTO Ministerial Conference (MC13) commenced on the 26th of February in Abu Dhabi, United Arab Emirates.

With its dispute-resolution mechanism in disarray, the WTO faced an opportunity to demonstrate its ability to facilitate negotiated agreements. At stake, among various other issues, lay the future of a moratorium on tariffs on digital trade.

This moratorium essentially prohibits member states from imposing customs duties on electronic transmissions such as software, e-books, music, and other digital products.

Since its inception in 1998, the WTO e-commerce moratorium has been renewed every two years, serving as a cornerstone of the digital economy. It has facilitated the growth of cross-border digital trade, enabling businesses to reach global markets with greater ease and efficiency.

However, although the moratorium was renewed yet again in 2024, there is an expectation of a fiercer negotiation when the time for renewal comes in 2026. At least 3 major developing countries expressed their dissatisfaction with the moratorium.

Let’s delve into the challenges.

Challenges to renewal

With the 13th Ministerial Conference (MC13) having just taken place, the future of the e-commerce moratorium had become a timely and contentious topic of discussion. MC13 held the potential to shape the trajectory of international trade policies and the digital transformation of trade for years to come, making the fate of the moratorium a pressing concern for WTO members worldwide.

Despite its longstanding presence, the renewal of the e-commerce moratorium faced challenges from certain quarters. Two developing countries, in particular, express concerns about the perceived imbalance in the current digital trade landscape. In most cases, when member states are signaling to oppose the moratorium it’s usually a bluff in order to get concessions in other areas. But things looked rather dire this time around.

Let’s look at which countries opposed the moratorium and why:

India

According to Bloomberg, during the WTO’s 12th Ministerial Conference in 2022 in Geneva, India had adopted the same stance as now and propagated for an end to the digital trade tariffs moratorium along with several other South Asian countries like Sri Lanka, Pakistan etc. However, after a discussion between USTR and Indian Trade Minister Piyush Goyal, India took a swift u-turn and agreed to an extension of the moratorium.

The 2024 moratorium followed the same trajectory. Piyush Goyal made a strong case against the e-commerce moratorium, alleging that it refrains from imposing customs duties, favored big tech companies and undermined the prospects of competitors in developing countries.

However, on the final day of MC-13, India took yet another U-Turn. Goyal said he agreed to the renewal of the moratorium upon the request of the UAE trade minister, Dr Thani bin Ahmed Al Zeoudi, who is also the chair of the ministerial conference. “He is a friend, and out of friendship, I agreed,” Goyal told reporters.

Indonesia

The evolution of the digital economy has brought forth new challenges and complexities that were not envisaged when the moratorium was first introduced. Issues such as data privacy, cybersecurity, and intellectual property rights now occupy center stage, prompting calls for a comprehensive reevaluation of existing trade rules. Indonesia argued that renewing the moratorium without addressing these concerns would be premature and may exacerbate existing regulatory gaps.

“Indonesia also believes that governments need to be free to impose tariffs in response to rapid change in the digital world,” said Askolani, director general of customs and excise at the country’s Ministry of Finance.

According to the WTO, the potential tariff loss to developing countries is around $10 billion, further emphasizing the significant economic implications at stake in the debate surrounding the e-commerce moratorium.

Indonesia was one of India’s staunchest allies in opposition against WTO negotiations. However, they were completely unaware of India’s decision to drop the opposition to the e-commerce moratorium. It continued to oppose the moratorium till the final hours of the meeting, before eventually relenting under pressure as well.

Potential implications of WTO’s tariff moratorium expiration

Over the years the moratorium has its fair share of advocates and critics both. While some believe that it’s essential to have the moratorium in place, others think that it disproportionately benefits tech giants from advanced economies, exacerbating existing inequalities. However, allowing the e-commerce moratorium to expire could have profound implications for the digital trade landscape.

One immediate consequence would be the imposition of tariffs on digital trade transactions, including the downloading of digital content on streaming services and other cross-border digital services. Such tariffs could lead to increased costs for consumers, stifling demand and hindering the growth of the digital economy.

The expiration of the moratorium could trigger a wave of regulatory fragmentation as countries rush to implement their own rules and tariffs on digital trade.

This fragmentation could create barriers to entry for small and medium-sized enterprises (SMEs), limiting their ability to compete globally. It could also escalate trade tensions between major trading partners, further complicating efforts to reach consensus on international trade agreements.

It could also create a climate where startups and small businesses struggle to navigate a patchwork of regulations and tariffs, diverting resources away from innovation and growth. Higher costs associated with tariffs on digital trade transactions may deter investment in new technologies and limit the ability of entrepreneurs to compete globally. This could particularly affect industries such as fintech, artificial intelligence, and digital healthcare, where cross-border collaboration and market access are crucial for advancement.

