Covid19 has started a new era in the world for all of us this year in the early 2020, starting from last quarter of 2019. Here in this presentation, we take a look at what holds in our future in terms of global trade, economy, supply chain, production, employment, balance of power, politics, opportunities, money. #economist #covid19 #globaltrade #export #supplychains #finance #production #economy #2020 #protectionism #newnormality #newnormal2020 #globalbusiness

2. A New Era: Global Trade in
2020 and Beyond
SeçilERTÜRK
İş Mükemmeliyeti Uzmanı
Business Excellence Specialist
ReportReview
03.07.2020

3. A new era: global trade in 2020 and beyond
• Executive Summary
• Introduction
 Chapter 1: Covid-19
 Chapter 2: US-China trade relations
 Chapter 3 : US-EU trade relations
 Chapter 4: Rising non-tariff protectionism
 Chapter 5: Taxing digital trade
• Conclusion

4. Executive Summary
2020 will be volatile for world economy.
Optimistic views from the first quarter of the year turn into
way too more pessimistic content and in the following slides, 5
key factors which will drive global economy will be shortly
shown.

5.  Coronavirus is effecting global economy under innumerable titles:
Production in Asia, movement freedom, consumer spending patterns are only
some of them.
Thus, a far reaching and long lasting impact is expected:
Countries are becoming much more protective, increasing export controls.
Uncertainty about a moratorium decision on customs duties between The
WTO members.
As a result, countries now have critical uncertainty in their supply chain and
financial operations.
Introduction

6. Yet, let’s not forget the opportunities to be arisen for the ones
who know how to see and make the most of it.

7.  Until very recently, there had been a stable picture in terms of
world trade after the crisis in 2008-9.
• Stronger market sentiment, firm consumer spending and improved
business investment were reported.
• However, much more recent forecasts are not any like that: While
an optimistic forecast is 13% drop in trade volumes , a pessimistic
scenario is actually 32% drop for 2020.
• Many retail and hospitality establishments are in the risk of
shutdown due to travel and transportation restrictions.
• Inevitably, all the component drivers in major markets are directly
and government policies are indirectly effected by Covid-19.

8.  With the outbreak of the virus in Wuhan, China went lockdown:
Restricting national and international supply chains those have critical
importance. Travel and tourism services equally effected by these
restrictions, no doubt.
• So many business & factories, considered as the hearts of the trade in
China, are significantly smitten.
 Pandemic has shown the cruciality of interconnectedness of
consumers and producers around the world.
• Hence, importance of flexibility and transparency in supply chains is
well grasped.
• Meanwhile, there was a prepared expectation of uncertainty over the
future of global trade due to Brexit and US-China trade conflict.
However, with Covid-19, the percentage in this expectation will likely
to increase.
Chapter 1: Covid-19

9. Chapter 1: Covid-19
• So many authorities in C-levels agree on that people are slow to understand the coming
waves of virus and companies need to be flexible in adjusting to changing market. Etc.
people traveling less, so spending less will lead to a drastical change in cash flow. Which
means a problematic supply chain.
• The longer the outbreak lasts, the more it will discourage capital investment = Decrease
in firms’ productivity.
Supply chain
• Many supply chains rely on small and medium sized business, yet these business can not
long survive without sales for months. These places are in much bigger stress than the
big scaled business.
• Names like Apple, Samsung are shifting their production to other regions in Asia other
than China.
Companies also will no longer want to “put all of their eggs in one basket”. Instead they will
look at setting up subsidiaries both elsewhere in South-east Asia and closer to their home
markets.

10. Chapter 1: Covid-19
 A fresh wave of supply chain reconfiguration is prompted.
• A greater focus on diversifying supply chains within Asia, potentially to countries
like Vietnam, Indonesia and Malaysia is forecasted. But then again, a robust debate is
also likely to take place about “relocalising” manufacturing in the US.
• Meanwhile, governments intend to prevent business from lockdown, but the capital
may not be enough to distribute to all the ones in need…

11. Chapter 2: US- China Trade Relations
• In 2019, the value of US-China bilateral trade was US$560bn.
• With the revised agreement in January 2020, the deal aimed on more at preventing
the tariff war from escalating than finding an end to the dispute with the agreement
preserving existing US tariffs on around US$480bn of Chinese goods.
Even firms that do not deal directly with US-Chinese trade will still suffer indirect
effects.
Rather than a possible leminiency of Trump due to health crisis, US will use the situation
against China is more likely expected.
• US presidential election is not expected to vary the bilateral trade relations of 2
countries and China should accept the terms if the rumors are true about their
economy.
• Companies are more aggresively pushed to reconsider their relocation due to Trump
and uncertainty effect. And supply chain needs certainty.

12. Chapter 3: US- EU Trade Relations
• US-EU trade totalled nearly US$852bn in 2019.
• US and EUwill suffer economically from Covid-19, along with that, European are
seen less enthusiastic when it comes to trade tensions with US. Two countries’
legal and regulatory issue do not comply with eachother.
• A potential impose of US on auto imports could be severe for EU, sharp hit for
exports.

13. Chapter 4: Rising non-tariff protectionism
• Tariffs – can be seen as another form of protectionism - received a
significant amount of global press attention.
• Amendments in tariffs can encourage buyers to switch from overseas
suppliers to local ones—but this would have taken a long time to work
through the system. Instead, governments opted to provide cash through
direct government subsidisation.
• The rise of tariff and non-tariff protectionism essentially raises costs for
firms and injects greater uncertainty into supply chains.
• Companies with agile supply chains and stronger supplier relationships
deal better with changes in global trade policy, including rising
protectionism.

14. Chapter 5: Taxing digital trade
• Decided by WTO, customs duties imposed for certain goods and services
under ‘’electronic submissions’’, such as software, emails and text
messages to digital music, films and games.
In a meeting held in December 2019 by WTO members, a decision has been
made about a moratorium on the following subject and a 6 months period is
agreed to refrain from imposing customs duties on electronic transmissions.
However, this update has found such a small coverage in the international
press.

15. • Huge bills for governments to cover after extending financial support to
various struggling industries. Taxing electronic transactions is seen as a
new source of revenue at a time when public finances are under strain.
• Also, with this decision, If firms have to pay tax whenever they provide
some digital service overseas, bills would quickly mount. Which can push
smaller markets to cut off from some digital services altogether.
• Not only service based sectors, but also international trade will suffer if
firms are unable to transact digitally and use data easily. Including the
threatening for new digital business to expand and flourish.
Chapter 5: Taxing digital trade

16. Conclusion
The impact of the outbreak will undoubtedly be felt across the world.
So many question marks are remained still;
How consumer demand will recover once quarantine measures are lifted ?
How governments will react if there is a serious second wave ?
How cross-border trade and supply chains will be affected ?
Some estimations:
 Protectionism is likely to itensify.
 The potential collapse of the WTO moratorium on digital transactions.
 Game changers in global trade.
 Even after a ‘’healing’’ from virus, no easy return to normal.
The businesses that survive, and even thrive, in the new normal will be those that identify how
these disruptions affect their business and adapt accordingly.