Over the past year, several countries have shifted their priorities to be more internally focused. Brexit in the UK and the 2016 US election were very publicized examples of this, but the shift has occurred or is occurring in many other countries.
I have been asked various times how I feel this will impact global trade as well as trade compliance. Following are my thoughts on this topic:
The majority of the world’s products are built with supply chains spanning countries, and I don’t see this going away. There will be modifications in how different countries trade, which will most likely cause shifts in supply chains. However, global companies will continue to compete on a global scale.
With modifications in trade agreements, duty rates, taxes, and other imposed fees, how should a global company prepare to compete in this dynamic environment?
It will be important that companies have the ability to analyze different trade lanes with ease. One can’t simply look at geography and transportation costs. Duties, taxes and other fees, which will be constantly changing, will have much more relevance. It will be important that decision-makers have the ability to determine laded costs under different scenarios that consider the use of every available trade agreement and duty deferral program.
Corporations must be nimble in order to rapidly implement trade programs that will improve their competitiveness. Even though certain larger “unpopular” trade agreements might diminish in use, they will be replaced by various bilateral trade agreements. Implementing several bilateral agreements dynamically cannot happen if you have rigid processes created for one specific trade agreement.
In summary, global trade will not go away, trade compliance will only grow in significance, and the organizations with the knowledge, visibility, and ability to adapt in a changing environment will succeed.