What 2019 global trade trends should you be looking out for? Here’s a preview of what could be dominating the headlines and your work conversations throughout the next 12 months.
1. Will the new USMCA be ratified?
After over two years of anti-NAFTA rhetoric from President Trump and many rounds of negotiations, a replacement deal to govern North American trade, the US-Mexico-Canada Agreement (USMCA) was finally signed by the leaders of Canada, the U.S. and Mexico on November 30, 2018.
Before coming into effect, however, the deal must be ratified by the legislatures of all three countries. This step could be particularly challenging in the U.S., where a newly elected Democratic Congress may object to some aspects of the deal or simply be unwilling to give Trump a victory on the issue.
While the general sentiment is hopeful for a full ratification in 2019, a significant roadblock in any of the three countries could leave the issue open-ended for at least several more months.
2. Brexit is coming
With a March 29, 2019 date set for the UK to officially leave the EU, Theresa May’s government has little time left to gain domestic support for the Brexit deal she has negotiated. While a December vote was postponed due to a lack of support, May has survived a non-confidence vote and re-scheduled the Brexit vote for the week of January 14.
If a deal is not reached by the March 29 deadline, the UK will face a “hard Brexit” with no guidelines determining significant UK-EU issues like the Irish border, migration, travel, and trade. Despite UK government plans for this contingency, a no-deal Brexit could send the British economy spiralling downward with negative implications for the global economy as well.
3. Is your data safe?
As major corporate data breaches become increasingly common headlines, and the value of data seemingly increasing every day, companies face a conundrum: how can they gather the data they need, but also keep it safe?
Adding extra levels of online security and authentication for customers, as well as changing internal processes to improve passwords, store data more securely and eliminate potential security gaps may all need to be added to your 2019 to-dos to ensure a high level of trust between you and your customers, suppliers and partners.
4. Addressing gender inequality to improve economic opportunities
Despite a growing awareness and focus on the importance of women’s entrepreneurship, studies show that many challenges remain. According to a policy research paper published by the World Bank, the “gender gap in business ownership remains high in many economies around the world”, and “the gap in female entrepreneurship is especially apparent in low-income economies, where women are much less likely than men to start a new business.”
New research from PayPal Canada and Barraza and Associates also indicates that in Canada, “on average, women-owned businesses earn $68,000 less than men who run similar businesses.”
As issues like access to venture capital and corporate procurement opportunities continue to face women-run businesses, one area of success is in e-commerce businesses. 50% of new e-commerce businesses started in the last two years in Canada are run by women, compared to just 34% 10 years ago.
5. AI tools becoming increasingly commonplace
AI has several applications in international trade, from analyzing metrics and economic trends or optimizing warehouse and inventory management to linguistic translation and online sales or chat services, not to mention exporting AI tools themselves.
As technology is refined and these tools are more widely understood, questions regarding data security and IP protection are starting to come to the forefront. But for businesses willing to take the leap, AI has the potential to transform some of their business practices and give them a competitive advantage in their industry.
6. The CPTPP comes into effect – how could it affect you?
As of December 30, 2018, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) comes into effect. This trade deal replaced the TPP after President Trump withdrew the U.S. from that agreement in January 2017 but still includes the other eleven countries from that deal: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The agreement removes the vast majority of tariffs and other trade barriers, and enforces new standards for human rights and environmental and labour practices.
Will there be a noticeable increase in trade between businesses in these countries? And with opportunity for new countries to join the deal at a later date, could early successes entice any other countries to take steps towards entering the agreement?
7. The fading appeal of Bitcoin and other cryptocurrencies
A year ago, the potential for Bitcoin or other cryptocurrencies to serve as a transformative tool in global finance seemed high. Bitcoin’s value had never been higher, and increasing numbers of banks and other financial institutions were taking steps into the cryptocurrency arena.
What a difference a year can make.
After a December 2017 high of $20,000, Bitcoin is currently valued around $3,500. Other major cryptocurrencies are also valued at 85-90% below their all-time highs. Public excitement has turned to skepticism in some corners, or concerns about fraud and scams in others.
Even if values increase in 2019, significant changes will be needed to restore trust and support in cryptocurrencies before its wider acceptance in international trade can be re-considered.
8. Accelerated growth of service export industry should continue
Service exports can cover a multitude of areas: international customer service, financial, legal or consulting services, research and development, online services and platforms, and more.
In Euler Hermes’ 2019 forecast, they predict service exports to be the fastest-growing trade economic sector, with an estimated global growth of $365 billion USD, similar to 2018 growth levels.
As service export opportunities continue to grow in the world’s largest economies and emerging economies alike, businesses should look for ways to expand their service offerings through methods like servitization, or service exports directly connected to your existing product exports.
9. Personalizing is key to reach new customers or businesses
With the increasing numbers of ads, emails and content out there competing for attention, more businesses are trying to apply the personal touch in an effort to stand out.
From using increasing amounts of data to target specific ads to personalizing email offers and even web pages around user behaviour and interests, there are more ways than ever to make someone feel like your efforts were created just for them.
On the other side, businesses are increasingly turning back to old practices that had fallen by the wayside. Personal calls, direct mail and printed media like magazines or booklets are returning to the marketing playbook, as what was once cliché is now a novel or unique approach again.
10. Small businesses need employees ready to help grow and expand to new markets
According to a Business Development Bank of Canada (BDC) survey, about 40% of small businesses are unable to find the right employees to grow. EDC also noted fewer Canadian businesses are newly exporting or planning to export to new markets in the near future.
To overcome these challenges, small businesses require employees able to research international markets, assess potential risks, create and implement market entry strategies and manage the international logistics, finance, marketing and sales, and other areas.
Looking for practical, flexible training to take your business into new international markets with confidence? Check the full list of EDC-FITT online courses and workshops to see which options work best for you.
We face an eventful year ahead, full of innovation, political risks, and important new opportunities for business growth.
What trends will you be most interested in throughout 2019?