2021 is a handful of oliebollen away in the rearview mirror and it’s time to prepare for new events. What will global trade unwrap? A number of nuggets below.

Think Green

No, not that green. Real green. As in: will the U.S. and European Union’s green initiatives put pressure on their trading partners to invest in more environmentally friendly manufacturing, transportation methods, or forms of energy? For example, will U.S.–Mexico relations be strained because of the demand for greener solutions in manufacturing plants?

Sanctions

It is expected that sanctions will remain a prime measure to put pressure on political regimes. When countries improve their standing, however, sanctions can get lifted: the Sudan sanctions are already lifted, and the question is if more will follow. Iran will demand a reprieve if the nuclear treaty is to be put back in place and Cuba may get another look with a Democratic administration. Anticipating the impact, or perhaps the opportunities, is important. 

Ecommerce

Lead by retail growth at a high rate of ~20-23% until 2020, ecommerce exploded last year (Forbes noted the May 2020 year-over-year growth was 77%) and will stay a part of every company’s selling strategy. Forced or accelerated by the pandemic, companies have adjusted their customer interactions, and ecommerce strategies will remain an integral part of all global businesses. No longer confined to specific market segments, this change drastically affects how global trade is conducted and where resources will be spent. Shipping directly to customers affects many aspects of the global supply chain and companies now must account for shipping and compliance aspects that are different from previous models.

Various governments (e.g., EU, Australia) already implemented or announced changes regarding treatment of low-value shipments (value-added taxes are no longer waived) and, with more revenue at stake, more governments will follow that trend. Additional scrutiny on the compliance front is another logical step. The ecommerce burst included markets outside of the traditional ecommerce heavy retail products. Industries with a heavier compliance burden (e.g., dual-use goods) have also shifted to online models and are dealing with non-traditional importers that will be less familiar with required compliance measures. New legislation/procedures will certainly make their entry in 2021 to ensure products do not end up in the wrong hands.

Brexit

No surprises here—the shadows Brexit threw ahead are now being caught up with. One thing perhaps underestimated in the mayhem of new regulations and immediate requirements is that the Free Trade Agreements (FTAs) that were mostly copied and pasted to avoid disruptions will get a closer look around Q3 2021. This may result in new Rules of Origin (i.e., requirements to meet preferential thresholds) or even different duty rates.

Manufacturing

Countries such as Vietnam and Cambodia made significant infrastructure investments and it looks like efforts are paying off. Manufacturing in South East Asia (and, for example, in the Philippines, Indonesia and Laos) is growing exponentially and with new locations come new compliance requirements. New Rules of Origin, documents, shipping lanes and trading partners make for exciting yet busy changes.

Besides South East Asia, Africa is also making strides. With large investments from China (among others in South Africa, Alegria and Zambia), infrastructure and capabilities improve, and the next global shift is in the works.

Tariff Measures

Regarding the additional duty rates the Trump administration put in place on imports (either on specific goods and/or from specific countries), it is to be expected those will be reduced if not nullified over the next months or years. That does not mean things will go back to how they were prior to 2016. The U.S. is expected to continue operating more forcefully when it comes to supporting U.S. businesses and industries against unfair third-country competition, and that includes protectionary measures. Perhaps there will be an uptake in the more traditional Anti-Dumping/Countervailing Duty cases through the WTO as a preferred path over unilateral actions.

US Changes

Undoubtedly the change in administration in the U.S. will have a significant impact on its position towards global trade. Balancing the need to keep a tight grip on foreign trade (especially with crucial partners such as China, the U.K. and the EU) with a more outward-facing policy will be an interesting affair for new Secretary of State Andrew Blinken. Expanding and re-establishing trade relationships will also be on the agenda. This will likely include a fresh effort to revisit the Trans-Pacific Partnership (U.S. – ASEAN), the review of a few other FTAs that were slowed down and, further down the line, even a Trans-Atlantic (U.S. – EU) pact, possibly spearheaded by a U.K. – U.S. agreement first.

All in all, 2021 will not allow companies to take a breather. If anything, the agility of supply chain strategies will be tested further this year.