Alternative options for revenue through existing domestic consumption taxes

Exploring other options for revenue through existing domestic consumption taxes could provide a viable alternative to imposing tariffs on digital trade transactions. Governments could consider leveraging value-added taxes (VAT) or sales taxes on digital goods and services consumed domestically, thereby generating revenue while avoiding potential disruptions to cross-border trade.

By adapting existing tax frameworks to encompass digital transactions, authorities can ensure a level playing field for both domestic and international businesses operating in the digital space.

This approach not only offers a means to capture revenue from the growing digital economy but also aligns with efforts to modernize tax systems in response to changing consumption patterns. Moreover, focusing on domestic consumption taxes allows governments to address revenue needs without impeding the free flow of digital trade across borders, thereby supporting continued innovation and economic growth in the digital era.

The future of digital trade in a post-moratorium era

The renewal of the WTO e-commerce moratorium presents a critical juncture for the future of digital trade. With MC13 having just taken place, WTO members must navigate competing interests and forge a path forward that promotes inclusivity, innovation, and sustainable growth in the digital economy.

A proposal to make the moratorium permanent was also put forth in MC13 but was met with severe opposition and it is expected that things will be rockier in 2026 when MC14 is expected to be held in Cameroon. The decisions made in the next two years will not only shape the future of e-commerce but will also have far-reaching implications for global trade and economic development.

It is essential to strike a balance between fostering digital trade openness and addressing regulatory concerns to ensure that all nations can benefit from the opportunities presented by the digital economy. Efforts to promote transparency, interoperability, and fair competition will be essential in creating an environment conducive to sustainable digital trade growth.

The post After tariff moratorium extended, is more permanent policy needed to keep digital trade open? appeared first on Trade Ready.

At a time when stability and access to working capital are essential, there is an urgent need for more effective, robust supply chain finance (SCF) solutions.

This makes the passing of a concise but extremely powerful piece of legislation particularly pertinent. The UK’s Electronic Trade Documents Act 2023 (ETDA) came into force in September.

While most businesses will likely have paid little heed to this development, its relevance is profound for companies of all sizes that trade domestically or internationally.

The legislation has an immediate global impact as between 60%-80% of all global trade is governed by English law, regardless of the domicile of the counterparties.

The ETDA reflects the essence of the 2017 UNCITRAL Model Law on Electronic Transferable Records (MLETR), that has been adopted by Singapore and the UAE amongst others, and which will form the root of similar legislation being adopted by G20 nations.

So, what is the ETDA? And importantly, what does it mean for businesses?

One small step for legislation

The processes behind funding trade and drafting their documentation largely rely upon the same laborious, manual methods. Consequently, they are insecure, inefficient, siloed, and impractical. Digitalisation is widely acknowledged as being the way forward for both physical and financial supply chains but applying digital capabilities to trade finance is not straightforward.

Unlike in other sectors of finance, where digital progress is more advanced, the rules upon which trade finance is governed date back centuries. Trade finance is therefore built on entrenched, longstanding legal specifications established for a paper-based age. The principles of “possession” and “transfer”, for example – which pertain to the exchange of trade documentation and are vital to facilitating trade finance – have remained largely unchanged in most jurisdictions.

In effect, according to the wording of global trade rules, paper documents are the format by which trade finance has to be conducted. And this has been the fundamental barrier to digital trade document adoption.

What the ETDA does is give certain documents commonly used in global trade the same legal status in digital form as their paper-based equivalents.

Superficially a small change, this amendment is the breakthrough that has been needed to allow digital documents to become mainstream and come into their own.

One giant leap for businesses and their balance sheets

Specifically, the ETDA has significant implications for negotiable documents such as promissory notes and bills of exchange. It is the digitalising of these documents – and their legal recognition – that is key. Free from the inefficiency constraints of paper, digital versions of negotiable instruments (or “DNIs”) are creating an avenue to transform and optimise SCF, and, in the process, discard inefficient and insecure paper-based processes.

From a corporate treasurer’s perspective there is considerable value to be gained – including, fundamentally, improvements to working capital through more effective funding and cost savings, with earnings within their existing supply chains.

DNIs are a scalable, flexible and binding promise of payment by a business. Crucially, this enables today’s fractured, impractical funding structures that result in lengthy payment cycles and strains on working capital to be completely inverted – from a “bottom up” approach to a “top down” one.

This means tying funding to the balance sheet of the issuer, rather than that of the generally weaker creditworthiness of businesses’ SME suppliers. A business can therefore borrow from a financial institution (FI) and then cascade funding down to their suppliers by issuing DNIs.

DNIs dispense with the separate assignment agreements and irrevocable payment undertakings (IPUs) that are currently necessary for the transfer of trade documentation. And, with the DNI the basis of the lending rather than non-negotiable invoices, not only can 100% of invoice values be financed, but payments can be made immediately, thereby massively speeding up access to funding across supply chains.

This approach enables smaller suppliers to optimise their working capital through early payments which, in turn, ensures supply chain security for the business, generates opportunities for supplier discounts, and improves buyer-supplier relationships.

