Access 20: The Big Ideas Defining Global Trade
2013 is poised to be the most important year for trade since — well, 2012. There are as many exciting free-trade agreements (FTAs) under negotiation as there are powerful new pacts going into effect. The stimulus-fueled build-out of global infrastructure is still making an impact. And digital technology continues to force us to redefine, and even re-legislate, doing business across borders. Join Access as we take you on a world tour of some of the most intriguing policies, places and ideas defining global commerce today.
1. The Trans-Pacific Partnership (TPP)
Important? You betcha. This FTA involves a region with some of the world’s most robust economies.
This huge negotiation includes the U.S., Canada, Mexico, Australia, Singapore and more — with Japan, South Korea and China all potential additions.
“Getting the rules right in the TPP is significant,” Josh Meltzer tells Access. Meltzer is a fellow in Global Economy and Development at the Brookings Institution, and the former first secretary for trade policy at the Australian Embassy in Washington, D.C. “Because these rules won’t just govern international trade and international investment among the TPP parties, they potentially could be extended and expanded to the Asia-Pacific region as a whole.”
2. The FTA Tariff Tool
Tariff and trade data have been combined into one online tool for the first time.
Use the new FTA Tariff Tool to see how specific products are treated under U.S. and FTA partner tariffs. You can also see which tariffs will be applied, and when products will go duty-free.
3. Yossi Sheffi
Want to understand regional economic development? Gather around.
Why have Rotterdam, Los Angeles — or even landlocked cities such as Memphis or Dallas/Ft. Worth — succeeded as transportation and economic hubs while other cities have not? MIT professor Yossi Sheffi’s new book, Logistics Clusters, lays it all out, and even offers a prescription for policy that can ignite logistics-cluster development. The benefit, Sheffi argues persuasively, is sustainable, localized job growth, especially among untrained workers.
Access asked Sheffi what logistics clusters he was watching the most closely. “If you look at Panama’s five-year plan, they want to become more than just the canal. Chongqing in central China is another city to watch. And the German government just put 100 million euros into Dortmund, Germany, north of Cologne.”
4. China’s Megacity of the Future
In six years, 150 major infrastructure projects will combine nine cities.
By merging nine cities in Guangdong — including global manufacturing hotbeds Guangzhou and Shenzhen — China will create the world’s largest city by 2018. The “Turn the Pearl River Delta Into One” initiative will create a single manufacturing hub of 42 million people (four times the size of New York City) encompassing a geographical area equivalent to New Jersey.
5. German Infrastructure
Which country can boast the finest infrastructure in the world? Just say ausgezeichnet!
According to a 2012 survey of 221 cities by New York–based consulting firm Mercer, it’s Germany that best exemplifies excellence in infrastructure planning and engineering — topping even Hong Kong.
While Singapore came in first overall, Germany dominated the top five, with Frankfurt, Munich and Düsseldorf all placing. Mercer’s survey measured traffic congestion, availability of flights from local airports, quality of public transport and availability of water.
6. International Services Agreement
Access to more services can be a game changer for the global economy.
Services are at the heart of the modern economy; they provide good jobs that pay well and are a vital component of every manufactured good. Manufacturing companies need efficient telecoms, insurance, finance and software services to succeed.
This year the U.S., EU, Japan and 18 other economies will meet in Geneva to negotiate a new international services agreement (ISA) that breaks down barriers to trade in services. The potential is huge. The U.S. is the No. 1 exporter of services in the world — it exports more than second-ranked Germany and third-ranked Great Britain combined. Brad Jensen of Georgetown University’s McDonough School of Business estimates that removing barriers to services could boost U.S. services exports by $860 billion a year, generating 3 million additional jobs in the U.S.
7. High-Speed Rail (HSR)
From Beijing to London with just one change of clothes.
China and the U.K. — and 17 countries in between — are currently negotiating the world’s most ambitious international HSR network. While portions of the network are already online, hopes are to fully connect the network by 2022. Though HSR rarely carries freight, the impact on business travel is profound.
8. Web-Controlled Cars
Just like in The Jetsons. Rosie the Robot not included.
When Access asked WIRED magazine co-founder and futurist Kevin Kelly what would define global trade in the next 24 months, he didn’t hesitate. “I think in two years we’ll see certain parts of highway systems where you can turn your car over to the computer within certain parameters,” he says.
Web-controlled cars are already legal in California, and both Audi and Toyota have publicly demo’d the technology. The potential for cost-savings to business and the overall economy is huge. By 2020, the Texas A&M Transportation Institute estimates the annual cost of traffic congestion in the U.S. to reach $133 billion.
