In recent times global trade has seen a rise in protectionism and growing fragmentation, causing businesses to face a tough battle in the international market.
Director General of the World Trade Organisation (WTO) Dr Ngozi Okonjo-Iweala has admitted that these factors have led to global trade “not having the best of times at the moment.”
However, the rise of digital trade offers a powerful tool to combat these barriers and help businesses thrive in the international trading arena.
How is the international trade market looking?
The international trade environment is increasingly characterised by protectionist measures.
Recent examples include the European Union (EU) imposing provisional tariffs of up to 37.4 per cent on Chinese electric vehicles (EVs), and the United States introducing 100 per cent tariffs on the same.
These actions are responses to accusations of unfair subsidies by the Chinese Government, which allegedly allow their EV producers to export at artificially low prices, threatening jobs in the West.
Such protectionist measures are not isolated incidents but part of a broader trend impacting global trade.
The rise of digital trade
Despite these challenges, digital trade provides a good pathway for businesses to mitigate the effects of protectionism.
E-commerce and digital services can go beyond physical trade barriers, allowing companies to maintain and even expand their international reach.
Strategies businesses can employ include:
- Boosting online presence with a user-friendly, multilingual website to reach international customers directly.
- Utilising digital marketplaces with established infrastructure for international sales.
- Adopting digital payment systems that make it easier for international customers to purchase goods and services.
- Using social media platforms to create targeted digital marketing campaigns for global audiences and an increased brand awareness.
- Offering digital products and services such as software, digital media, or online consultancy services.
Addressing regulatory challenges
While digital trade offers significant advantages, businesses must still overcome various regulatory challenges.
These include data protection laws, digital taxes, and cybersecurity requirements, which can vary across regions.
However, these challenges can be met by doing the following:
- Staying informed on regulations
- Ensuring compliance
- Advocating for fair digital trade practices
As Dr Okonjo-Iweala warns, continued fragmentation will be costly for the world.
Embracing digital trade is a strategic response to current challenges and a necessary step toward ensuring resistance and growth in the global economy.