DNIs also allow corporates to have far greater control of how and when they use SCF, including being able to negotiate payment terms with suppliers to pay early or on time, depending on their liquidity needs. They are inherently more flexible than existing solutions, meaning treasurers can effortlessly switch between different funding methods – such as employing either their own or third-party cash – depending on which is the most effective for them at any given time, predicated, for instance, on their business cycle or cash position.

For example, if a typically cash-rich business runs into liquidity issues, instead of having to limit their dynamic discounting programmes, they can use DNIs to access external liquidity to extend payment terms as needed.

In terms of bottom-line contribution, a typical supplier early payment programme using digital documents such as this, can result in annual net benefits of between 1-7% of cost of goods. Furthermore, regardless of whether supplier early payment discounts are negotiated, businesses can also use digital instruments to avail themselves of post maturity finance and can thereby ‘buy’ themselves an approximate additional 50% cash in hand (i.e. a 60 day supplier invoice is settled with a bill or bill drawn for an additional 30 days) to plug financing gaps as needed.

Harnessing Digital Negotiable Instruments (DNIs)

One consideration that must be made regarding DNI adoption is the ETDA stipulation that the use of a reliable electronic trade document system and sufficient security on electronic documents is required for a DNI to be legally recognised. While clarity regarding exactly what constitutes a “reliable system” is currently being sought, there are DNI solutions readily available that, by passing key possession and reliability tests, already conform with the ETDA’s definition.

These solutions, such as the TradeSecure platform, place quantum-secure digital seals around DNIs that require a specific cryptographic key and protect electronic signatures using quantum notary technology. Such capabilities ensure DNIs cannot be duplicated or tampered with, thereby assuring the ownership and authenticity of the instrument. Easy trackability also streamlines and automates the audit process.

ETDA: Enter The Digital Age

One can reasonably ask that, if the use of promissory notes is already possible, why don’t businesses employ them? Simply put, without digitalisation, this process was heavily reliant on physical, paper documentation, the inherent administrative costs that accompany it, and the slow pace of transfer via mail. As a short-term financing process (between 90-120 days), long turnarounds have made them previously not worthwhile.

With digital documents, there is no long waiting period for paperwork to move through the supply chain, creating a far more readily available cash pool. This is because digital instruments can be exchanged in (close to) real-time, expediting processes by approximately 10-12 days, and thereby enhancing time to revenue and operational efficiency.

DNIs can easily be integrated into current SCF programmes via APIs, making them interoperable with existing global trade platforms and businesses’ ERP systems. For smaller businesses that may not use ERP, invoice data can be uploaded simply using CSV files. DNI adoption is therefore non-disruptive, straightforward, and efficient.

Once onboarded, using digital trade documents rather than paper versions will bring direct cost savings, with costs linked to paper trade documents estimated to be three times more than their electronic counterparts.

There is little doubt that to the bystander that the ETDA is a dry and inconsequential piece of legalese. However, by enabling the digitisation of trade documentation, it and similar legislation being implemented across the G20 and beyond, promises to create opportunities for corporates to conduct trade financing unlike what has come before.

By issuing a digital promissory note (DNP) or bill of exchange that gets immediately financed by a financial institution and discounted by suppliers, and then being able to choose the timing and frequency of the use of these solutions is transformational for businesses – driving extensive commercial advantage. As businesses seek to seize the opportunities abound and adoption inevitably accelerates, let us enter the age of SCF 2.0.

The post New UK legislation on electronic trade documents ushers in a world of possibilities for global businesses appeared first on Trade Ready.

Some of these topics keep reappearing year after year, due to new developments and their continued place of prominence in the minds of global trade practitioners. This year the atmosphere of volatility and uncertainty continues, leaving many to question the value in forecasting at all. But, as global economist Peter Hall put it:

“Here’s the deal: forecasting is alive and well, if the impact of structural changes is properly understood. Data and cyclical fundamentals together show that the global economy is stronger than news reports have indicated. This will help it to absorb higher interest rates without drastic fallout, and to continue growing for a number of years to come. To do this successfully, more capacity will be needed to deal with rising demand.”  – Watch the full video “Is Forecasting Passe?”

Read on for our 10 2024 trends.

Curious about our past predictions? Check out what we thought 2017-2023 had in store.

• 10 global trade trends we’ll be watching in 2023 
• 10 global trade trends we’ll be watching in 2022 
• 10 global trade trends we’ll be watching in 2021 
• 10 global trade trends we’ll be watching in 2020
• 10 global trade trends we’ll be watching in 2019
• 10 global trade trends we’ll be watching in 2018
• 10 global trade trends we’ll be watching in 2017

1. 2024 global trade outlook “uncertain but pessimistic”

Not exactly a cheerful headline. The United Nations Conference on Trade and Development (UNCTAD) released its Global Trade Update on December 11, projecting a highly uncertain and generally pessimistic outlook for 2024.

