Unlocking Global Trade Growth

Atlanta, April 23, 2015 (GLOBE NEWSWIRE) -- The following is an article written by Amgad Shehata of UPS.

Global trade volumes have slowed dramatically after a period of steady growth, with financial flows hovering at levels almost 70 percent below their peak, according to the International Monetary Fund.

The slowdown in growth has broad consequences for domestic economies. Less trade means weaker job growth. Declining trade also is quite damaging to global economies that have invested in infrastructure for manufacturing or services exports.

Some of the sluggish growth is attributable to normal cyclical factors such as fluctuations in currency and commodity prices. But other causes, such as a troubling stasis in global trade policy, are reason for concern. Trade policy sets the stage for many of the derivative benefits that economies receive.

Addressing these factors and returning global trade volumes to their pre-recession levels require strong political leadership capable of connecting bold new policies with modern technologies that facilitate communication and connectivity between countries. Together, these moves will ensure a future in which trade is easier, less expensive and more democratic. When trade operates in that kind of friendly environment, everyone has the potential to win by participating in global value chains.

Express delivery, internet and the rise of small business trade

As governments plan their next steps, our experience at UPS suggests a possible large new area of potential trade growth: a trade boom among smaller businesses and individuals who leverage the established global express delivery and technology networks to tap new customers.

The Internet now reaches 3 billion people, up from 1.5 billion a decade ago and 360 million in 2000. This, combined with the further expansion of global express delivery networks that were forged on the backs of multi-national value chains, has made exporting and importing possible for smaller businesses that previously could not engage directly in international trade.

Today, the Internet helps companies reach countless potential customers and suppliers. With express delivery enabling small package shipping, a world of new opportunity has opened. Statistics show this clearly. In 2003, the United States had 119,000 exporting companies with fewer than 100 employees. Today that number has jumped to more than 280,000.

Trade policymakers now have the chance to build momentum with policies that can revive trade growth. For that to happen, broad-based liberalization must resume. The ambitious set of regional and multilateral trade negotiations now underway can help. So can the international regulatory cooperation agreements being negotiated. Specific agreements include the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and the Trade in Services Agreement (TiSA), as well as Europe/Asia, Asia/Asia cooperation efforts.

Small businesses should be enthusiastic supporters of these agreements, which reflect many of the unique challenges companies face. They also help address new issues arising from Internet access and data flow. Such policy innovation - and the fact that almost all of the world's largest trading economies are participating - gives them great promise for growth.

As the negotiations continue, the Obama administration and Congress are set to consider Trade Promotion Authority (TPA). Many regard the bill, which would modernize the U.S. trade ambition in the 21st century, as essential to the United States' ability to conclude TPP, TTIP and TiSA. Clearly, the United States has at its doorstep a path that accelerates economic growth and trade in a significantly robust and inclusive way for businesses of all sizes.

To jumpstart trade growth, policymakers must support the boom in small-business and specialized, individualized trade. The WTO's Trade Facilitation Agreement, which was completed in 2014, would enable a world trading economy that is friendlier to smaller businesses and entrepreneurs than ever before.

The challenge now is to ensure full and effective implementation among the 160 countries that signed the agreement, especially the smaller and poorer economies that need the most help building capacity to implement technologies and processes for inclusion in high-velocity global supply and value chains. These developing economies, if they ambitiously embrace the opportunities to modernize their trade regimes, stand to gain the most.

Strong trade growth could resume

The long stalemate in the Doha Round suggests some of these negotiations may be difficult. And we know trade liberalization often faces increased skepticism and opposition during periods of economic hardship.

But last year's approval of the WTO's highly pragmatic and valuable Trade Facilitation Agreement suggests that determined and creative policymakers can win uphill battles. The record of the last generation is strong. Trade liberalization launched an era of falling poverty and rising growth in the developing world, raised living standards worldwide and ensured access to markets that enabled the United States to recover from the financial crisis through exports.

The current stasis in trade policy should not continue. We see new opportunities, a future of higher participation and broader benefits for businesses of all sizes as well as a re-invigoration of global production and services trade that can deliver significant benefits for those who get it right. All this takes is bold vision and courageous leadership because the more trade barriers that we remove, the more trade happens.

Amgad Shehata is a Senior Vice President with UPS, having responsibilities for International Public Affairs and Strategy.

Reprinted with permission of Longitudes, the UPS blog devoted to the trends shaping the global economy.

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CONTACT: Dean Foust UPS Executive Communications dfoust@ups.com 404-828-7123

Source: UPS