Global Trade Policy: Challenges and Opportunities (2023)

Contents

Contents

The international trade environment has changed drastically in recent years. Traditional trade links are fraying in light of the strategic competition between the US and China, the UK’s departure from the EU and ongoing supply chain disruptions.

At the same time, new regional and sectoral trade agreements create opportunities to harness the twin transitions to green and digital economies. In a contested world, trade policy can play an important role for international cooperation and supporting domestic policies around equity and inclusion.

Chatham House – in partnership with other leading organisations – offers expert analysis to help navigate this complex trade landscape. We seek to develop policy recommendations for the future direction of global trade in a context of changing geopolitical dynamics and rapid technological transformations.

Our work on global trade comprises the following main activities:

Chatham House Global Trade Policy Forum

Chatham House launched the Global Trade Policy Forum in 2020 to serve as the focal point for the institute’s research and events concerning global trade. At the core of this multi-year initiative are a high-level speaker series, expert roundtable discussions and written outputs which address the range of regional and systemic trade matters.

The research activities of the Chatham House Global Trade Policy Forum are focused on three pillars:

1. Trade fragmentation: Myths and realities

  • Trade and investment ties with China in an era of strategic competition;
  • Supply chain resilience post-COVID-19 and improved preparedness for future shocks;
  • Russia’s invasion of Ukraine and implications for the future of globalisation.

2. Trade and the twin transitions to green and digital economies

  • Alignment between trade policy and tackling climate change including border carbon adjustment mechanisms;
  • Trade policy amidst the shift towards digital, service-led economies and divergent approaches to data governance and key emerging technologies.

3. The future of global trade governance

  • Prospects for reforming the World Trade Organization (WTO) and priorities for the multilateral trading system;
  • Changing landscape of bilateral and regional and sectoral trade arrangements and forums of cooperation.

The Global Trade Policy Forum is supported by AIG (founding partner), Boston Consulting Group (associate partner), Clifford Chance LLP, Diageo plc and UPS (supporting partners).

(Video) World Economic Order: New Challenges and Opportunities

The UK Trade Policy Observatory (UKTPO)

Created in June 2016, the UKTPO is a partnership between Chatham House and the University of Sussex.

Following the departure from the EU, the UK is reconfiguring its trade policy and is navigating a new international trade landscape as an independent player.

The UK Trade Policy Observatory offers a wide range of expertise to help support government departments, national and international organisations and other stakeholders in developing trade policies.

It provides insights through briefing papers, videos, podcasts and events on many aspects of the UK’s emerging trade policy and the global context.

For the most recent content visit the University of Sussex UKTPO website.

Project content

Other resource Digital trade and digital technical standards Amid global competition to define the rules and standards around digital innovation, policymakers in the US, EU and UK will need to cooperate in promoting governance models rooted in support for democratic values and a free and open internet.
Expert comment Re-imagining trade for domestic and foreign policy Exploring future trade policy through issues such as the green transition, labour standards, human rights, the role of the WTO, and non-trade policy objectives.
Expert comment Why the G7 trade track must last beyond UK presidency With Germany and Japan next in line for leading the G7, these two champions of global trade should continue to carry the baton of a separate trade track.
Explainer Why joining the CPTPP is a smart move for the UK Joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will set or renew the UK’s trade terms with 11 trading partners in just one negotiation, but its significance goes beyond strict trade interests.
Expert comment Three pillars for a US trade strategy in Asia-Pacific A new approach for the US to strengthen economic and strategic ties in the region, advance strong rules for new trade issues, and tackle China’s trade policies.
Expert comment Inevitable Clash When Climate Meets Trade at the Border As the evolution of climate policy sees carbon-neutral targets and climate taxes going more mainstream, the trade regime is being put under increasing pressure.
(Video) Challenges and Opportunities for International Trade Law Practice
Explainer Video Explainer: How Can the World Trade Organization be Improved? Marianne Schneider-Petsinger explains the three key functions of the WTO and the current challenges facing each of these functions.
Expert comment Economic Diplomacy in the Era of Great Powers The 21st-century global economy has different drivers from those in the previous century. Amid ever more politicized trade relations, economic diplomacy needs a more transparent framework.
Research paper Reforming the World Trade Organization A modernized and fully functioning WTO ismoreessential than ever.This paper makes the case for transatlantic cooperation as a necessary condition for reform.
Expert comment Clearer Role for Business Regulators Needed in Monitoring Trade Agreements As the economic recovery from coronavirus is worked through, careful steps are needed to ensure actions to enforce human rights commitments in trade agreements do not worsen human rights impacts.
Expert comment National Self-Sufficiency or Globalization is Not a Binary Choice COVID-19 exposes the fragility of global supply chains, leaving companies and policymakers to reconsider a decades-long focus on efficiency and reducing costs by operating on a ‘just in time’ basis.
Expert comment Privileging Local Food is Flawed Solution to Reduce Emissions The COVID-19 pandemic has brought food security and food imports to the forefront again. Some fear that the crisis could quickly strain global food supply chains as countries adopt new trade restrictions to avoid domestic food shortages.
Expert comment The EU Cannot Build a Foreign Policy on Regulatory Power Alone Brussels will find its much-vaunted heft in setting standards cannot help it advance its geopolitical interests.
Expert comment Trade Tensions Set to Continue in 2020 As the US faces off over trade with both China and the EU, expect another year of uncertainty.

