Managing Cross-border Risks and Working to Facilitate Resilient Supply Chains
COVID-19 has undoubtedly changed the landscape of international trade. The turbulent times that COVID-19 has ushered in has subsequently established a chaotic trade climate that has seen both positive and negative trade actions by countries. Supply chains have been affected by manufacturing and port closures, as well as export restrictions on some medical and food products. At the same time, there has been positive trade momentum including tariff deferral and exclusions, economic stimulus, extra commercial plane cargo shipments, and increased demand of certain food products. The highs and lows of the pandemic have required countries to reassess their trade policies. Below is a summary of actions over the past three months and considerations for the future as we transition to a new normal and anticipate another wave of cases in fall and winter.
What has been taking place with the protests?
In February 2019, TradeMoves highlighted Chile's strengths as an export market. We cited a high GDP per capita, preference for US products, and free trade policies as examples of why you should look to export to Chile. Since 2015, 100% of US exports to Chile are duty free as a result of the US-Chile FTA. Chile has largely been considered the economic poster child for Latin America. In the 1980s, Chile opened its borders and deregulated during General Augusto Pinochet's reign. More recently, Chile has further embraced the idea of economic liberalization which has led to an increase in both foreign direct investment within the country and international trade. Since Fall of 2019, Chileans have become increasingly dissatisfied with rising costs and low wages, among other issues. Month-long protests coupled with a week of imposed martial law culminated in a million-person protest in the capital of Santiago in October 2019. The country once thought to be most stable in Latin America is now entering a transition phase of reform.
Why is Electronic Commerce (E-Commerce) important for importers/exporters?
The Internet provides a direct and a more transparent channel for both buyers and sellers to conduct business via e-commerce platforms. E-commerce has enabled small and medium-sized enterprises (SMEs) to reach customers in domestic markets as well as overseas. According to the McKinsey Global Institute, an estimated 12% of global trade in physical merchandises ($2.3 trillion in 2018) -- including business-to-business (B2B) and business-to-consumer (B2C) channels -- is conducted via e-commerce, with around $700 billion being cross-border purchases. In 2018, 1.8 billion people around the world purchased goods online, and 57% of these online buyers purchased goods from sellers abroad, according to the US Congressional Research Service. With the growing use of e-commerce platforms, doing business online has become an equally critical channel for importers and exporters to establish relationships and supply chains as traditional brick-and-mortar outlets.