Covid-19 and the changing face of global trade

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The Covid-19 pandemic has reshaped the world with more and more consumers shopping online and brick-and-mortar stores turning to online sales to survive. e-Commerce gave some industries, such as consumer goods, an incredible boost, and new customers from unexpected sectors, such as the aging population. On the other hand, department store sales and retailers selling what people consider “non-essential” items have been the hardest hit. How has the pandemic changed consumer perceptions of commerce, and what should governments be doing to ensure a smooth trade flow?

Statistically speaking

According to the latest data from IBM’s US Retail Index, the Covid pandemic fast-tracked the shift to digital shopping away from physical stores by about five years. E-commerce is projected to grow by approximately 20 percent this year. The US Census Bureau’s Q2 2020 report showed a 31.8 percent hike in US retail e-commerce to $211.5 billion in the first quarter, and 44.5 percent year-over-year. In Q2, e-commerce accounted for 16.1 percent of total retail sales, up 11.8% from Q1.

What should you be importing?

Importers should note that the pandemic has refined the categories of goods that consumers see as essential. With many people in lockdown, formal clothing and baggage, for example, are “non-essential,” while other sectors are thriving. There has been a surge in orders of groceries, home and garden improvement goods, ICT equipment, home activities like gaming equipment, fitness gear & bikes, books, fridges and freezers, coffee products, alcohol, and items related to personal protection. As online purchases increase, the pandemic has changed customers’ perception of digital processes, probably forever.

Maintaining trade flow

In an unprecedented global health crisis, trade is vital to saving livelihoods and lives; and only worldwide cooperation will keep business flowing. The situation has led governments to take measures to facilitate cross-border trade. These measures have mainly involved information accessibility, simplifying documentation requirements, and streamlining processes and clearance. Despite enduring cross-country differences and tensions, such as increased tariffs among significant players, COVID-19 has improved dynamism in the global e-commerce landscape. The Organisation for Economic Co-operation and Development (OECD) reports that by early May 2020, new trade-facilitating measures had been established at borders. These include creating “green lanes” to simplify border controls or using digital tools as much as possible to streamline documentary requirements. Also, efforts to gather and distribute information on bottlenecks and good practices at borders have helped the continued functioning of value chain procedures. The OECD encourages governments to increase transparency regarding trade; keep supply chains flowing – especially for food and health supplies by speeding up border checks and minimizing physical interaction between customs and border officials and traders. They should avoid making things worse through redundant export limitations and additional trade barriers. Governments need to serve the public interest, not vested interests.

For the US importer

The US has been trying to ease imports by taking certain actions, including lowering specific entry requirements. The FDA has also relaxed its requirements for specific documentation. Currently, many items are even non-dutiable. Importers will have to keep their fingers on the pulse and continuously check how these changes affect them. For instance,  will there be fewer demands regarding importer security filing of 10+2 form? Will they have more import clearance success?

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