International trade: What you need to know this month

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Aditi Sara Verghese, Policy Lead, World Economic Forum

• This monthly round-up brings you a selection of the latest news and updates on global trade.
• Top international trade stories: Lessons from Davos on the state of global trade; Red Sea shipping attacks “chaotic” for European manufacturers and retailers; European Commission scales back plans to impose tighter controls on outward investment and sensitive technology.

1. Discussions at Davos on the state of global trade

Key quotes from delegates at the World Economic Forum’s Annual Meeting in Davos give a unique insight into the state of global trade.

The Forum’s President Børge Brende began Davos week stating that “slowbalization” is holding back growth, employment and sustainable development, highlighting the need to revitalize trade.

Others also suggested that a business-as-usual approach is not enough to ensure a sustainable future for all.

“We need to think of globalization, not in the way it was done before, but differently, and we need to make sure that those who did not benefit during the first round, benefit this time. The reason globalization got a bad name is that some poor people in rich countries were left out, and poor countries, or developing countries were at the margin,” Dr Ngozi Okonjo-Iweala, Director-General of the WTO, told the ‘No Recovery Without Trade and Investment’ panel session audience.

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The reshaping of supply chains and global growth is an opportunity not a challenge, she added, adding that “green trade has tripled in value to $1.9 trillion”.

On the Annual Meeting’s key theme of ‘rebuilding trust’, United Nations Secretary-General Antonio Guterres said: “Rebuilding trust will not happen overnight – but I am convinced that it’s both essential, and possible.”

Ursula Von der Leyen, President of the European Commission, highlighted the importance of working together to ensure the right environment for growth: “Our companies thrive on freedom, on freedom to innovate and to invest and to compete.”

2. Red Sea shipping attacks disrupt east-west supply chains

European manufacturers and retailers face a period of severe supply chain disruption following attacks by Houthi rebels on ships transiting the Gulf of Aden and southern Red Sea off the coast of Yemen.

A majority of ships are avoiding the Red Sea approach to the Suez Canal, with many shipping lines rerouting vessels around Southern Africa’s Cape of Good Hope. This can add up to two weeks to the sailing time between Asian and European ports.

The result is shipping surcharges for some services and delays in the arrival of some products and components. This has led to depleted inventories and even production lines coming to a standstill.

An international taskforce is operating in the region to protect merchant shipping, which includes military vessels from the US, UK, France and other countries.

The Red Sea disruption and shipping surcharges come after container shipping rates had returned to pre-COVID-19 levels following price spikes due to the pandemic.

3. News in brief: Trade stories from around the world

The European Commission has limited plans to impose tighter controls on outward investment and sensitive technology, in a bid to enhance the bloc’s economic security and improve co-ordination between member states, the Financial Times reports.

A US Treasury delegation will visit Beijing for talks on economic cooperation with China, following a November summit between the country’s President Xi Jinping and US President Joe Biden.

What is the World Economic Forum doing on trade facilitation?

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A shortage of ships leaves China’s auto industry facing record-high freight charges to export electric vehicles to European markets after dozens of old vessels were scrapped during the pandemic in 2020.

New post-Brexit import document requirements on animal and plant products destined for the United Kingdom are due to come into force at the end of January 2024, with physical inspections set to begin in April.

The UK has halted trade talks with Canada following two years of negotiations post-Brexit, with trade operating under the previous European Union agreement from when Britain was a member of the bloc.

4. More on trade from Agenda

Davos 2024: World Trade Organization Director-General Ngozi Okonjo-Iweala tells the World Economic Forum’s Annual Meeting: “There’s a better way to do globalization“.

What is the WTO’s Investment Facilitation for Development agreement and how can it help foster economic growth and sustainable development?

In Davos, a coalition of 60 trade ministers is bringing together trade, climate and finance to break silos and drive ambitious, inclusive action for sustainable trade. Here’s how.