The COVID-19 pandemic has brought on several changes, which may last even after the virus is gone. It has also affected global trade, straining supply chains and creating a “new normal.” Here are some of the most significant changes to look forward to in international trade:
eCommerce grew significantly in 2020, with online spending reaching a total of $82.5 billion in May. This trend will most likely continue in 2021 and should remain a part of every company’s strategy. Although online sales sped up because of the pandemic, companies have sought ways to meet their customer needs in more innovative ways, especially with eCommerce. However, with companies now needing to serve customers from more diverse locations, additional aspects of shipping regulations and compliance must be taken into consideration.
New Manufacturing Hubs
Manufacturing in South East Asia is booming, and with new locations come new requirements. New shipping lanes, rules of origin, and trading partners signal a shift that is both exciting and challenging. Africa is also making strides, with tremendous investments from China going into South Africa, Zambia, Algeria, and more.
Virtual Trade Missions (VTMs)
Before the lockdowns and travel restrictions, trade missions required government officials and business people to travel between countries to discuss and negotiate mutual trade agreements. These in-person gatherings helped solidify key contacts, suppliers, and government networks. However, in-person trade missions have now mostly been postponed, with virtual trade missions (VTMs) replacing them. This is expected to continue in 2021 as interest grows for virtual communication platforms.
US-China Trade Under the Biden Administration
The future of the US-China trade relationship still remains uncertain in 2021. Several WTO members, including the US, have problems with Chinese trade and investment practices, including the country's access to sensitive technologies and data. However, the Biden Administration has said that it will try to change the unfriendly trade policies inherited from the Trump administration. It is unclear whether the WTO would be a forum for the two countries to settle their trade dispute, but we are likely to see calls at the WTO for reform relating to subsidies and imbalances that the US and other nations claim are created by China’s anti-competitive practices.
Role of Tech
Tech continues to play a significant role in economic growth and international trade. However, rules and regulations have been slow to keep up with development.
In 2021, we should expect to see further attempts to resolve cross-border tech issues, either through multilateral agreements or unilateral measures. This will facilitate trade agreements on digital services, digital taxation, the development of 5G technology, and more.
There is a lot to look forward to in 2021. And the changes we would likely see in technology, communication, and international cooperation will help improve the ways of doing business between countries.
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