Upcoming events

Members event The Future of Global Trade: Beyond ‘Peak Globalisation’? Is globalisation in retreat or changing?

Past events

Partner and major corporate event Trade and the transitions to digital economies At this corporate nominees breakfast, experts discuss trade and the transition to digital economies.
Members event Russia’s war in Ukraine: The impact on UK and global trade Cancelled How has Russia’s invasion of Ukraine impacted trade, how is it affecting the UK economy, and what does it mean for the future of globalisation?
Research event Supply chain resilience: The dangers of pick 'n' mix Discussingregulatory responses to address supply chain vulnerability.
Research event Geopolitics and trade: A changing landscape This event will tackle the geopolitical challenges international trade is currently facing.
Research event Transatlantic cooperation on global challenges: What role for the US-EU Trade and Technology Council? This event will explore the progress and deliverables made by the Trade and Technology Council (TTC) since it’s launch.
Conference Global trade 2021 Join global trade policy experts and practitioners to discuss how to build a more resilient global trade system that can withstand the shocks of tomorrow.
Research event Worker-centred and values-based US trade policy: How can it be achieved? This event will asses how theBiden administration’s efforts in pursuing a ‘worker centered’ trade policy will be achieved.
Research event What’s next for the WTO: Priorities and deliverables Ahead of the WTO’s 12th Ministerial Conference (MC12) at the end of the year, this discussion offers an opportunity to analyse the priorities and deliverables for the organisation during this critical time for global trade and the years ahead.
Research event Supply chain resilience and national security: Protectionism under a different name? Examining the primary arguments behind protectionism as well as their intended and unintended consequences. Panellists discuss recent trends in protectionism, focusing on traditional and new tools.
Research event Invitation only China, the US, and the future of the WTO The rules-based multilateral trade regime faces many challenges. Meaningful WTO reform can only be achieved with the US and China on board.
Research event Recording International trade in 2021: Can multilateralism be revived? 2021 could be an inflection point for global trade governance as trade – in particular the distribution of vaccines – plays a critical role in the fight against COVID-19 and the global economic recovery.
Research event EU-Mercosur trade deal: challenges of ratification? What is the current status of the EU-Mercosur agreement and is ratification a likely possibility in 2021?
Research event Recording The US-EU-UK triangle: bilateral and multilateral trade issues What is the outlook for the bilateral trade relationships between the US, EU and UK?
Research event A new US administration, new trade policy priorities? Panellists discuss US trade policy under the Biden administration.
Research event Lessons from the pandemic for cross-border supply chains Panellists discuss the resilience of global supply chains.
(Video) Biodiversity and International Trade Policy: Issues, Opportunities and Challenges | GCRF TRADE Hub
Research event Invitation only The future of global trade What issues top the global trade agenda?
Research event Recording US Trade Policy in the Asia-Pacific: What Strategy for the Next Administration? Panellists discuss the issues and tools for economic engagement with the Asia-Pacific region thatPresident-elect Biden should prioritize.
Research event Invitation only The US, Europe and a New Balance Between Globalization and Sovereignty over Key Industries The COVID-19 pandemic and ongoing trade tensions between the US and China have not only exposed the fragility of global supply chains, but are also fuelling debates about the merits and risks of globalization versus autarky.
Research event Recording Global Food System and Trade After COVID-19 The global food system is heavily dependent on trade, with imported food representing around 20 per cent of food consumption worldwide.
Research event Invitation only US Trade Policy and the 2020 Election As the US presidential election looms in November 2020, trade policy will be a key foreign policy issue.
Research event Recording The US Economy and COVID-19: Prospects for Recovery
Research event Recording Reforming the World Trade Organization
Research event Latin America - The Outlook for Regional Integration and Global Trade Beyond COVID-19?
Research event Webinar: Rethinking Supply Chains in Asia, Europe and the US: From Global to Regional or National?
Corporate members event Virtual Roundtable: Director's Briefing – The Future of Global Trade
Research event Virtual Roundtable: What’s Next for Trade and Protectionism? From Pre-Existing Trends to COVID-19 and Beyond
Research event Virtual Roundtable: What Will COVID-19 Mean for the Participation of Developing Countries in the Global Trading System in the Short and Long Run?
Members event The US Role in Shaping World Trade
(Video) Will the Revamped US Trade Policy Be Ready for Global Challenges?
Research event Virtual Roundtable: The Impact of COVID-19 on Global Trade So Far
(Video) What are the three big global challenges impacting international trade right now?

