Virtually nothing has been left unscathed by the global COVID pandemic. Everything from education to entertainment and healthcare has been affected. Even global trade has been changed. How? By forcing stakeholders to streamline whenever and wherever possible.
If the global trade industry learned one thing from the pandemic, it is this: technology is not being harnessed to its full capability. Technology inefficiencies were made glaringly apparent when companies began limiting their operations or shutting them down altogether. Despite lockdowns and business disruptions, certain goods and services still had to be traded. But how do you facilitate global trade when you are trying to limit the distance between people?
Vigilant Global Trade Services, a company that provides global management and trade compliance services, says things in the U.S. were fairly streamlined even before the pandemic. Not so in many other countries. At any rate, both the U.S. and its international trading partners are now working harder than ever before on getting things in order.
Filing Documents Digitally
A big hurdle in many countries is filing import and export documents. Wherever there is paperwork, there are filing delays. Delays are sometimes caused by inaccurate or incomplete information. They can also be caused by missing documents, incorrect filing entities, classification mistakes, and more.
Trade authorities the world over are now looking to digital document filing as a way to address most of the systemic inefficiencies that now exist. In Brazil for example, digital filing was previously not necessary. The Brazilian government is now moving to change that. Many export documents can already be filed digitally. Those that cannot will be digitally accessible in the future.
Tariff Exemptions and Drawback Concessions
Tariffs and drawbacks are tools governments use to prevent trade imbalances. However, certain goods necessary to fight the pandemic were made eligible for tariff exemptions and drawback concessions in 2020. Not only did this precipitate the movement of such goods, but it also reminded governments that barriers to trade only make it more difficult.
Some of the exemptions and concessions are set to expire at the end of 2021. Could they be renewed for another year or more? It is possible. It’s also possible that they could be extended to cover additional goods. Time will tell what types of goods world governments decide should be free from tariffs and drawbacks.
Greater Transparency Between Partners
Moving on to the private sector, the pandemic forced trading partners to make the best of a bad situation. It forced them to develop a greater level of trust based on transparency and openness. For example, logistics is a whole new ballgame as a result of pandemic accommodations.
Prior to the pandemic, shippers could get by with 7-10 days advance notice of pending shipments. This is no longer the case. The pandemic created a shortage of cargo vessels as logistics providers scaled back their activities. Shippers suddenly found themselves having to schedule transport up to five weeks in advance.
For their part, logistics providers had to figure out how to accommodate their customers as best they could. Both shippers and logistics companies had to help one another out with the understanding that no one was dealing with optimal circumstances. As is frequently the case during times of adversity, trading partners developed stronger relationships facilitated by technology and improved efficiency.
How much of the COVID-induced change becomes permanent remains to be seen. If the majority of implemented changes are here to stay, they would signal a new era of global trade based on a new level of understanding and cooperation. Maybe that’s just what global trade needed all along.