WITA’s Friday Focus on Trade | January 6, 2023





Trade Data Monitor’s Top 10 Trade Trends

Going Into 2023

The world was rocked in 2022 by Russia’s invasion of Ukraine, punishing inflation, and slackening demand in the U.S. and Europe. That’s dampened expectations for exports and imports in 2023. Global trade growth will slow to 1%, according to the World Trade Organization, because of inflation, higher interest rates, weaker demand in the U.S. and Europe, protectionism, and a leveling-out after recovery from the Covid-19 pandemic. The world will have a difficult time fully recovering from this current slump until it licks inflation. According to the WTO, “energy prices rose 78% year-on-year in August while food prices were up 11%, grain prices were up 15% and fertilizer prices were up 60%.”
But global trade, if anything, offers some hope. The $9 trillion global logistics industry has proven that it’s much more resilient than national economies, and practically unbreakable when it comes to delivering a box of watches, apples of shoes from anywhere in the world to anywhere else in the world.
Here are Trade Data Monitor’s top 10 ongoing trade trends at the start of 2022:
1.  The Post-Covid Trade Bump is Over
In 2022, global trade recovered from the Covid-19 slump. When all the numbers are tallied, it’s expected to increase 3.5% over 2021, according to the WTO. Governments handed out stimulus payments to their citizens that they used to buy consumer goods. Now that money is spent and inflation is biting into their budgets, causing a sharp shrinking in spending that’s deflating global trade. The WTO notes that imports will decline in different parts of the world for different reasons. In Europe, higher energy prices due to the war in Ukraine. In the United States, “monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment.” China “continues to grapple with COVID-19 outbreaks and production disruptions paired with weak external demand.” And for developing countries, “growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress.” Rising energy bills will cause consumers to spend large percentages of their paychecks driving their cars and heating their homes, and less money on shoes, toys and gadgets.
01/03/2023 | John W. Miller | Trade Data Monitor


Beware the Misleading Narrative on Globalization’s Retreat

Part of the fallout from today’s polycrisis – that catchy term encompassing the COVID-19 pandemic, supply chain disruption, growing geopolitical rivalry, food insecurity, energy price hikes, and the cost of living crisis – are assertions by prominent commentators and government officials that globalization has gone too far.
One example is a recent speech by Chrystia Freeland, Canada’s deputy prime minister, finance minister and former foreign minister, in which she re-examines the results of spending “three decades building an interconnected global economy.”
The view that flows from some of this thinking is that the international footprint of companies must be rethought because executives failed to take proper account of risks evident in today’s fraught world.
And the drum beat from certain key policymakers is relentless. Apparent “weaponization” of trade ties by China and Russia has put wind in their sails, as Mark Leonard shows in his 2021 book The Age of Unpeace. This has led to calls for supply chains to be designed with “just in case” considerations in mind rather than with “just in time”.
Senior national security officials from Germany, the US, and the UK are on record twisting the knife further – adding an “us versus them” angle to corporate deliberations on supply chain reconfiguration. In a speech in London in July, 2022, the Director of the Federal Bureau of Investigations (FBI), Christopher Wray, said that China posed a “far more complex and pervasive threat to businesses than even most sophisticated company leaders realize.”
12/30/2022 | Simon Evenett | Institute for Management Development

2023 Will Be a Defining Year for Brexit and Trade

Notwithstanding endless discussions and early data, Brexit cannot yet be definitively declared a success or failure. Those who would point to trade deals and independent regulatory policy as signs of success really have only the low-hanging fruit of typical Free Trade Agreements with New Zealand and Australia to point towards. On the other side of the argument, evidence of export struggles compared to other European countries are as yet far from definitive given what was always going to be an economic shock.
The year ahead will provide far more evidence on how Brexit is faring, in particular from three major trade policy challenges:
  • Acceding to the Comprehensive and Progressive agreement for the Trans-Pacific Partnership (CPTPP), given entanglement with the implementation of the Northern Ireland Protocol;
  • Completing a satisfactory Free Trade Agreement with India’s notoriously parsimonious negotiators;
  • Navigating a disintegrating world trade system threatening to leave the UK adrift.
Succeed in these, and the UK’s international position will be looking far stronger and more settled. In part, because to do so will mean taking on those parts of the Conservative Party which have most staunchly backed Brexit.
12/31/2022 | David Henig | European Centre for International Political Economy


The Impact of the Ukraine Crisis on International Trade

On 24 February 2022, Russia invaded Ukraine, triggering international condemnation. The 2 March 2022 United Nations resolution demanding that Russia immediately end its military operations in Ukraine was adopted by 141 countries, with 37 abstentions and 5 against, while the 12 October 2022 UN resolution demanding the reversal of Russia’s attempted illegal annexation of Ukrainian territories was adopted by 143 countries, with 35 abstentions and 5 against1.
The international condemnation was followed quickly by the imposition of wide-ranging economic sanctions on Russia, and the provision of military support to Ukraine, by most OECD and European Union countries. Trade-related sanctions have included prohibitions of exports to Russia of strategic goods, including high-tech goods and components for use in electronics, telecommunications, aerospace and oil refining, among other sectors. Sanctions imposed by the United States apply not only to goods exported by US companies, but also to goods produced elsewhere using US technologies. The extraterritorial nature of US sanctions has likely impacted exports to Russia even from countries that have not applied sanctions.The EU, United Kingdom and US have also announced plans to phase out imports of Russian energy.
The war hit the global economy by creating new geopolitical and economic uncertainties, soaring energy prices, and disruptions to global value chains in which Russian and Ukrainian companies were involved. Economic sanctions exerted adverse effects not only on Russia, but also on countries that imposed them and, more generally, on other economies because of higher energy and commodity prices.
12/20/2022 | Zsolt Darvas, Catarina Martins | bruegel


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