FAQs

What are the challenges of global trade? ›

To be specific, there are seven major challenges to global trade and investment the world is facing now.
  • Economic Warfare. ...
  • Geo-politicization. ...
  • State Capitalism. ...
  • Lack of Leadership. ...
  • Power Distribution. ...
  • Weaker Underdogs. ...
  • Price Fluctuations of Natural Resources.

What are the advantages and disadvantages of trade policy? ›

Advantages to trade protectionism include the possibility of a better balance of trade and the protection of emerging domestic industries. Disadvantages include a lack of economic efficiency and lack of choice for consumers.

What are the negative impacts of global trade? ›

Free trade is meant to eliminate unfair barriers to global commerce and raise the economy in developed and developing nations alike. But free trade can – and has – produced many negative effects, in particular deplorable working conditions, job loss, economic damage to some countries, and environmental damage globally.

What are the 5 global challenges? ›

What do we need to prioritize this decade?
  • Climate Change. Climate change is one of the biggest risks and a threat multiplier, facing humanity in the coming decades. ...
  • Crisis and Disasters. ...
  • Health. ...
  • Migration and identity. ...
  • Values, power, and inclusion.

What are the disadvantages of trade policy? ›

On the other hand it has disadvantages also- Exploitation of Labour, abuse of powers by executive, unequal distribution of wealth and income, lack of job security etc (www1).

What are the pros and cons of global free trade? ›

Pros and Cons of Free Trade
  • Pro: Economic Efficiency. The big argument in favor of free trade is its ability to improve economic efficiency. ...
  • Con: Job Losses. ...
  • Pro: Less Corruption. ...
  • Con: Free Trade Isn't Fair. ...
  • Pro: Reduced Likelihood of War. ...
  • Con: Labor and Environmental Abuses.
27 Aug 2019

How does trade policy affect the economy? ›

Trade liberalization benefits better performing firms and contributes to economic growth. There is evidence that better performing firms tend to enter international markets. Internationally active firms are larger, more productive, and pay higher wages than other firms in the same industry.

What are five factors affecting global trade? ›

A country's balance of trade is defined by its net exports (exports minus imports) and is thus influenced by all the factors that affect international trade. These include factor endowments and productivity, trade policy, exchange rates, foreign currency reserves, inflation, and demand.

What are the positive and negative effects of trade on the environment? ›

Trade can have both positive and negative effects on the environment. Economic growth resulting from trade expansion can have an obvious direct impact on the environment by increasing pollution or degrading natural resources.

What are the positive effects of trade? ›

Trade is critical to America's prosperity - fueling economic growth, supporting good jobs at home, raising living standards and helping Americans provide for their families with affordable goods and services.

What is the importance of trade in global economy? ›

Globalisation of trade offers immediate benefits: faster growth, higher living standards and new economic opportunities. On the downside, not all countries have benefited equally from the globalisation phenomena.

What are the benefits of foreign trade policy? ›

Availability of different types of goods and services – One of the major benefits of international trade is that it enables a country to obtain goods and services that it is unable to make on their own due to lack of resources or higher costs of production.

What are the three major benefits of trade explain briefly? ›

Trade lowers domestic prices; improves resource allocation through specialization; lowers profit margins of domestic producers and increases operating efficiency of domestic firms through increased competition.

What are the most important global challenges? ›

Climate change is one of the major challenges of our time. From shifting weather patterns that threaten food production, to rising sea levels that increase the risk of catastrophic flooding, the impacts of climate change are global in scope and unprecedented in scale.

