As we dive into 2020, there are several critical international trade trends that every company needs to keep an eye on. The current trends are focused primarily on the increase of foreign trade in the global economy and the way firms, markets, and countries are becoming more and more interdependent.
The highly intense competition between nations, industries, and individual firms on a world-wide scale in one recent development that’s impacted several major international trade trends.
In this article, we’ll take a look at the four trends to keep an eye on this year.
1. The Trend of Forced Dynamism
The flow of international trade must, by default, adhere to all trends that shape our global cultural, economic outcomes, and political environment. After all, international trade is a highly complex topic due to how its climate is changing on a continual basis.
To begin with, corporations, businesses, and enterprises are consistently pushing economic growth frontiers. They’re also pushing boundaries that relate to culture, technology, and politics. These all have a way of changing the surrounding global economic context and society as a whole.
Secondly, several factors that are entirely external to the international trade game are forcing companies that trade to change the way they do business. Some of these factors include new science breakthroughs and information technology developments.
2. Cooperation From Nation to Nation
Nations work to cooperate with other countries in hundreds, if not thousands of ways. They do this through treaties, summits, and international organizations. This type of cooperation is generally meant to encourage business globalization by eliminating the restrictions that make it challenging to conduct business internationally.
This is done by outlining specific frameworks that cut down on uncertainties concerning what businesses can and cannot do in international trade.
In 2020, the trend is for more nations to cooperate with each other in order to:
- Attack and solve problems they can’t solve on their own
- Gain certain reciprocal advantages
- Deal with external concerns that lie outside of their specific territory
Creating agreements on a wide variety of commercially-related activities, such as trade and transportation, allow individual countries to gain a mutual advantage over others.
As an example, groups of nations have come together to agree on allowing foreign airline flights to fly over or land in their borders. One example is the agreement between Russia and Canada that helps polar trips to cross nation lines, thus saving a full five hours when flying from Hong Kong to New York City.
Other groups of nations have agreed to protect all property of companies that are foreign-owned fully. They’re also permitting goods and services that are foreign-made to enter into their boarders with fewer restrictions.
Beyond that, more nations have decided to work together on the problems they haven’t been able to solve on their own. One way of doing this has been by coordinating each nation’s independent economic programs (including their interest rates) to avoid disrupting global economic conditions.
Some nations have begun to restrict the import of a number of products that could harm endangered species. Others have restricted the international trade of firearms due to the continued threat of terrorist activity. If you’re an arms dealer in the US, it’s best to update your ITAR registration if you intend to trade internationally.
Finally, nations set agreements about how they’ll be able to exploit certain areas that are outside of their borders commercially.
Some examples of this include the use of outer space for the transmission of mobile internet, cellular signals, television and radio, non-coastal parts of seas and oceans to exploit mineral deposits, and Antarctica to set limits on fishing within the waters of its coast.
3. Liberalizing Movement Across Borders
Every country in the world has specific restrictions on how goods and services cross borders. This includes the resources used to produce them, such as workers and capital. In the past, these restrictions have made trading internationally quite cumbersome.
Beyond that, because of how often these restrictions change and get updated, a company’s ability to sustain its international trade practices is in a constant flux of uncertainty.
Today, however, governments are imposing few restrictions on movements across borders than they did even a decade ago. They’ve reduced limits because they believe:
- Open economies give consumers greater access to more goods and services, at more affordable prices
- Businesses will develop more efficient practices when forced to compete for internationally
- When they reduce restrictions, other countries will follow
4. Technology Transfer
The transfer of technology is a process where financial technology gets disseminated. This takes the form of a “technology transfer transaction,” which in some cases is a legally binding contract. In all cases, it involves communication by the transferor of knowledge to a recipient.
It can also include non-commercial tech transfers, like those that are found in international agreements of cooperation between developing states and developed nations.
These agreements can relate to agricultural, development, infrastructure, or international trade. They also play a role in fields such as education, research, transportation, and employment.
Trends to Watch in 2020
These are just four of the trends to watch for as we enter 2020. More are sure to evolve as the year continues.