Factors contributing to this outlook include ongoing geopolitical tensions, escalating debt, economic fragility, lower demand in developed countries, reduced trade in East Asia, an increase in trade-restrictive measures, commodity price volatility, and lengthening supply chains, especially between China and the United States.

Despite these challenges, the report notes some positive trends in 2023, including a slight increase in trade volumes, indicating resilient global demand for imports, and a $500 billion growth in trade in services, boosted by delayed COVID-19 recovery.

The report also highlighted the impact of “friend-shoring, and a general decrease in the diversification of trade partners. For more on friend-shoring, skip to Trend 6.

The update provides a mixed picture across economic sectors. Looking ahead to 2024, the commodities sector faces continued uncertainty due to regional conflicts and geopolitical tensions. Overall, the report paints a complex and challenging landscape for global trade in the coming year.

2. Inflation and the global economy

The global economy remains fragile and uncertain, revealing and worsening structural weaknesses in an interconnected global system. Again, we need to look to the emerging trend of offshoring, reshoring, and friend-shoring, creating an overall realignment of global trade between rival blocs. This is expected to reshape supply chains, necessitating adjustments in company relationships and giving rise to new competition.

One of the central challenges facing the global economy in 2024 is of course inflation, with projections indicating a global inflation rate of 5.8%, and core inflation not expected to return to target levels of around 2% until 2025, according to the International Monetary Fund (IMF). However, variations in inflation rates are anticipated across countries and regions based on economic conditions, policy responses, and external shocks.

While the United States experiences relatively low inflation rates, the global average masks substantial differences among countries and regions. Advanced economies are projected to see inflation below 3.0% in 2024 after averaging 4.6% in 2023. In Canada, inflation is expected to continue to decline, staying between 2% and 3%, stabilizing at 2% toward the end of 2024, according to the Business Development Bank of Canada (BDC). Notably, the economic landscape includes a weak Eurozone and a particularly challenged United Kingdom.

Altogether, the realignment of global trade relationships and ongoing inflation challenges are expected to have a significant impact on supply chains, corporate relationships, and competitive dynamics in the coming year and beyond.

3. Cybersecurity risks continue to rise

2023 was a big year for cybersecurity, during which we saw the biggest ever denial of service (DDoS) attack and an increase in cyber attacks with big impacts such as the cyber attack that forced the FAA to ground all flights due to issues with a critical system.

The WEF listed “Widespread cybercrime and cyber insecurity” as the 8^th biggest risk in its Global Risks Report 2023.

Forbes lists 12 predictions for cybersecurity in 2024:

1. Rise In Ransomware Attacks
2. Increased AI-Powered Attacks
3. Flipside: AI As A Cybersecurity Tool
4. IoT Vulnerabilities
5. Electric Vehicle Hack Apocalypse
6. Quantum Computing Threats
7. Data Velocity And Hybrid Infrastructures
8. Need For DevSecOps
9. More Zero Trust Adoption
10. Stricter Data Privacy Regulations
11. Additional Supply Chain Attacks
12. Biometric Authentication Challenges

Ramping up cybersecurity action plans and closely monitoring the latest emerging threats will top many companies’ agendas for 2024.

4. Policy impact after COP28’s first ever “Trade Day”

At the COP28 climate summit in October, global leaders marked the first “Trade Day” as part of the UN’s annual climate conference, underscoring the crucial role of trade in combating climate change. Trade is seen as a powerful tool in addressing climate change, influencing global carbon emissions as well as facilitating the flow of green goods and services essential for the low-carbon energy transition.

The global production and distribution of goods and services contribute to roughly a quarter of all carbon dioxide emissions, according to UNCTAD.

During Trade Day’s launch a roadmap of trade policy options were outlined aiming at an equitable and ambitious response to climate change. Discussions throughout the day centered on leveraging trade policies to decarbonize global supply chains, incentivize businesses toward a net-zero future, secure value chains related to the energy transition, and integrate environmentally responsible practices into trade finance.

Emphasis was made on the need for a multi-lateral approach to creating climate and environment regulations so that small businesses and vulnerable countries aren’t entangled in a complex web of rules.

How this multilateral approach to more equitable and environmentally friendly trade policy will come together remains to be seen, and we will be watching for updates throughout 2024.

5. Trade-restrictive measures on the rise

Returning to UNCTAD’s The Global Trade Update, the report highlights a notable rise in trade-restrictive measures in 2023, particularly non-tariff measures (NTMs). This has been attributed to an increase in industrial policies and added pressure for countries to fulfill their climate commitments. As a result, nations are adopting policies that favor domestic industries and aim to decrease dependence on foreign supply chains.

A recent report from UNCTAD, titled “Trade regulations for climate action,” identified 2,366 NTMs related to climate change, impacting 3.5% of potentially tradable goods and representing 26.4% of global trade. For better or worse, UNCTAD has predicted that these policies are likely to reduce the growth of international trade in the year ahead.

