Trade Facilitation Archives - WITA

The Fourth Industrial Revolution: Changing Trade as We Know It

Juliette Holthaus — Fri, 18 Oct 2019 17:32:17 +0000

Trade as we know it will change. The reason for this is that the world is entering an era of rapid digital technological development, labelled the Fourth Industrial Revolution (4IR). However, despite the name, it is more of an evolution than a revolution, with new technologies building upon older ones. The 4IR is the convergence of evolving, mainly digital, technologies. This convergence is driving the change that has already started and that will accelerate in the years to come. Companies are building new business models, using the opportunities derived from these digital technologies and their interactions. The 4IR is set to disrupt almost every industry in every country. It will affect the full value chain – from end to end.

The 4IR will affect how companies produce goods and services and what they will produce. Based partly on interviews with Swedish industrial companies, we have identified the following five major production trends: i) automation of physical and digital processes (eventually possibly resulting in the spreading out of production where computers make the decisions), ii) a move towards mass customisation, iii) accelerated servicification, iv) increased specialisation, and v) disintegration of global value chains (GVCs) and production in ecosystems. The technologies will – in turn – affect trade in the following three ways:

1. Improve trade logistics and lower transaction costs.
2. Change the actual content of what firms trade – moving from goods to services and data.
3. Change production processes and the location of production. Technologies can lead to automation and, in turn, the possibility of dispersed, self-orchestrated production. The impact on trade is likely to be significant.

First, moving production closer to customers to serve local markets will lead to less measured trade. Second, the GVC setup will change when companies no longer produce their goods in one place. Beyond being close to customers, companies want to be close to “hubs”, i.e., centres of coopetition, innovation and collaboration. Again, this will affect the GVC set-up. Third, trade flows will change since reorganised GVCs lead to changed movements of the inputs and regional sourcing. Fourth, trade participation will change, for both for countries and firms. For countries, trade participation will change as new GVC set-ups will make the receiving countries importers of inputs and exporters of the product now produced in that same country. For companies, often SMEs, new technologies allow them to enter the supply chain and participate in production.

The technological opportunities of the 4IR will lower the threshold to enter trade, especially for SMEs. Many SMEs have already stepped over the threshold and more will follow. However, taking the step is generally more difficult for SMEs. One central reason is that the benefits of automation have to be even more certain to small companies. Uncertainty about which direction the 4IR will take is a barrier for companies entering the 4IR.

publ-The-fourth-industrial-revolution

To read the full report, click here

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Emerging Technologies and Managing the Risk of Tech Transfer to China

Wed, 04 Sep 2019 15:31:20 +0000

There are deep interconnections between the U.S. and Chinese economies, and China has built its technology base on what it has acquired from the West. China’s government and some Chinese companies will use any means, legal or illegal, to acquire technology. The United States’ relationship with China cannot continue unchanged, but given the interconnections, change must be managed carefully. New restrictions are needed, but counterintuitively, these should be shaped by recognizing that being open makes the United States stronger than being closed. The best approach is an incremental and flexible approach to technology transfer centered on the need to avoid harm to the U.S economy. This report outlines the policy tools that the United States can use to mitigate risk while maintaining the openness that is a hallmark of the U.S. economy.

To access the original report source: Click here

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How to Strengthen Europe’s Policy Brief Agenda on Digital Connectivity

Mary Jane MacArthur — Thu, 11 Jul 2019 20:06:39 +0000

As the US–China trade war evolves into a more permanent conflict at the nexus of trade, technology and data, Europe needs to act on the challenges of digital connectivity. An edge in innovation and Artificial Intelligence (AI) is crucial, as digitization transforms the global economy. Moreover, dominance in the fields of data and technology is vital for military dominance, and the United States has shown no restraint in demanding support from its allies to maintain its leading position. The call to ban Huawei from providing 5G infrastructure is the most well-known such example. But the United States’ push for a new export control regime for emerging technologies illustrates that the US–China conflict is impacting the EU and its member states and their relations with the United States and China in other fields as well. The EU needs to act if it is to remain a relevant player in the global reconfiguration of power and sources of power.

The EU’s ‘Europe–Asia Connectivity Strategy’, adopted in October 2018,1 should help the EU and its member states on their way, but falls short of providing the necessary strategic guidance in the digital field. Essentially a value proposition for sustainable, comprehensive and rules-based connectivity, the strategy largely focuses on the field of transport. This focus may have seemed natural considering the boom in Chinese investments and loans for infrastructure development in Europe recent years, but today, as the fourth industrial revolution2 sparks a more conflictual international environment, European stakeholders are left ill-equipped to deal with growing challenges in the field of digital connectivity.

Policy_Brief_Strengthen_Europe_Agenda_on_Digital_Connectivity

[To read the original brief, click here.]

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Can Blockchain revolutionize international trade?

Matt Style — Tue, 27 Nov 2018 14:46:34 +0000

Executive summary

Blockchain is much more than Bitcoin.

Blockchain’s first implementation as the technology underpinning Bitcoin has led many to associate Blockchain with Bitcoin. However, the potential use of Blockchain goes well beyond the world of cryptocurrencies. For some, it is a technology that will change our lives, while for others it is a pipe dream; no technology has stirred up so much debate since the advent of the internet. However, despite the numerous headlines on Blockchain, the technology remains difficult to apprehend for many.

Blockchain: a tamper-proof, decentralized and distributed digital record of transactions that creates trust and is said to be highly resilient.

A blockchain is a decentralized, distributed record or “ledger” of transactions in which the transactions are stored in a permanent and near inalterable way using cryptographic techniques. Unlike traditional databases, which are administered by a central entity, blockchains rely on a peer-to-peer network that no single party can control. Authentication of transactions is achieved through cryptographic means and a mathematical “consensus protocol” that determines the rules by which the ledger is updated, which allows participants with no particular trust in each other to collaborate without having to rely on a single trusted third party. Thus, Blockchain is, as The Economist calls it, a “trust machine”. Participants in a blockchain can access and check the ledger at any time. Blockchain therefore ensures immediate, across-the-board transparency, and as transactions added to the blockchain are time-stamped and cannot easily be tampered with, blockchain technology allows products and transactions to be traced easily. Smart contracts – i.e. computer programmes that self-execute when certain conditions are met – can be used to automate processes, further reducing costs. Because of their decentralized and distributed nature and the use of cryptographic techniques, blockchains are said to be highly resilient to cyber-attacks compared to traditional databases – although there is no such thing as perfect resilience…

Continue reading the full report on the WTO website, here.

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