Significant and sustained increases in the world trade should be a worry for many as the increase in trade uncertainty observed in the first quarter could be enough to reduce global growth by up to 0.75 percentage points in 2019. In August, the US Institute for supply management latest report shows a contraction in production, purchasing, and employment indices.

Uncertainty generated from Brexit, the US-China trade war, Japan – South Korea trade wars, and general discontentment with global trend towards widening income inequality is creating a toxic mix for politicians to deal with.

The irony is the conventional approach of blaming your trading partners for your problems is only likely to exacerbate a general lack of confidence and increase further uncertainty.

The current round of the G7 summit in Biarritz concluded with support “to overhaul the WTO to improve effectiveness with regard to intellectual property protection, to settle disputes more swiftly and to eliminate unfair trade practices.”

In essence, it’s signaling a need to strengthen the capabilities of the WTO to act faster and more decisively in resolving disputes that are even more political than structural in nature, requiring a more multi-faceted engagement approach. Whilst this may help in the long-run, in reality, companies will have to contend with uncertainty in global trade for some time to come as well as the impacts on the real economy from these disputes.

And all of this is happening as IMO 2020 approaches, the January 1, 2020, date by which the International Maritime Organization mandates a switch to lower sulfur fuels in order to achieve an 80% reduction in sulfur emissions leading to significant cost increases in the shipping goods via ocean freight (initial estimates between US$180,00  and US$420,00 per a twenty feet container dependent on routing, base fuel costs, carrier).

So given the significant uncertainty around global trade agreements, the increasing use of trade as a political football, the increasing costs to trade and the shortening of product lifecycles as customers want faster, newer more differentiated offerings. Is it still worth it?

Of course this is very much dependent on what industry you are in. Whether you’re a global manufacturer or a wholesaler sourcing goods, your perspectives may be different based on investments made, sensitivity to current trade/tariff measures, customer demands, your markets, and the degree to which you are exposed to political debate and targeting.

However, I would offer that the benefits of specialization, economies of scale and unique factors of production that have underpinned global trade still exist as Adam Smith put it in 1776:

“By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?”

Today this simple analogy still holds true in skills, competences, capabilities, and access to markets and insights so that over time the expectation is that trade will prevail.

While the recent outlook has been gloomy, opportunities for 2020 include a resolution to a number of ongoing disputes and a final settlement on Brexit (hopefully). Additionally, the maturation in technologies such as blockchain, process automation, forecasting and demand management solutions can also offset costs associated with IMO and support greater agility in the uncertain supply chain world that we currently live in.

Indeed, if 2019 was the year of trade uncertainty, 2020 could be a restorative year in our ability to execute global trade. Partnering with an experienced supply chain leader will be essential to minimizing cost increases while ensuring the efficient flow of your company’s goods and services.

Braver is a world class foreign trade and international affairs company. We monitor worldwide cutting-edge technologies, with potential to change the way we look at the planet and bring it to emerging countries through import and export management. If you are looking for a strong partner to help your company unveiling the Latin American market, bring your project to Braver and let us show you the way. Contact our businesspeople and get to know more.

Essential in the formulation of foreign trade public policies, these professionals are able to foster internationalization, competitiveness and the exchange of ideas, products and services. Primary factors for the development and creation of employment and income in any country. Foreign trade policies are complex because they directly affect the economy and people’s expectations for the future. Grounded in long term basis, foreign trade public policies reflect on industry, trade, services, and reverberate in foreign exchange, infrastructure, customs and regulatory administration, fiscal policies, compliance, and in the international affairs.

Valuable in building global business strategies, in the private sphere, they are also helping companies of different sizes and capital structures, to analyze conjunctures and understand when, how and where to start a journey abroad. They can participate from the construction of concepts, brands, products and services for certain markets, to the financial, exchange, logistics, customs and operational management of already established international business. The technicality of daily tasks and a language difficult for outsiders to interpret, give an additional degree of specialization to Foreign Trade Professionals.

