WHAT IS THE FUTURE OF TRADE REPORT? The report is a synthesis of quantitative research and global viewpoints on what the future holds based on research, data, and interviews with business leaders and trade experts

2. Exploring geopolitics, technology, global economic trends, with a focus on trade
growth, supply chains, trade finance, infrastructure and sustainability.
WHAT IS THE FUTURE OF TRADE REPORT?
The report is a synthesis of quantitative research and global viewpoints on what the future holds based on
research, data, and interviews with business leaders and trade experts
12MONTHS IN THE
MAKING
100+TRADE EXPERTS AND
BUSINESS LEADERS
8KEY TRADE HUBS
DUBAI, LONDON, HOUSTON,
JOHANNESBURG, SHENZHEN,
SILICON VALLEY, SINGAPORE,
AND ZURICH.

3. Valued at US $25 trillion, trade
drives the global economy. Moving goods
and services, increasing prosperity and
creating opportunity.
But a new global trade order has emerged.

4. THE FUTURE OF TRADE GROWTH

5. The covid-19 pandemic, global trade tensions, and longer-
term structural factors lay the context for a weak trade outlook
in the short-term and modest trade outlook in the long-term.
These major challenges will require governments and
businesses to revise and reform their approach to trade.
If supported by the right set of policies and investment, global
trade still has significant potential.
TRADE IS IN A STATE OF
SHOCK DUE TO THE
COVID-19 PANDEMIC

6. US$18tn
POTENTIAL TRADE
BOOST BY 2030
-5.2%GLOBAL GDP
FOR 2020

7. GEOPOLITICS PROTECTIONISM COVID-19
The current global environment is not conducive to cooperation and
collaboration. Yet, innovative measures taken by economies based on
regional groupings or thematic issues may find a way ahead even if there
is a lack of global leadership for the time being.

8. Technology has the potential to continue to reduce trade costs and put new
technology products on the market. But the relationships between
technology and trade is becoming more complex, and new technologies
and digitalisation may undermine trade growth.
Services trade has remained resilient through recent crises and is set to
increase its share of global trade, enabled by technology. However,
services trade policy is highly restrictive and needs to be addressed for
cross-border services trade to grow.

9. US$2.5 trillion
TRADE FINANCING GAP BY 2025
The development of trade-related infrastructure has a proven impact on trade
growth. However, a lack of financing and the potential for infrastructure
development to be complicated by geopolitics are risks.

10. The DMCC Commodity Trade Index (CTI) incorporates ten indicators to produce
an index score for 10 markets: the US, Netherlands, Singapore, the UK, the UAE,
Switzerland, Hong Kong, China, South Africa and Nigeria. This is the second iteration of
the CTI, after it was first introduced in the 2018 Future of Trade report.
The data behind the indicators are taken from renowned sources such as The World Bank, ensuring the
robustness of the findings.
Analysis is based on ten indicators, across three key areas:
1. Headquarter locations of major commodities trading houses
2. Proximity to markets (based on commodity export data)
3. Commodity trade partner tariffs on primary goods
4. Tons of oil exported annually
5. Hub’s share of global commodity trade for coffee, grains, sugar, gold, diamonds,
soya bean, tea, cotton, silver, animals and animal products and plastic
6. Natural resource rents as a share of GDP
7. Financial services infrastructure
8. Attractiveness of the tax regime
9. Strength of contract enforcement
10. Ease of trading across boarders
DMCC’s COMMODITY TRADE INDEX

11. United States takes over from UAE in 2020 Index.
But the UAE is only 1% behind the US
COMMODITY TRADE INDEX RESULTS
Country Locational and
trading partner
Commodity
endowment factors
Institutional
factors
Average Rank Rank change
from 2018
United States 38% 60% 86% 61% 1 -1
United Arab Emirates 35% 74% 70% 60% 2 1
United Kingdom 38% 23% 75% 46% 3 0
Switzerland 57% 10% 65% 44% 4 -1
Singapore 39% 2% 85% 42% 5 -1
Hong Kong 30% 12% 81% 41% 6 -1
Netherlands 61% 7% 52% 40% 7 3
China 15% 38% 55% 36% 8 0
Nigeria 14% 45% 30% 30% 9 0
South Africa 15% 15% 28% 19% 10 0

12. Changes in the Chinese economy are driving the emergence of hubs across all three
sectors. As China becomes less competitive, a new generation of manufacturing hubs
will compete for business.
Meanwhile, Chinese finance and technology hubs are challenging global incumbents in
Silicon Valley and the traditional New York-Hong Kong-London-Tokyo axis.
Mexico
India
THE NEXT GENERATION OF TRADE HUBS
Vietnam
Malaysia
Myanmar
US$ 38 BILLION
FDI FROM CHINA INTO VIETNAM IN 2019

13. CONCLUSION
The disruption caused by the trade tensions and the pandemic pose major
challenges that will require governments and businesses to
revise and reform their approach to trade. None of the factors identified
present the same opportunities as the structural drivers of the
last decades of the 20th century, but they have significant potential if they
can be supported by the right set of policies and investment.
However, the current global environment is not conducive to cooperation
and collaboration. Yet, innovative measures taken by economies based
on regional groupings or thematic issues may find a way ahead even if
there is a lack of global leadership for the time being.