6. Friend-shoring planning in 2022 and 2023 is coming to fruition in 2024

The continue swing toward “friend-shoring” for geopolitical closeness and overall risk reduction has led manufacturers to invest billions in building factories that are either closer to the end consumers or in less risky regions.

This trend continues after years of supply chain upheavals caused by a litany of weather, geopolitical and Covid-10 disruptions. The transportation sector is responding by increasing capacity in regions such as cross-border connections between Canada,U.S. and Mexico connecting to Latin America.

“During 2022, 14% of all U.S. imports by value originated in Mexico, according to data analyzed by Supply Chain Dive. Similarly, U.S. firms have long been financially active in the country, and are responsible for 42% of the total foreign direct investment in Mexico since 2006,” according to SupplyChainDive

There has been a general trend of re-organization of shipping routes enacted over the last couple of years that are now starting to operate at full capacity. Logistics companies are racing to fill the demand. Intermodal logistics services out of Mexico have been steadily growing as the CUSMA trade agreement increased demand in the region and became even more attractive within near-shoring and friend-shoring strategies.

UNCTAD also highlights a marked increase in trade concentration. “There has been an overall decrease in the diversification of trade partners, indicating a concentration of global trade within major trade relationships.”

7. Digital trade growth continues, particularly in Africa and Asia Pacific

Digital trade, comprising all digitally ordered or delivered transactions, is reshaping the global economy.

A significant trend in this digital era is the remarkable growth of digitally delivered services, which have nearly quadrupled in value since 2005, passing the growth of goods and other service exports. In 2022, these digitally delivered services made up 54% of total services exports, offering new opportunities for players in the global market, including micro, small, and medium-sized enterprises (MSMEs).

Although developed economies lead in exporting digitally delivered services, developing economies, including those in Africa and Asia Pacific, are increasingly participating in this trend. However, least-developed countries (LDCs) are experiencing slower growth in the export of digitally delivered services.

Governance in digital trade is also growing, and significant progress has been made through bilateral and regional trade agreements. Today most FTAs include digital trade provisions. On top of trade rules, regulations addressing cross-border data flows, consumer protection and issues around competition are being addressed through digital trade policy.

We’ll be watching for developments in the technology, standards and trade policy that come into play in 2024.

8. AI in everything

AI is transforming international trade, along with everything else, at a breakneck pace. This is presenting as many challenges as opportunities to businesses facing cybersecurity risks aided by AI, as well as using AI to find and protect against potential cybersecurity vulnerabilities.

It’s providing a myriad of supply chain technology solutions to improve processes in managing inventory and production, and automating logistics. It is also being used to ease cross-border regulation by automating form filling, checking for documentation errors, and help with compliance checks.

Financial institutions are using AI to assess financial risk and detect potential fraud. Small businesses are benefiting from productivity gains by using AI to generate trade documents, assist with translation, customers service and much more.

As AI is increasingly coming into play in business and in every day life, we will be watching with a particular eye on how it’s being used in trade functions and international businesses.

9. Supply chain volatility is still a huge factor in 2024

At the time of writing, shipping lines are being diverted from routes through the Suez Canal as attacks on cargo ships have recently escalated. At the same time, drought in the Panama Canal region is causing a major bottleneck and disrupting trade flows as shippers look for alternative routes or face delays.

Supply chain disruption has been the name of the game for several years now, with major challenges in capacity amid labour shortages and fluctuating demand during the Covid lockdowns of 2020-2021, geopolitical conflicts and weather-related delays.

While things have now largely stabilized since the pandemic with less congestion and a more normalized supply-demand, new risks such as cyberattacks, continued geopolitical conflicts, and labour shortages and strikes.

Fortunately, there are several tools and new technologies emerging to assist businesses with better plan and risk mitigation including the use of AI tools, digitization of trade and shipping documents, and increased transparency.

10. Gaining new skills most important in getting hired and promoted in 2024

An Employ Recruiter Nation Report shows that 39% of employers plan to focus on internal mobility in 2024. This indicates HR decision-makers’ awareness that in a competitive job market, hiring highly qualified candidates is challenging, necessitating a focus on retaining existing employees.

To do this, there’s a growing trend for organizations to offer career pathing, reducing employee turnover and enabling them to transition into roles that offer challenges and new learning opportunities. This eases the burden on hiring teams, as businesses seek to acquire new skills rapidly through upskilling and internal mobility.

Providing stipends for certifications, mentorship programs, and career development training will be crucial for leaders to empower employees to enhance their skill sets and advance within the organization. While external talent sourcing remains important, prioritizing internal mobility is set to be a major focus in 2024.

At the same time, emphasis will shift from the prestige of past employers on resumes to the importance of individual skills, which also improves diversity, equity, and inclusion. This shift benefits organizations as it broadens the talent pool. Businesses are expected to concentrate on addressing skills gaps which will help achieve the organization’s long-term strategic goals.

