Global trade quietly ushers in the "new multilateral"

Dubai multi commodity trading center (DMCC) recently released the "future of trade 2022" report. The report titled "Global trade in the new era of multilateralism" points out that global trade hit a record high of $28.5 trillion in 2021. With the advent of a new era of multilateralism dominated by regionalization, trade in services, innovation and sustainable trade, it is expected that the world economy will slow down in the next few years, but global trade will still grow steadily.
Compared with 2021, the trade growth in 2022 may slow down. Despite the impact of factors such as the Ukrainian crisis and the COVID-19, it is still optimistic on the whole. For example, consumer demand suppressed by the epidemic has been gradually released and began to promote commodity trade, and service trade will also rebound.
Ahmed bin suleim, executive chairman and CEO of DMCC, said, "After the global trade volume set a new record in 2021, it is expected that the trade growth in 2022 will remain strong, although the growth rate will slow down slightly. In addition to market demand gradually getting rid of the haze of the epidemic, there are also some long-term changes that support the future development of cross-border trade, including the rise of regionalism, the growth of service trade, innovation and climate policy."
He stressed that "to promote the future development of Global trade and build an economic system that is more resistant to crisis, we have the same focus, that is, to provide funds for infrastructure and trade financing weaknesses in a situation consistent with the principle of sustainable development. We need to narrow the digital divide between countries and regions, so as to share the benefits of Global trade with everyone."
"New multilateralism" takes shape
In the next decade, geopolitics will, as always, significantly shape the pattern of trade activities, driven by regionalism, bilateral trade and new developments in global investment flows. Trade policies based on nationalism rather than protectionism will continue to dominate. In addition, new multilateralism will gradually rise, which will drive cross-border trade in new industries, including the fields of digitalization and sustainable development.
Bilateral, regional and multilateral trade agreements are increasing. In the United Arab Emirates, the government aims to sign 27 bilateral comprehensive economic partnership agreements with major trading partners, eight of which will be reached this year to promote trade and foreign direct investment. In other regions, China and the UK have also actively applied to join the comprehensive and progressive trans Pacific Partnership Agreement (cptpp), which can provide opportunities for trade and bilateral investment.
Under the new trade pattern, cross-border investment and trade will increasingly tend to be market-oriented rather than efficiency oriented. The overlap between trade liberalization and digital transformation will continue to be a decisive gateway, and the establishment of compatible and connectable networks will be crucial.
The development of virtual assets, including central bank digital currencies, will reshape global finance, trade and investment. Innovative technologies will continue to improve productivity, promote sustainable development and accelerate growth on a global scale. Trade and technology will continue to seek synergies in 2022 and beyond.
Fayar Ahmadi, chief operating officer of DMCC, said, "Strong global trade will help build a stronger, sustainable and steadily growing global economy this year and beyond by providing goods and services to countries. The restructuring of the global value chain will continue to be a source of trade normalization, revitalization of global growth and cross-border trade recovery, promote economic diversification and reduce countries' dependence on a limited number of importers, exporters and industries."
Shaping future trade
The research conducted by the DMCC report shows that the new era of multilateralism will be shaped by three key changes in the global economy.
First, during the impact of the COVID-19 on Global trade, many countries have realized the costs of protectionism. As countries become more sensitive to the costs of supporting protectionism, they will turn to eliminating trade barriers.
Secondly, inflation will continue to rise, and the central bank will further implement tightening policies to cope with rising prices. This will make global borrowing costs higher, reduce import demand and weaken export competitiveness.
Finally, Global trade will also be affected by the climate crisis, which will also bring economic shocks and opportunities. The government may need to intervene to control potential economic losses, but the demand for sustainable commodities in developed and developing economies will increase, creating new opportunities for sustainable trade.
The future of trade is an important biennial Research Report of DMCC on Global trade changes. It analyzes the impact of technology, global economic trends and Geopolitics on the future of trade, focusing on trade growth, supply chain, trade financing, infrastructure and sustainable development. The report explains the prospects of trade development in the 1920s. It provides valuable reference information for business operators involved in trade, trade policy, international investment and global value chain.
Industry and policy suggestions
DMCC's "the future of trade 2022" report puts forward several suggestions for enterprises and governments. Its industry recommendations include increasing information sharing through telecommunications technology, including traditional and new technologies. This will help predict, buffer and manage unexpected shocks (including geopolitical tensions and natural disasters); Promote the simplification and digitization of trade facilitation processes. Adopt faster and more automated customs procedures and processes to help offset the continued growth of trade costs; Expand and diversify cross enterprise credit, which helps mitigate risks. Companies and financial intermediaries should coordinate and strengthen inter company credit and work together to reduce risks in the supply chain; In coordination with the government, the strategic focus will be on economic diversification, so as to improve economic resilience and sustainable development measures, and resist the impact of oil prices and climate related uncertainties in production.
The policy recommendations put forward in the report include continuing to give priority to filling the trade financing gap, including through export credit institutions, expanding working capital programmes and new facilities to support small and medium-sized enterprise exporters; Promoting trade should be a key policy priority, and priority should be given to bilateral trade relations with low viscosity, because the increase of bilateral trade flows will often lead to the decline of trade flows with other countries; Government guaranteed bank loans should be used to purchase trade receivables and inject cash into the supply chain. In addition, these secured loans can be securitized and the central bank provides relevant funds; Further improve the performance of logistics. Reduce trade costs by improving the efficiency of customs and border clearance, improving the quality of trade and transportation infrastructure, and facilitating price competitive transportation services in terms of policy.