What are the Top 10 Challenges? ›

Top 10 Personal Challenges
  • Run a marathon. ...
  • Take on a charity challenge. ...
  • Exercise your brain. ...
  • Surprise yourself. ...
  • Volunteer yourself. ...
  • Get a new job/seek promotion. ...
  • Overcome a fear. ...
  • Climb a famous peak.

What are the 3 global challenges? ›

Top 20 Current Global Issues We Must Address
  • #1. Poverty. In fall 2022, the World Bank will update the International Poverty Line from $1.90 to $2.15. ...
  • #2. Climate change. ...
  • #3. Food insecurity. ...
  • #4. Refugee rights. ...
  • #5. COVID-19. ...
  • #6. Future pandemic preparation and response. ...
  • #7. Healthcare. ...
  • #8. Mental health.

What are some of the challenges faced by the global economy today? ›

Over the last two years, the pandemic has played a major role in shaping the global economy.
...
A summary is given below.
  • Economic slowdown. ...
  • Increasing debt burden. ...
  • Inflation. ...
  • Geopolitical tensions.
14 Mar 2022

What are the causes of global challenges? ›

They are also caused by processes such as uncontrolled production, consumption, pollution, population growth, and pressure on the ecosystems.

What are the problems with the strategic trade policy? ›

A main problem is that strategic trade policy incentives depend very much on the nature of the underlying oligopolistic interaction. In particular, the strategic argument for export subsidies requires that outputs be strategic substitutes, which typically holds for a Cournot duopoly.

What are five advantages and five disadvantages of international trade? ›

Advantages and Disadvantages of International Trade
  • Advantages of specialization and division of labour.
  • Availability and cheapness of commodities.
  • Large scale production.
  • Creation of industrial society.
  • Stabilization of internal price.
  • Availability of commodities whose costs of production are high.
  • Improvement in transport.

What is trade policy and why is it important? ›

Trade policies can be aimed at a number of issues related to importing and exporting, such as foreign retaliation, jobs, or tariffs; or they may focus on protecting intellectual property, setting standards that promote collaboration and reduce trade barriers, or establishing trade agreements and trade laws.

What is the disadvantages of global free trade? ›

The disadvantages are twofold. If FTAs are not set up within the right framework of policies, they can diminish rather than enhance economic welfare. The second disadvantage is that they are not good vehicles for liberalising trade in sectors on which parties outside the agreement have a major influence.

What are the positive and negative effects of globalization? ›

Globalization has allowed society to enjoy many benefits, including increased global cooperation, reduced risk of global conflict, and lower prices for goods and commodities. Unfortunately, it's also led to serious negative effects on the environment.

What is the advantages and disadvantages of globalization? ›

Comparison Table for Advantages and Disadvantages of Globalization
AdvantagesDisadvantages
Globalization has helped provide better services to people worldwide and increased the GDP rate.Globalization can increase the unemployment rate since it demands higher-skilled work at a lower price.
4 more rows
17 Jan 2022

What do trade policies affect? ›

Countries that are open to international trade tend to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people. Open trade also benefits lower-income households by offering consumers more affordable goods and services.

How does trade policies affect the global market? ›

Changes in trade policies, for example, can alter the costs of raw materials and the import and export tariffs to which they're subject. This will change their price and profitability on business markets, and could lead to attempts to find alternative sources or materials.

How do international trade policies affect the global economy? ›

International trade not only results in increased efficiency but also allows countries to participate in a global economy, encouraging the opportunity for foreign direct investment (FDI). In theory, economies can thus grow more efficiently and become competitive economic participants more easily.

What are the 5 most common barriers to international trade? ›

The main types of trade barriers used by countries seeking a protectionist policy or as a form of retaliatory trade barriers are subsidies, standardization, tariffs, quotas, and licenses.

What do you mean by trade policy? ›

Trade policy can be defined as goals, rules, standards, and regulations that are involved in the trade between countries. These policies are particular to a specific country and are formed by its public officials.

What are the factors affecting global trading environment? ›

The macro-environment includes economic factors such as national income levels, inflation rates, currency values, interest rates, etc., which impact an individual's ability to do business internationally.

Does global trade improve quality of life? ›

The traditional macromarketing model holds that international trade leads to increased eco- nomic development, which in turn results in an improved quality of life (Mullen 1993; Mullen, Doney, and Becker 1996).

What is the positive impact of barriers to trade? ›

Although these barriers often discourage trade between nations, they come in handy when a government wants to improve the consumption of local goods, create local employment, foster national security and increase national revenue.

