Multi-bilateral trade agreements emerge, global trade quietly ushered in a "new multilateral"

The Dubai Multi Commodities Centre (DMCC) has released the Future of Trade 2022 report
.
The report, titled "Global Trade in a New Era of Multilateralism", pointed out that global trade will hit a record high of US$28.
5 trillion in 2021, with multilateral trade dominated by regionalization, service trade, innovation and sustainable trade.
With the advent of a new era of socialism, it is expected that although the world economy will slow down in the next few years, global trade will still grow steadily
.

Trade growth may slow in 2022 compared to 2021
.
Despite the influence of factors such as the Ukrainian crisis and the new crown pneumonia epidemic, overall optimism can still be maintained.
If the consumer demand suppressed by the epidemic has gradually been released and began to promote trade in goods, trade in services will also rebound
.

Ahmed bin Suleim, Executive Chairman and Chief Executive Officer of DMCC, said, “After a record global trade volume in 2021, trade growth is expected to remain strong in 2022, albeit at a slightly slower pace
.
In addition to market demand gradually getting rid of the haze of the epidemic, the growth factor is also due to 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 policies
.
"

He stressed that “driving the future of global trade and building a more crisis-resilient economic system share the same focus of financing the soft underbelly of infrastructure and trade finance in a sustainable manner
.
We need to narrow the digital divides between countries and regions to share the benefits of global trade with all
.
”

"New Multilateralism" Emerges

Over the next decade, geopolitics will, as always, dramatically shape trade activity, driven by new developments in regionalism, bilateral trade and global investment flows
.
Trade policies based on nationalism, not protectionism, will continue to dominate
.
In addition, the new multilateralism will gradually rise, which will lead to cross-border trade in new industries, including digitalization and sustainable development
.

Bilateral, regional and multilateral trade agreements are on the rise
.
In the UAE, the government aims to sign 27 bilateral comprehensive economic partnership agreements with key trading partners, eight of which will be concluded this year, to boost trade and foreign direct investment
.
Elsewhere, China and the UK are also actively applying to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which can provide opportunities for trade and bilateral investment
.

Under the new trade pattern, cross-border investment and trade will become more market-oriented rather than efficiency-oriented
.
The overlap between trade liberalization and digital transformation will continue to be the defining juncture, and building compatible and connected networks will be critical
.

The development of virtual assets, including central bank digital currencies, will reshape global finance, trade and investment
.
Innovative technologies will continue to increase productivity, drive sustainable development and accelerate growth globally
.
Trade and technology will continue to seek synergies in 2022 and beyond
.

"Strong global trade will help build a more resilient, sustainable and steadily growing global economy this year and beyond by providing goods and services to countries," said Fiyar Ahmadi, Chief Operating Officer of DMCC.

"Global value chain restructuring will continue to be a source of trade normalization, reinvigorated global growth and cross-border trade recovery, promoting economic diversification and reducing countries' reliance on a limited number of importers, exporters and industries
.
"

Shaping the future of trade

Research conducted in this DMCC report shows that a new era of multilateralism will be shaped by three key shifts in the global economy
.

First, the costs of protectionism have been felt by several countries during the COVID-19 pandemic that has hit global trade, and as countries become more sensitive to the costs of supporting protectionism, they will turn to removing trade barriers
.

Second, inflation will continue to climb, and the central bank will further tighten policy to counter rising prices
.
This makes global borrowing more expensive, which will reduce import demand and make exports less competitive
.

Finally, global trade will also be affected by the climate crisis, which will bring both economic shocks and opportunities
.
Governments may need to intervene to contain potential economic damage, but demand for sustainable commodities will grow in both advanced and developing economies, creating new opportunities for sustainable trade
.

The Future of Trade is DMCC's biennial major research report on changes in global trade
.
It analyzes the impact of technology, global economic trends and geopolitics on the future of trade, with a focus on trade growth, supply chains, trade finance, infrastructure and sustainable development
.
The report illustrates the prospects of trade development in the 2020s, and it provides valuable reference information for those involved in trade, trade policy, international investment and global value chain business operators
.

Industry and policy advice

The DMCC Future of Trade 2022 report makes several recommendations for businesses and governments
.
Its industry recommendations include increased information sharing through telecommunications technologies, both traditional and new
.
This will help predict, buffer and manage unexpected shocks (including geopolitical tensions and natural disasters); facilitate streamlining and digitization of trade facilitation processes
.
Adopt faster, more automated customs procedures and processes to help offset continued increases in trade costs; and expand and diversify cross-enterprise credit, which can help mitigate risk
.
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, focus strategically on economic diversification to improve economic resilience and sustainable development measures to withstand oil price shocks and climate-related uncertainties in production
.

Policy recommendations from the report include continuing to prioritise filling the trade finance gap, including through export credit agencies, expanding working capital programmes and new facilities to support SME exporters; boosting trade should be a key policy priority and less sticky should be given priority of bilateral trade relations, as increases in bilateral trade flows tend to lead to declines in trade flows with other countries; government-guaranteed bank loans should be used to purchase trade receivables and inject cash into supply chains
.
In addition, these secured loans can be securitized and financed by the central bank; further improving logistics performance
.
Reduce trade costs by improving the efficiency of customs and border clearance, improving the quality of trade and transport infrastructure, and facilitating policy-based transport services at competitive prices
.