Digital transformation has reduced the costs of international trade, affording organizations and enterprises across the globe various opportunities to trade different products, goods, and other commodities. This has resulted in growing competitiveness in the international trade scene as stated by the Digital Trade: Developing a Framework for Analysis report and the World Trade Organization.
This growing competitiveness is a two-sided coin. On the one hand, there are greater possibilities. Enterprises can now offer smaller companies, brands, and even individuals to get into the business of trade. On the other hand, there are more complexities. Trade facilitation has evolved in the digital era as more small parcels cross international borders.
According to the ITIF (Information Technology and Innovation Foundation), “data-localization policies are spreading rapidly around the world.” This significantly decreases trade and productivity as well as increases prices for impacted industries. Cross-border data flows also raise new issues in privacy, intellectual property, cybersecurity, and industrial policy. For almost 8 years now, the landscape for digitally-enabled services has become more restrictive with the implementation of measures that impact communications infrastructure and connectivity — some of these measures affect cross-border data movement.
In addition, rising geopolitical tensions also impact cross-border trade. In an illustrative 2022 simulation study published by the Centre for Economic Policy Research (CEPR), “The war in Ukraine and the sanctions imposed on Russia have intensified the debate on the economic repercussions of a shift in global trade policy focus from mutual economic benefits of open trade policies to geopolitical considerations limiting interdependence.” The study also forecasts a possible decoupling of the global trading system into two coalitions: a US-centric and a China-centric. This is threatening to reduce global welfare in 2040 by about 5%.
The economic hangover of the COVID-19 pandemic also — and still — presents a challenge. According to the Organisation for Economic Co-operation and Development (OECD), international trade during the COVID-19 pandemic has resulted in big shifts and uncertainties. In this 2022 publication, OECD highlights trade impacts across specific goods, services and trade partners, which are described as “highly diverse, creating pressures on specific sectors and supply chains.” OECD states, “The changes in the trade structure caused by the COVID-19 pandemic in a single year was of a similar magnitude to changes otherwise typically seen over 4-5 years.”
All of these result in a high level of unpredictability impacting global trade with subsequent planning difficulties for supply chains and their operations.Overcoming the Barriers to Trade Cross-border data flows can become a challenge as governments impose dynamic compliance regulations. To address this, companies must increase visibility into global transactions. Increasing visibility into global transactions is key to achieving efficiency in data localization policies around the world in cross-border trade.
Addressing rising geopolitical tensions requires flexibly adapting and meeting region-specific customs and compliance requirements. One approach does not fit all. Also, companies must aim to minimize delays and contain the rising cost of compliance in the post-COVID-19 world, so a dynamic and flexible approach is key to navigating the big shifts and uncertainties. These are highly tedious and complex tasks, but they are non-negotiable.
These areas are where SAP Global Trade Services (GTS) can help. SAP GTS helps companies accelerate cross-border supply chains by automating and streamlining trade processes, so enterprises can control costs, reduce the risk of penalties and fines, and clear customs faster. With a single repository for all compliance master data and content, you can centralize global trade management. With SAP GTS, your company can trade globally with confidence:
You can take advantage of automation and direct filing to effectively manage export/import compliance, minimize logistics and brokerage charges, and improve product classification.
You can strategically leverage free trade agreements, maximize eligible products through preference determination, and efficiently manage vendor declarations.
You can leverage FTZs, support region-specific duty minimization, deferral and avoidance regimes, and meet Intrastat and Excise movement requirements.
You can optimize the screening of denied or restricted parties to avoid global trade violations and delays.
Implementing SAP GTS can be challenging at first, though. But the good news is that there are companies like Ropaar that can help you. With Ropaar, you can navigate new trade regulations and region-specific trade policies and regulatory frameworks with SAP GTS. By leveraging Ropaar’s years of experience in supply chain management, you can be confident that your organization can overcome current and future supply chain challenges. Contact us to learn more about our solutions and services.