Augmented reality, artificial intelligence, big data, blockchain. How can all this mathematization impact the career of a Foreign Trade Professional?

According to a study by Dataflog, urban centers are now home to 82.3% of the US population and around 50% of the world’s population. This number continues to rise, as the same study predicts that by 2050 three-quarters of the world will live in an urbanized space. As the global headcount rises dramatically and more and more people head to the bright lights, it puts an enormous strain on these cities’ technology and resources to support the expanding population. Providing enough energy needed to power these megacities is a huge task for example, and even finding enough water will become increasingly difficult for a number of urban spaces. The strain on the infrastructure is also a major concern for many cities. This has led to the rise of ‘smart cities’, urban spaces using computerized, data-driven methods and software to solve the crises.

Trade agreements are treaties signed by two or more nations to encourage the free flow of goods and services between the members. These agreements, which can be bilateral or multilateral, reduce or eliminate trade barriers such as tariffs and quotas. As such, they lead to the creation of new markets for businesses, facilitate the production of high-quality goods and enhance economic growth.

There is no alternative to sustainable development. Even so, many companies are convinced that the more environment-friendly they become, the more the effort will erode their competitiveness.

They believe it will add to costs and will not deliver immediate financial benefits. Talk long enough to CEOs, particularly in the United States or Europe, and their concerns will pour out: Making our operations sustainable and developing “green” products places us at a disadvantage vis-à-vis rivals in developing countries that don’t face the same pressures.

Plant-based eating as one on the top trends driving the food and beverage industry. With third of the population actively reducing their meat consumption, the demand for plant-based products is rapidly growing in 2019.

Counteracting the meat and dairy industries commodity boards, non-profit organizations are emerging to support plant-based choices by promoting education, research, and entrepreneurship in the plan-based field.

Trend #1

Battle for technological supremacy. The United States and China have emerged as the dominant players in the race for hegemony in the Fourth Industrial Revolution. Divergent technology standards will persist while the competition continues. The winner will have outsized influence—with economic, political, and military implications for years to come.

In a globally connected world characterized by diversity, there exist different approaches towards negotiation, which are dependent on people’s respective culture.

We believe there is a significant impact of culture to negotiation processes, and by exploring three culture types – Dignity Culture, Face Culture and Honor Culture – we can better understand it all.

Luxury brands will be challenged to focus on the human aspect of the digital revolution, as they seek to find traction with the younger, digitally-powered consumers that have come with it.

Market turbulence, slowing sales. At the end of November the Savigny Luxury Index, compiled on the stock values of 18 leading luxury companies, reported a drop in average stock prices to reach a lower level than at the beginning of the year. Citing worries over a decline in Chinese tourism, that government’s heavy-handed enforcement of personal luxury goods’ imports, and the threat of a trade war with the U.S. French investment bank Societe General foresees similar trends, forecasting a “slowdown in the luxury sector has just started as concerns over the spending trend of affluent Chinese millennials and the impact of the Yellow Vest protest in France.” Goldman Sachs concurs and dropped its 2019 forecast for luxury industry sales growth from a previous 7% to 5%. The investment community dislikes any uncertainty and there is plenty of it to go around. A recent survey by J.P. Morgan among ultra-high-net-worth investors (those with more than $30 million in liquid financial assets) found that 75% expect a recession to hit the U.S. by 2020.Even Gucci CEO Marco Bizzarri, who sits on top of the world’s fastest-growing legacy luxury brand, knows the good times can’t last. “We need to recognize the fact that at a certain point we’re going to slow down, we cannot keep on growing 50-60% per month, it’s impossible,” he said in a video to company employees.

The club of emerging political and economic powers of Brazil, Russia, India, China, and South Africa in response to new global challenges is famously known as BRICS. Since its inception in 2006, it has been a platform to highlight the prominence of multi-polar world order challenging the collision of G-7 members.

These five countries account for 20% of world GDP and 40% of the world population. Further, they hold 40% of gold and hard currency reserves. Being collectively the largest market, their cumulative GDP has tripled in the last ten years.