There are two important changes this year that will affect international trade. First, the popular rejection of globalization, and international trade, to the extent that it means economic integration. Second, the growth of e-commerce as a part of international trade.
From Brexit, the Colombia vote on the peace agreement with FARC rebels, and the US presidential election, there is an unmistakable trend of citizens in Western democracies shouting “Stop!” The desire of people to ask tough questions of their political leaders about how they are faring in the global economy is unleashing forces that are beyond their ability to cope and adjust, let alone plan for the future. Political leaders can no longer ignore the dislocations caused by globalization and the problems it does not solve because now people are demanding attention.
Since 2008, global trade volumes have been flat, hence the overcapacity of ocean shipping, except for e-commerce, which is growing 20 percent per year. E-commerce is a significant disruptor as to who engages in global trade, what commodities are shipped cross-border, trade patterns, and the supply chains of those goods.
Part of the backlash against global trade is the perception that the multilateral trading system and free trade agreements only benefit multinational corporations. E-commerce will distribute the benefits of global trade more widely by lowering the barriers of small businesses to access the world’s consumers who will have more product choices at lower prices. While not all global trade will migrate to e-commerce, significant volumes of consumer products will.
The challenge for those of us who believe in both democracy and global trade is to find creative solutions to the concerns raised by citizens who seek to regain some control over the choices in their lives.