The renewed focus on skills is in both technical and leadership competencies, evident in job postings and internal opportunities. Recruiters will continue to prioritize leadership skills, ensuring that the current short-term focus doesn’t lead to leadership skill gaps in the future.

The post 10 global trade trends we’ll be watching in 2024 appeared first on Trade Ready.

Unsurprisingly, this year’s top stories included several focused on technology such as digital trade and AI. There was also a lot of interest in sustainable practices, tips for women leaders and the value that immigrant-led businesses can bring in Canada and beyond.

Enjoy this year’s top international trade articles.

1. 10 global trade trends we’ll be watching in 2023

10 global trade trends we’ll be watching in 2023

2. Why digital trade should be a cornerstone of Canada’s Indo-Pacific Strategy

Why digital trade should be a cornerstone of Canada’s Indo-Pacific Strategy

3. 7 emerging cleantech suppliers that can help you create a more sustainable supply chain

7 emerging cleantech suppliers that can help you create a more sustainable supply chain

4. Unpacking the Digital Transformation of Trade

Unpacking the Digital Transformation of Trade

5. How to Take Your Business Global – 5 Important Steps for Female Leaders

How to Take Your Business Global – 5 Important Steps for Female Leaders

6. Investing in immigrant founders to unlock the next generation of Canadian innovation

Investing in immigrant founders to unlock the next generation of Canadian innovation

7. 8 common global procurement mistakes made by small and medium sized businesses (SMEs)

8 common global procurement mistakes made by small and medium sized businesses (SMEs)

8.Top 10 things we learned at the WPO 2023 Entrepreneurial Excellence Forum

Top 10 things we learned at the WPO 2023 Entrepreneurial Excellence Forum

9. 5 ways AI is transforming international trade

5 ways AI is transforming international trade

10. Top 10 fastest growing international trade jobs in 2023

Top 10 fastest growing international trade jobs in 2023

The post Best of 2023: Top 10 most-read international trade articles from the past year appeared first on Trade Ready.

Canada’s Indo-Pacific strategy was released by the Government of Canada on November 27^th and it has been defined under five core objectives which will impact the life of Canadians, from peace, security, climate change and human rights, to trade, investment, supply chain resilience and partnerships.  

Home of 40 diverse economies with over four billion people, including three of the largest economies in the world (China, Japan and India), the Indo-Pacific strategy will play a pivotal role in defining Canada’s future.

So, it is worthwhile to reflect about how this strategy should be implemented effectively from a business perspective and how to increase its chances to succeed under the challenging economic, social and geopolitical scenarios that both Canada and Indo-Pacific countries face.

Without a doubt, there are several tools that will be useful to consider during the implementation stage of this strategy, but taking advantage of digital trade is an essential one for business success due to its scope and cross-cutting nature.

Digital trade, which refers to commerce enabled by electronic means, has grown rapidly during the present century. It has become critical over the course of the Covid-19 pandemic by providing solutions to effectively support companies across industries, and by keeping products and services within reach of consumers.

Nonetheless, international organizations such as the World Economic Forum notes that, despite the growing value of the digital economy, digital protectionism is on the rise, and that cybercrime will grow faster and account for half the value of the digital economy by 2025.

This brings up three important questions:

1. How can Canada contribute to governing and harnessing the full potential in digital data without compromising the security of people?
2. What can Canada’s government do so that digital trade is utilized as a tool of inclusion?
3. How can Canadian entrepreneurs leverage digital trade to succeed within the Indo-Pacific strategy?

There are 4 key reasons digital trade is a perfect fit to support Canada’s Indo-Pacific Strategy

1. Promote and action Canada’s values

Adding digital trade as an important tool to implement the strategy can apply Canada’s values to promote open societies and free and sustainable trade.

A recent report issued by the Digital Policy Alert Organization highlights that over the past three years governments have gone into regulatory overdrive in digital sectors. In areas such as data governance, online content moderation, taxation and competition law enforcement this has created digital fragmentation due to the inconsistency of rules.

Regulatory heterogeneity is growing, and this is a threat for businesses because this discourages participation in global markets and imposes barriers that affect both entrepreneurs and consumers.

Regulation in digital trade is imperative.  However, it needs to be coherent and consistent with principles that guarantee non-discrimination, transparency and fairness, but also offer predictability.

With no multilateral agreement in place to regulate activities in the digital world, Canada’s Government has the opportunity through the Indo-Pacific strategy to step in, propose rules to address concerns on digital issues and guarantee a level playing field.

This is a chance to create consensus around the principles that will govern digital sectors in the region and, at the same time, confirm its commitment for high-standard, rule-based digital trade that works for all.

2. Increase trade liberalization

The digital economy is associated with greater levels of trade liberalization, which improves trade activities between countries.

