The De-Globalization of Supply Chains Is Reflected In Trade Policy

If we’ve learned anything in the last few years, it’s how vulnerable our supply chains have become in the last five decades. In a global economy, no nation or industry is self‐sufficient. Each is involved at various levels in trade to sell what it produces, acquire what it lacks and produce more efficiently than the competition.

Since the beginning of the 19th century, manufacturers have actively sourced and sold products in regions other than the country of origin. Kicked off by the birth of the Industrial Revolution and evolving to the present Fourth Industrial Revolution, globalization has run parallel. The frontline of globalization and industrialization today is led by digitalization. But on steroids — moving into the cyber economy through e-commerce, streaming, digital service, and 3D printing. It is further enabled by artificial intelligence, but also threatened by cross-border hacking and cyberattacks.

However, de-globalization is evident, too, and it is accelerating through global disruptions like major climate change that has led to extreme weather events, political upheaval triggering protectionist measures, the war in the heartland of Europe, and the pandemic with unseen magnitude and longevity.

Almost every major economy is building a “trade wall” along its borders, including the US, EU, UK, and China. Some nations are banding together as the European Union did in 1993. The Regional Comprehensive Economic Partnership (RCEP) agreement entered into force on January 1, 2022, creating what is described as “the world’s largest free trade area.” The most blatant example of a protectionist policy is Brexit, and we know how that is going. 

Concerns about the appropriate balance of trade between nations, consumer and environmental safety, protecting against terrorism, and generating revenue are at the root of volumes of legal documentation and a corps of agents all over the world enforcing them. Tariff discourse is evolving into action, non-tariff measures are increasing, and the number of trade agreements has risen to record levels. In this fluid environment, it can be challenging to pinpoint trends and assess how trade policy shifts might impact business and products.

While new policies are initiated, shippers and manufacturers are scrambling to reconfigure their supply chains physically and financially by finding alternate production sources and new suppliers. Given this scenario, how can companies manage their global supply chains effectively — reduce costs, buffer against risk, stay agile, satisfy customers, anticipate development, and even prevent disruption?

It is critical to be tuned in to the geopolitical changes impacting the direction of global trade and implementing punitive or retaliatory tariffs. Companies should consider how to react to these developments and brace for more changes that might come down the road. To stay ahead, you need up-to-date trade knowledge to pinpoint differences and digital supply chain execution technology to ensure goods cross borders efficiently.

At a minimum, current duty rates, accurate bilateral or multilateral trade agreements data down to the Harmonized Schedule (HS) level, methods to identify which products are targeted with what anti-dumping or countervailing measure, and more. Best-in-class businesses also need ways to track import and export trends as supply chains adjust in response to trade policy fluctuations. Then restricted party and sanction screening is required along with any special controls – military end-use, forced labor and others. 

To remain competitive in this global trade landscape, innovative companies are implementing digital solutions that leverage probabilistic methodology to identify growth opportunities, boost productivity, enable compliance, and minimize risk. That is a tall order in times like these, where new tariffs, trade wars, and supply chain disruptions force companies to rethink their global strategies. 

Companies using global trade technology for export, import or duty-minimization programs can efficiently ensure due diligence and compliance. They are also empowered to seize opportunities from new and evolving trade agreements. Automatic access to HTS or HS numbers, export control numbers, import and export controls, total landed costs, and duty-saving programs help companies implement scalable compliance procedures. These organizations can also more easily minimize disruptions and get goods to market quickly and at the lowest cost in a constrained supply environment.

As politicians, economists and consultants continue to predict whether recent supply chain chaos and geopolitical struggles will result in a reversal of globalized sourcing, supply chain leaders are at least weighing the options. 

Networked, cloud-based supply chain technology and services give companies the ability to see, forecast, act, and advance in the most informed and intelligent manner, optimizing making, moving and selling across the entire value chain when certainty isn’t certain. Connected processes and systems provide a secure connection to decision-grade network data, empowering companies with the visibility and capability to optimize efficiencies and manage supply chain volatility in real time. All of this enables suppliers, manufacturers, transporters, and fulfillment channels across the supply chain to operate as one, optimizing supply, demand, and delivery efficiently and sustainably while the world we live in is in constant motion.

Gary M. Barraco is Assistant Vice President in Product Marketing at e2open, where he leads the team that provides go-to-market insights on the value of e2open’s trade compliance, logistics and trading partner network solutions – all part of e2open’s connected supply chain platform. Gary joined e2open with the 2019 acquisition of Amber Road, where he led all product marketing activities. Gary was a senior leader with ecVision before Amber Road acquired the company. He has 20 years of military service in the U.S. Army.