9. Predictive GPS
Who knows you better than anyone? Hint: It’s not Mom.
Think of it as Foursquare on steroids. Researchers at the University of Birmingham in the U.K. have taken location-based programming to a whole new level by developing an algorithm that uses tracking data — your phones combined with your friends’ phones — to predict where you’ll be in 24 hours.
Get this: The average error is just 65 feet.
10. The Study of the Year
Going global lifts more boats. And here’s the study that proves it.
“American Companies and Global Supply Networks,” by Matthew Slaughter from Dartmouth’s Tuck School of Business, quantifies the positive impact U.S.-based multinational corporations have on the domestic economy.
Slaughter’s research shows that when viewed in aggregate, as U.S. companies expand overseas, they tend to invest more — not less — in domestic hiring and R&D. Furthermore, they tend to create incremental new jobs within smaller businesses within their global supply networks.
11. Social Shopping
Friends who shop together, stay together.
Think of it as the ultimate intersection of Pinterest and Amazon. New highly curated, community-driven shopping experiences are allowing global consumers to fan and follow tastemakers and gain increasingly frictionless and democratic access to previously hard-to-find goods. Apparel is first; what’s next? Check out svpply.com, shopstyle.com, flit.com and polyvore.com for a taste of, well, good taste.
12-15. New Trade Agreements Fueling Growth
Three new FTAs will ease hurdles to doing business from Poland and Panama to points between.
Free-trade agreements have been signed or enacted all over the world in the past 18 months, from Australia-Malaysia to Canada-Jordan. Among the most significant:
(13) the U.S.-South Korea FTA will make nearly 95 percent of bilateral trade between these two economic superpowers duty-free in the next five years. (14) The U.S.-Panama FTA, newly in effect, removes hundreds of tariffs for business in both countries — some that were as high as 81 percent. And (15) the EU-Singapore FTA, settled in December 2012, makes it easier for European automakers and financial institutions to do business with the city-state.
16. Global Gateway Concentration
It’s an increasingly diverse, global economy — served by ever-concentrated air corridors.
A landmark “Global Gateways” study by the Brookings Institution reveals that while international passenger air travel has risen dramatically since 1990 — doubling in the U.S., thanks in large part to emerging markets — it’s taking place inside increasingly concentrated corridors.
Yes, Wichita and Warsaw are more connected for business travelers today than 10 years ago, but New York City still lies between. To support global trade across all U.S. markets, Brookings says, federal and local policies must focus more support on existing metropolitan gateways.
17. Smart Glasses
Forget tape on your glasses. Try these.
To nerds, it’s an “augmented reality head-mounted display (HMD).” To the rest of us, it’s Google Glasses.
Your eyewear will soon provide access to a hands-free, real-time information stream: email, social media and Yelp reviews from around the world for whatever business or product you’re looking at.
It’s not science fiction — both Google and Android were showing off the technology at the 2013 Consumer Electronics Show in Las Vegas.
18. Better Legislating Data
It’s one of the least discussed, most urgent issues affecting trade.
Want a virtually cost-free way to unlock innovation? That’s easy, experts at major policy institutes say: Modernize international trade policy to keep pace with digital technology and Big Data.
“If anything, there’s been a retrogression recently,” says Gary Hufbauer, the Reginald Jones Senior Fellow at the Peterson Institute for International Economics. “Countries are increasingly putting in reactionary, short-sighted legislation on [how businesses can use] data flows and servers across borders.”
Hufbauer’s prescription is twofold. We need international trade policy that shares a definition of consumer privacy. And businesses need a break. “It shouldn’t be that a corporation has to prove its innocence when it’s moving data and servers across borders. The presumption should be in the other direction,” he says.
19. Global Stimulus
Canadian bank CIBC World Markets estimates global infrastructure spending at $35 trillion over the next 20 years.
The financial crisis of 2008 prompted governments to “fund the biggest global build-out of physical economic assets in the history of man,” according to The Collaboratory for Research on Global Projects at Stanford University.
The only time this much money moved this quickly into the global economy was during World War II.
20. Shanghai Hub Expansion
Shanghai Pudong International Airport will be the world’s top air cargo hub by 2015.
Shanghai Pudong International Airport goes by the call letters PVG, but soon it may be known as your business’s MVP. The Shanghai Airport (Group) Company Limited (SAA) recently approved an expansion project expected to increase PVG’s freight-handling capacity to 5 million tons annually by 2020. FedEx is investing $100 million in its Shanghai hub, which will allow it to triple its capacity there.
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