An OECD study points out that a 10% increase in digital connectivity between two countries, which allows their companies to deliver their products and services beyond borders by improving regulations and infrastructure, might expand their trade in goods by around 2% and over 3% trade in services.

The OECD report adds that when digital policies are implemented alongside regional trade agreements, the growth in good exports could duplicate the impact. Based on this evidence, Canada is in a great position to link digitalization with trade activities thanks to its extensive network sustained in 15 Free Trade Agreements (FTAs) in force with 51 different nations.

To be noted, Canada is part of two of the most advanced free trade agreements that include stand-alone chapters on digital trade issues, namely the CPTPP and the USMCA. This valuable expertise must be leveraged to expand partnerships and strength ties in the Indo-Pacific.

As part of the strategy, Canada has committed to join the Digital Economic Partnership Agreement (DEPA) with Singapore, New Zealand and Chile, which is excellent news for Canadian businesses. DEPA has emerged as an innovative solution to address critical issues that the digital economy confronts and has encouraged cross-border collaboration on topics such as digital inclusion, artificial intelligence and digital identities.

Canada has the opportunity through the Indo-Pacific strategy to encourage a holistic, balanced and effective policy-setting across the region via digital and trade agreements that address key issues.

These issues include data flows and governing data, which increase business activities and supply chains resilience, and guarantee a more equitable distribution of the gains of digital technologies while addressing risks.

3. Help Canadian companies diversify their markets

Promoting the adoption of digital technologies supports Canadian companies in diversifying their markets.

Recognizing the country’s high export concentration, the Indo-Pacific strategy aims to promote a more sustainable economic growth and to reduce Canada’s vulnerability to adverse external shocks including geopolitics. In this line, a key piece of the Indo-Pacific strategy is the approach that Canada will take moving forward to engage with two of the world’s largest economies, namely China and India.

On the one hand, Canada’s government recognizes within the strategy that its relationship with China will be aligned with those of its closest allies and will be displayed on different levels, both challenging and collaborating with China depending on the circumstances. Canada’s government knows that geopolitics currently plays an important role and that this is a latent risk for its businesses running operations in China; so the strategy aims to support Canadian companies to build business opportunities in other Indo-Pacific markets.

On the other hand, Canada’s goal with India is to expand the bilateral relationship through a broad range of cooperative projects.

The level of Canada’s engagement with China and India have been set in opposite directions in the strategy.

Supporting Canadian entrepreneurs to improve their processes, distribution, marketing and commercialization methods via digitalization can help to succeed in its position with these two countries by opening new markets beyond China and creating more robust commercial ties with India.

4. Make trade more accessible to SMEs

The digital economy can help to increase the participation of small and medium-sized enterprises (SMEs) and in this manner, contribute to alleviating one of the most pressing challenges in the Indo-Pacific, which is to create a more inclusive and equitable business environment.

SMEs, including under-represented groups, youth, women entrepreneurs and indigenous groups, need to have access to digital technologies in order to be able to participate, compete and reap the benefits of international trade and encompassing supply chains. Digitalization can offer SMEs access to affordable, more advanced technologies, which can help to reduce costs and increase competitiveness.

Canada’s Indo-Pacific Strategy will be considered a compelling and viable approach if it provides solutions to the most critical issues faced by SMEs, which includes digital exclusion and lack of digital infrastructure.

The digital exclusion in some Indo-Pacific economies is an important issue to address in order to fully integrate their people into the digital economy. For instance, the internet penetration rate in Papua New Guinea, Bangladesh and India are 18, 31 and 47 percent of their total population, respectively.

Canada should promote digital capacity-building across the region through the strategy and walk the talk by collaborating and supporting connectivity initiatives in the Indo-Pacific, revising regulatory frameworks affecting SMEs’ adoption of digital technologies and investing in the improvement of digital infrastructure. The strategy has to reflect Canada’s commitment with inclusive and sustainable digital development.

Canada’s Indo-Pacific strategy offers a comprehensive and well-articulated policy that sets an important roadmap to Canada’s present and future, aiming to become a trusted and influential partner in the region.

To succeed in the implementation of this strategy, it should incorporate digital trade as a strategic tool for inclusion due to the portion that this represents in the global economy. Canada’s priority must be to avoid falling behind in the development of digital technologies and to assume a leadership position in the discussion of the agenda.

Canada’s Indo Pacific strategy has put the country in a better position for the future, so implementing this strategy using digital trade could represent a cornerstone upon which all the trade initiatives are supported, contributing significantly to reaching its goals.

The digital trade approach could also contribute to the ultimate goal shared by most of Indo-Pacific countries of building greater levels of economic integration that translate into sustainable jobs and prosperity for all.

The post Why digital trade should be a cornerstone of Canada’s Indo-Pacific Strategy appeared first on Trade Ready.

Did you have a computer in your house 25 years ago?