15. US-CHINA TRADE WAR
& COVID-19
WILL DEFINE TRADE IN
THE 2020S

16. The strategic rivalry between the US and China will be the defining
dynamic for international relations and global trade in the 2020s. There
are three possible scenarios for the future, the most likely being that
global trade tensions get worse before they get better.
The US-China trade tensions have given cover for other actors to
implement protectionist agendas. Protectionist measures were at a
historic high in 2019, a situation which has been exacerbated by the
COVID-19 pandemic in 2020.
Continuity
Risk
Opportunity
1.
2.
3.

17. WTO reform is highly unlikely in the current climate. In the interim,
economies will need to become more innovative to create a new trade order
reliant on plurilateral, regional, and bilateral agreements.

18. Global trade tensions have driven a recalibration of supply chains that will see
greater simplification and diversification. The COVID-19 pandemic will further
drive this trend.
In this environment, the strategic objective of supply chains becomes one of risk
resilience, in addition to cost efficiency

19. CONCLUSION
Geopolitics and trade tensions are set to be a defining part of the trade
landscape in the 2020s. While major trade policy progress is stalled for
now, there are opportunities to move trade policy forward in an uncertain
geopolitical environment.

21. E-COMMERCE
ADDICTIVE
MANUFACTURING
AUTOMATION
Technology has huge potential to drive trade, but in some cases domestic regulation
or international interoperability stand in the way of broad uptake, limiting the impact
on trade growth. There is significant opportunity for governments and businesses to
cooperate to identify areas for change to allow technology to facilitate trade.

22. US$ TRILLION BY 2030
1.3
2.1
PROJECTED E-COMMERCE GROWTH

23. While some technologies have the potential to boost trade –
others may disrupt current patterns of production and trade and
reduce international trade.

24. Technology has wider structural implications for global trade
and the global economy, impacting jobs, infrastructure, legal
structures, and the nature of comparative advantage.
Artificial intelligence, in combination with other technologies
such as autonomous vehicles, robotics, and IoT sensors, will
play a major role in driving down costs along the logistics
chain, from shipper to recipient.
1/2of manufacturing supply chains will
have invested in AI by 2021

25. Technology will continue to unlock new markets and new
areas of growth for both goods and services through e-commerce
and enabling the delivery of cross-border services online.
Automation and robotics will shorten supply chains by
moving manufacturing closer to centres of consumption while
additive manufacturing will undermine components supply chains

26. CONCLUSION
Technology has huge potential to drive trade, but in some cases domestic
regulation or international interoperability stand in the way
of broad uptake, limiting the impact on trade growth. There is significant
opportunity for governments and businesses to cooperate to identify areas
for change to allow technology to facilitate trade.
There is also a role for governments to mitigate the potential downsides that
technology may have on trade and jobs, through investment in
infrastructure and education, and the development of global policy on
technology.

28. 90%
OF GLOBAL TRADE IS RELIANT
ON TRADE AND SUPPLY CHAIN FINANCE

29. THERE WILL BE A
US$15 TRILLION
INFRASTRUCTURE FINANCING
GAP BY 2040

30. Access to finance and trade-related infrastructure – both physical
and digital – are critical in making trade happen. Though policy
and technology can help overcome obstacles to trade, these
issues remain critical to trade growth.
The trade finance and infrastructure finance gaps will only
grow over the next ten years unless there is a significant
change in how public and private sector actors operate.
Bridging the investment gap in both trade finance and
trade-related infrastructure is due to a few shared issues:
notably the perception of such sectors as being too high
risk. There also remains a high barrier to access for wider
groups of investors in such regulated sectors.

31. The trade finance gap has seen some unique barriers, including the
small size of the trade finance pool, the difficulty businesses face in
accessing trade finance products, and the low rate of successful
applications for trade finance products. To close the trade finance
gap, there are a number of solutions – including increasing the size
of the trade finance pool, leveraging technology, increasing the
success rate of applications, and driving stronger global standards in
the industry.
The main challenge in addressing the infrastructure gap is an
overreliance on public funding and the limited use of private
capital. Bridging the infrastructure gap will require increasing
the size of the infrastructure finance pool by further involving
the private sector and allowing for greater innovation in the
sector.

33. US $1 TRILLION
COST OF CLIMATE CHANGE
TO BUSINESSES BY 2023

34. Sustainability in business and trade is rapidly approaching a tipping point.
Companies are increasingly seeing the value – both internally and
externally – in comprehensively incorporating sustainable principles into
business and trade. It is no longer true that adopting such measures is
costly and requires a sacrifice in profits and growth.

