Business News President’s Focus


As the Chamber gears up for its first online conference on international trade (see page opposite), Commonwealth Chamber president Keith Stokes-Smith takes a look at what the future holds for global trade in the wake of the Covid-19 crisis.


than the Great Depression.” But this could be followed by another ‘possibly much worse downturn’, according to the Economist Intelligence Unit (EIU). So, what is the future for global trade? First of


J


all, whatever the experts predict, given what we have gone through and will go through (and may go through again) vis-a-vis Covid-19, we cannot afford to sit back and allow the negative impacts to happen or to the extent predicted. The least we can do is do our best to mitigate


them, think outside the box, create demand for our goods and services. We must turn a crisis into an opportunity. There is nothing to be gained by raising the white flag or even thinking about it. The wider world is changing as a result of


Covid-19 – similarly, the wider world is becoming more aware of the rise of China and the debt and dependency by the developing world to it. Further, it is claimed that over the last two


months, China’s diplomats have done away with diplomacy, replacing courtesy with intimidation.


‘Global trade will certainly need a helping hand as a result of the current pandemic’


The virus has exposed the vulnerabilities of


many organisations to global shocks, especially those who have a high dependence on China, to fulfil their needs. According to Deloitte, ‘new supply chain


technologies are emerging that dramatically improve visibility across the end-to-end supply chain, and support companies’ ability to resist such shocks. The traditional supply chain model is


transforming into digital supply networks (DSNs), where functional silos are broken down and organisations become connected to their complete supply network to enable end-to-end visibility, collaboration, agility, and optimisation. Organisations that deploy DSNs will be ready


to deal with the unexpected. As globalisation and the world trade order come under unprecedented attack, some are indeed hoping to see businesses bring more operations back home, thus reducing dependence upon foreign workers and potential vulnerability to pressure from foreign governments. That may well be, but whether economies of


scale can be achieved such that the product/ service is price competitive may be an issue. Is there a lesson to be learnt from globalisation? Well yes. It is fragile, despite its benefits. Clearly there has been a lack of


12 CHAMBERLINK June/July 2020


dependable manufacturing alternatives, which in turn has caused supply chains to break down. We have become too interdependent upon


one and other, whether that is as countries or businesses. Some economic sectors might be able to


weather the crisis – others, who relied upon a single supplier in a single country, may have more challenges. Globalisation calls for an ever-increasing specialisation of labour across countries, a model that creates efficiencies but also vulnerabilities. Global trade will certainly need a helping hand


as a result of the current pandemic, and part of that will be the continuation of central banks and governments acting to stimulate the economy with expansive monetary and fiscal policy.


This will mean increasing the size of a


country's money supply in relation to demand, taking advantage of the increased capital to announce tax cuts, lower interest rates and higher government expenditures to spur economic growth. Working together, it is claimed, monetary and


fiscal policy can prevent another global depression. Let’s not forget as well where the UK should


be in a few months time – by then, its trading relationship with the EU will have changed. According to the Department for International


Trade website ‘It (the government) will scrap red tape and other unnecessary barriers to trade, reduce cost pressures and increase choice for consumers and back UK industries to compete on the global stage’. Fingers crossed.


ust one of the many headlines relating to Covid-19 has been: “The world economy already faces an economic downturn worse


Keith Stokes-Smith (right) with Chamber chief executive Paul Faulkner: Can global trade overcome the Covid-19 hurdle?


Greater Birmingham


Commonwealth Chamber of Commerce


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