While the Covid 19 wreaks havoc around the world and brings the economy to a screeching halt, experts say that only the pandemic is not to blame and rethinking the global trade system is imperative.
They said that the global trade disparity combined with the US-China trade war and traditional trade systems has made the world economy susceptible to these crises.
In a session titled The Great Trade Reset in World Economic Forums Trade Multistakeholder Conversation, the speakers pointed out that rethinking the global trade system, reforming the trade laws and adopting technology-based solutions can make the system more robust and adaptive.
In his opening speech, President of World Economic Forum Borge Brende pointed out that in the current year the contraction of the global economy can be up to 6%, the largest contraction since 2008’s financial crisis. He also predicted that real growth won’t be observed until 2022.
John W.H. Denton, Secretary-General of International Chamber of Commerce (ICC) said, governments need to "reassert that a multilateral trade system that functions is actually in everybody's interest."
Searching for a robust policy is important because no matter what happens free trade will not go away and we need to make it efficient.
Mattias Hedwall, Global Head of International Commerce and Trade of Baker & McKenzie International said, "Free trade is important and it will not go away -- it's for us just to make sure we are on top of it."
Mattias thinks in post pandemic time, companies should take opportunities on the offering and adopt new business models. He also made two recommendations-
1. Review and analyze the business relationships. Understand how to adopt and what shifts are possible. Go to the local market and understand local law and map up the high-risk areas of the business.
2. Handle the situation in a long term manner. Do holistic analysis from practical and regulatory angles. Know what others are doing, especially what your customers and suppliers are doing. Be prepared to make necessary changes to handle future disruptions.
Meanwhile, e-commerce has been the most successful in the times of physical trade restrictions. Along the way it not only made good for itself but also played a critical role in keeping the balance of trade.
Murat Emirdag, Chief Executive Officer of Hepsiburada, an e-commerce company that operates from Turkey, pointed out five ways that e-commerce has helped in the time of pandemics-
1. Access to products.
2. International sourcing and logistics.
3. Innovative ways of payment solution and contactless delivery.
4. SME’s were able to continue to grow by accessing new markets during the tough times.
5. New ways of collaborations across the organizations.
To facilitate these modern concepts and innovations, trade regulations should be optimized to adopt in the fast-moving tech world. Because free trade agreement is not reformed fast enough as the modern trade environment.
Shi Jingxia, Professor, University of International Business and Economics emphasized on international cooperation. She said, “All major players should work together to make the WTO great again.”
In a world where half the population is born after the internet, it’s impossible to reshape the economy without considering new business models and trade laws and systems must be reformed to facilitate these innovations.