Over recent decades trade has grown remarkably and transformed the global economy. International trade has brought the global trading community closer together with complex value chains resulting in greater integration between countries, regions and continents.
These interactions through trade bring enormous economic and social benefits. But none of this can be taken for granted.
Professor Sangeeta Khorana MIEx, chair of the Institute of Export & International Trade (IOE&IT) academic board, sees reasons to be concerned about recessionary trends, growing protectionism, the decoupling of economies and fragmentation of supply chains,
all of which could be disruptive and costly.
“There are geopolitical factors, including the war in Ukraine, that have increased protectionism across the world. There has been a slowdown in global trade and trade will most likely be impacted adversely by shocks, including the war in Ukraine, higher energy prices and monetary tightening. Given the world is so intricately interlinked through global value chains it matters how countries work together.
"Growing protectionism is a major concern for next year. There is a trend towards decoupling and fragmentation of supply chains and this could prove very costly for the world. It took us a long time to get to where we are in terms of the current levels
In such febrile times, with economic headwinds facing all businesses in the year ahead, Khorana says it is even more important for people working in trade to have the backing of a professional qualification.
“Trade is international and highly complex, and you are at a huge disadvantage if you don’t understand what international trade is about, how to trade and for businesses to really know the mechanics of trade. This is what IOE&IT aims to inform students and learners about. All countries are integrated with one or another in some form through the global value chain.
"Roughly two thirds of all trade is in these value chains. Whether we like it or not, countries are integrated and it is important to understand how to navigate the landscape of tariffs and non-tariff measures. We help students develop an understanding
of the ins and outs of trade. They have to have a full understanding of these details, which is something the qualifications we offer bring.
Insights into the realities of trade
“We often talk about things like subsidies, about countries giving subsidies to make businesses competitive and about anti-dumping measures. But it is not until you really understand what these concepts are, and you develop the kind of thorough understanding
of them you get from studying a degree in international trade, that you can appreciate the implications of them and how they affect your business and decisions.
“The Institute helps to provide a very good understanding of the mechanics of trade. We explain to businesses how to do business. We are making our students aware of tariffs and non-tariff measures, such as SPS and TBT. Complicated regulatory environments that discourage new investments and the non-tariff measures have increasingly become important in the current climate when geopolitical factors are leading to higher protectionism across the world.
The Institute offers it students and members the kind of in-depth insights into the practical realities of trade that Khorana sums up neatly as “the things you need to know”.
Right now, UK traders are clearly facing a multitude of challenges from the remains of the pandemic, the effects of Brexit and the impact of war in Ukraine. But here again, Khorana is relatively optimistic that, in spite of these difficult headwinds,
there are pockets of resilience and areas of opportunity.
"Looking into next year, it is going to be tough for lots of businesses. But there will be opportunities and things to look forward to. First, the UNCTAD report on trade reports that trade volumes (if not value) have continued to grow during 2022 and there are signs of resilient demand especially in East Asia. That’s a bright spot and a plus point. Second, we've seen that ports and shipping companies have adjusted to the challenge of Covid, so they have now been able to sort out the supply chain disruptions that had an impact last year and the early part of this year.
Business and trade agreements
Khorana is also hopeful that more businesses over the world are starting to see the benefits of free-trade agreements (FTAs).
“Trade policy translates into benefits for businesses over time. With regards to how businesses can benefit from FTAs, trade agreements are a mechanism that enable traders to benefit from lower or zero tariffs. The problem lies with non-tariff measures.
Trade agreements essentially provide a much more stable and informed trading environment for businesses.”
This is why Khorana says she will keep banging the drum to get better awareness of the benefits of FTAs among the business community.
“We need to inform businesses more about trade agreements. Often when you speak with small businesses, they are unaware of how to go about navigating the minefield of non-tariff measures. The only way out of this is to provide more information, but at the same time to provide signposting as to where that information can be found.
“It's a series of steps. We have to build the capacity of businesses to find where the information is and then train businesses enough so they are able to make use of trade agreements. We need to inform, but also build capacity so they are able to benefit. A lot of support is required by businesses to be able to explore new markets. Governments are doing a lot through help desks, trade missions and providing information and support.
The role of women in trade
Khorana also carries a torch for an issue of major social change, namely the promotion of female entrepreneurs and celebration of women working in international trade.
“Recently we've seen more discussion about gender in international trade. It’s a discussion that had going on for a while, but it was forced into the limelight by Covid. The pandemic had a negative impact on gender participation in the workforce.
"Because most women, especially in developing economies, work in the informal sector. If you look at the data, while women and men are roughly 50% each, when it comes to contribution in terms of GDP, women only contribute 37%. Women, despite being important
players in businesses, are employed in informal sectors or in the service sector.”
IOE&IT works closely with the SheTrades Initiative and in September 2022 supported four female entrepreneurs to attend the WTO Public Forum. As part of the SheTrades initiative with the ITC, several female entrepreneurs came to the Forum to tell their stories, promote their companies and inspire and learn from each other. At least one of these,a business owner from Bangladesh, has recently been in touch to express how much impact the event has had on her and her business.
“This is an aspect which has been brought to the forefront, and as an Institute, we have been discussing how we can bring women's participation in international trade into the mainstream. The WTO Public Forum and the 1st WTO International Gender Congress were precisely about how we go about addressing the multitude of barriers that women face in participating in international trade.
"From a lack of qualifications, to the lack of the family support or lack of access to finance, we're discussing what can be done to get more concrete and solid information about women's participation in international trade. Most importantly, we want
to focus on what can be done to get more women entrepreneurs in international trade.”