35. 92%
BELIEVE INTEGRATION OF
SUSTAINABILITY WILL BE
IMPORTANT TO THE FUTURE
SUCCESS F BUSINESSES
48%
SAY THEY ARE ACTUALLY
IMPLEMENTING SUSTAINABILITY
INTO OPERATIONS
However, business leaders remain divided on whether sustainability is an
economic imperative. Though it is fast approaching, key barriers remain,
including a lack of established reporting standards, uncoordinated policy
responses, and the current global trading order. In order for this to change,
innovative solutions are required, which could include the use of technology
and stronger policy coordination in both bilateral and multilateral
agreements.

36. There is significant pressure from consumers, governments and the
investors community on businesses to become more sustainable.
The challenge for economic actors, government, and the global trading
system is how to enable trade in a more sustainable manner.

37. Despite clear indications of the growing importance of sustainability, the
lack of comprehensive solutions, global regulatory frameworks, and
standardised reporting remains a barrier to comprehensive implementation.
Like in many other industries, sustainability will likely see a similar path to
global adoption – slow adoption at first, followed by fast-paced acceleration
as more companies adopt such standards.
Traditional views that suggest adopting sustainable practices is only
possible by sacrificing some level of profit no longer holds true – as seen by
many recent studies that show that such changes can actually improve
company growth and revenue. However, efforts to implement sustainability
will remain piecemeal and uncoordinated as long as global trade rules are
not conducive to such changes.

38. Though governments are beginning to realise that trade goals must be compatible
with sustainable development, and new bilateral and multilateral agreements are
incorporating chapters on sustainability, there is some way to go.
The economic imperative for sustainability also remains missing to some extent –
but there is growing consumer and investor demand, meaning that sustainability
can be a significant economic advantage for both marketing and investor relations
purposes. Government policy on sustainability requirements may be a proxy for
economic incentive for now.

39. The COVID-19 pandemic may have both positive and negative impacts on
sustainability in business – though there is increasing understanding of the
benefits of sustainable business practices, the priority for governments will
be on restarting national economies.
HAS THE COVID-19 PANDEMIC PUT
SUSTAINABILITY ON THE BACK-BURNER?

40. CONCLUSION
Highly regulated sectors like trade finance and infrastructure have
traditionally not been a matter of public debate – they have often been left
to the big public sector players, and in some cases, private actors.
But there remains a huge financing gap in both sectors, which cannot be
filled by the current state of play in such sectors. Trends in place since the
2008 Global
Financial Crisis and more recently the impact of the COVID-19 pandemic
are only increasing the barriers to entry and ease of remaining in such
sectors.
In order to bridge financing gaps, there must be change in how public and
private sector actors operate. Access for a wider group of investors is
necessary, as is dispelling perceptions that investment in such sectors
is a risky endeavour.

41. RECOMMENDATIONS

42. BUSINESS
1. Be ready to adapt to a more challenging trade landscape – expect difficulties trading across jurisdictions and
increased protectionism, as well as more modest trade growth overall. Review and recalibrate supply chains to
focus on resilience and risk as well as efficiency.
2. Increase investment in technologies that reduce trade costs and open new markets or partner with services that
leverage these technologies. Take the lead in driving domestic regulatory change to allow the implementation of
technologies that facilitate trade e.g. acceptance of electronic trade documents, blockchain etc.
3. Make the case for international – if not multilateral – agreement on key issues such as e-commerce and
services. Contribute to the development of international agreements and standards on interoperability and other
aspects of trade and technology to address fragmentation.
4. Advocate towards government for international trade in national trade policy and international trade policy to
support the survival of the WTO and the global trading system. In addition, support national government to defend
the value of trade domestically.
5. Be more ambitious on ESG – implement company-wide reviews and sustainability reporting, and issue
guidelines on investment and corporate practices. This is not only the right thing to do, it has significant benefits –
including on cost.

43. GOVERNMENT
1. Like-minded governments must come together and defend global trade. This should include finding common
ground for progress on WTO reform, as well as making the case domestically for international trade rather than
allowing it to be a scapegoat.
2. Governments should resist protectionism and when building national security into trade policy, this should be
done in a way that is strategic and constructive, not as a short-term protectionist measure.
3. In the absence of multilateral progress, governments will need to become more innovative with their trade policy
in terms of seeking out deeper regional and bilateral deals and pursuing sector-specific international opportunities.
International opportunities include e-commerce, the free flow of data, the interoperability of technology, services,
and sustainability.
4. Governments must continue to invest in infrastructure – both physical and digital – in order to facilitate trade in
both goods and services. In particular, close the infrastructure finance gap by working with business to get private
capital into infrastructure projects.
5. The on-going digitalisation of the economy makes digital infrastructure particularly important, as well as digital
education and skills development in light of the job losses caused by the pandemic and those that may be driven by
automation and AI.

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