What is trade policies in developing countries? ›

Instruments of trade policy employed. by developing countries include import. tariffs and surcharges, export taxes and. subsidies, multiple exchange rates, as well. as quotas and licenses.

What is the concept of global trade? ›

Global trade refers to the purchase or sale of goods or services outside geographical boundaries. It is a means of global economic interaction between the buyers and sellers of different countries. Global trade enables local traders, artisans, and producers to sell their products in the international market.

Why trade is important for the development of the country? ›

Trade has been a part of economic development for centuries. It has the potential to be a significant force for reducing global poverty by spurring economic growth, creating jobs, reducing prices, increasing the variety of goods for consumers, and helping countries acquire new technologies.

What is the impact of globalization on trade and employment? ›

One of the notable effects of globalization is heightened trade liberalization and opening up of global labor markets. Reports indicate that liberalization of trade often has considerable effects on various groups with regard to wages, availability of job opportunities, and the overall cost of living.

What are the advantages and disadvantages of free trade policy? ›

FTAs can force local industries to become more competitive and rely less on government subsidies. They can open new markets, increase gross domestic product (GDP), and invite new investments. FTAs can open up a country to degradation of natural resources, loss of traditional livelihoods, and local employment issues.

What are the main features of foreign trade policy? ›

Features of foreign trade policy 2015-2020 :

MEIS (Merchandise Export from India Scheme) and SEIS (Service Exports from India Scheme) have been launched. Goods: Previously, there were five separate schemes (Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri.

What are the 3 trade policies? ›

Trade agreements assume three different types: unilateral, bilateral, and multilateral.

How does trade strengthen the economy of a country? ›

Trade strengthen the economy of a country by increasing competition and bringing price reduction in the market. Explanation: ... Trade increases competition and lowers prices, which gives benefits to consumers by raising the purchasing power. Trade also increase employment.

How can international trade be improved? ›

Key Strategies for International Trade Game Plan
  1. Strong Offerings. Any successful plan for international trade has to start with a high-quality, unique product. ...
  2. Market Opportunity. ...
  3. Supply Chain Logistics. ...
  4. International Law Compliance. ...
  5. Strategic Partnerships. ...
  6. Local Resources.
11 Sept 2020

What are the challenges of global globalization? ›

But globalization also poses some daunting challenges like environmental degradation, legal compliance issues, and worker exploitation. The important thing to remember, though, is that the challenges of globalization can be overcome.

What are the key challenges in the global economy? ›

In addition, many countries are faced with an increasing debt burden, high inflation and, burning issue of the moment, geopolitical tensions, which all play a major role.

What are advantages and disadvantages of international trade? ›

It enables a country to obtain goods which it cannot produce or which it is not producing due to higher costs, by importing from other countries at lower costs. (iii) Specialisation: Foreign trade leads to specialisation and encourages production of different goods in different countries.

What are four challenges caused by globalization? ›

The Challenges of Globalization
  • Exploitation. American companies have been known to use cheap foreign sweatshop labor to make cheap American goods. ...
  • High Investment Costs. ...
  • Confusing Local Systems. ...
  • Weak Regulation. ...
  • Immigration Challenges. ...
  • Localized Job Loss.
6 Feb 2020

Is globalization an opportunity or threat? ›

Whether globalization is an opportunity to developing countries economies or a threat depends on many factors which include the political stability in a country, the available resources, and level of industrialization among others.

What is the meaning of global challenges? ›

On the other hand, according to Kirsten Gelsdorf4 global challenges are defined as any major trend, shock, or development that has the poten- tial for serious global impacts. We should review these challenges in a interconnected way. Global challenges cannot be project by making distinction between them.

What are the opportunities in economic? ›

Economic opportunity means any purchase, sale, lease, contract, option, or other transaction or arrangement involving property or services wherein a consultant may gain an economic benefit.

Videos

1. Asia Trade Summit 2019 Highlight Video: Global trade challenges and opportunities
(Economist Impact Events)
2. GLOBE Webinar: Transatlantic cooperation on WTO reform: challenges and opportunities for MC12
(GLOBE H2020 EU Project)
3. Officially-supported trade finance: Challenges and opportunities in times of crisis
(Blavatnik School of Government)
4. The Future of Global Trade
(Paulson Institute)
5. Trade policy in the fight against plastic pollution: What challenges and opportunities? (S29)
(Geneva Trade Platform)
6. The future of global trade: US trade policy in the Joe Biden era and beyond | LIVE STREAM
(American Enterprise Institute)
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