Odds are, the answer to that question is no. In the years since, however, computers have become omnipresent, and our phones are rarely further than a couple of feet away from us. With so many devices connected to the internet, buying and selling goods and services online has transformed from a revolutionary new idea to an unremarkable daily occurrence.

The problem is that NAFTA, the largest regional multilateral free trade agreement, originally negotiated 25 years ago, hasn’t been updated to reflect these modern realities. So what should be done about that, and how will it affect the lives of international trade professionals and consumers?

Why is it so important to take NAFTA into the 21^st century?

On November 29, Canada 2020 hosted the NAFTA Goes Digital seminar to discuss these important questions and provide some answers.

The seminar was moderated by Heather Scoffield, Ottawa Bureau Chief for the Canadian Press.

The panelists were:

• Peter Clark, President of Grey, Clark, Shih and Associates and experienced Canadian trade advisor and commentator
• Laura Dawson, Director of the Wilson Center’s Canada Institute in Washington, DC
• Ari Giovenco, Director of Trade and International Policy for the Internet Association in Washington, DC

One of the earliest questions addressed why this digital chapter will be important for so many businesses.

“There’s been a prevailing idea that we can put a bubble around a national economy for goods, to control what goes in or out, and provide incentives or affect prices in other ways,” Dawson argued. “But now, we have a totally different digital economy without that bubble. Until this chapter is completed, we’re trying to apply old rules to a new situation that doesn’t fit them.”

Giovenco then explained that this chapter will affect any business using e-commerce that allows sales beyond domestic borders, whether they’re intentionally going after international customers or not.

“The internet is a borderless medium, so companies can go international without ever intending to do so. Since this is the case, how do you know things are going where they need and that people have the access they want? What are the rules about advertising on social media, monitoring and controlling the flow of data, copyright legislation, or customs and tariffs that can be added to products purchased through e-commerce?”

Dawson explained that most digital issues discussed in the NAFTA talks fall under one of four categories: freedom to move data across borders and prohibiting data localization, technology service provider freedoms, protecting IP (copyright, source codes), and customs facilitation and digital supply chains.

When could we start to see changes come into effect?

The prevailing consensus among the group of experts was that most of the pressing digital issues had already been addressed during the TPP negotiations. While that agreement was never put into effect, the decisions were easily transferable from the original TPP text, with small modifications to reflect the specific NATFA context as well as changes in the digital realm since those negotiations took place in 2012.

“Many of the negotiators on the digital chapter of NAFTA are the same people who had negotiated these issues in the TPP, and can essentially continue the same debate,” explained Giovenco. “There’s a lot of goodwill because everyone realizes how many companies are affected.”

Clark added that liability issues for service providers is the only major issue still without resolution, and that there should be an agreement in the near future.

Dawson countered that there are so many potential liability issues to tackle, from legal to financial and others, which may still prove a challenge for negotiators.

Despite the fact that negotiators of the digital chapter are aligned on most issues, its place within the larger NAFTA framework may delay its implementation. There are also certain topics such as service exports and finances, that need to be updated before aspects of the digital chapter can be finalized.

Who benefits most, and what may change?

One important change that may be coming, according to the panelists, is an increase to Canada’s de minimis threshold, or the value of goods Canadians can bring back into the country without paying duties. While the U.S. de minimis is set at $800, Canada’s is just $20, one of the lowest in the industrialized world.

The U.S. has advocated for Canada to increase their de minimis to at least $200, and studies have shown that Canada currently spends more to enforce this regulation than it reaps in duties.

“Canada will not want to be forced by the U.S. into giving too much,” Dawson explained. “Along with dairy access, de minimis is one area where Canada has not moved so far, but has room to do so.”

Clark agreed, and predicted it would move to somewhere between $200-300 by the end of negotiations. This would facilitate an increase in duty-free online shopping for Canadians from American websites, a popular demand from consumers across the country.

Giovenco offered that finalizing the digital chapter is crucial for many companies and would serve to foster further innovation and technological development.

“About 425,000 jobs and billions of dollars’ worth of business are affected by laws governing safe harbours for IP and copyright. Canada and the U.S. have different laws governing these issues, while Mexico has very few in place, so it’s essential to unify these laws in order to drive innovation and open the three markets to companies.”

While the U.S. or other parties may prove to be short-term winners, there was unanimous agreement that this chapter would be a win for everyone in the long-term, especially service providers and exporters in Canada, the U.S. and Mexico.

One final lingering concern is the way that major global corporations like Google or Netflix may or may not be regulated. Giovenco was most concerned with opening access, while Dawson focused on how to protect user data or prevent such companies from erasing Canadian culture.

It’s safe to say that NAFTA’s digital chapter will have a major impact on North American trade. By enacting a framework that aligns with the 21^st century realities of digital trade, and deals with major issues like liability, digital privacy and IP protection, companies will have a clear path to digital expansion and expanding their businesses across the NAFTA region.

The post NAFTA will soon have new digital trade rules – how will they affect you? appeared first on Trade Ready.