Government subsidies set to worsen trade frictions
During this month, a panel hosted by Bloomberg and Asia Society’s Australia chapter weighed in on the status of global trade frictions.
According to a recent Bloomberg article, the panel, composed of government and business experts, discussed how businesses facing vulnerabilities from Covid-19 are in for another round of problems post-pandemic.
One of these issues will heavily center on a debate over government subsidies.
The Bloomberg article continues that at this point, where tariff wars have been in play prior the pandemic, certain institutions such as the World Trade Organization may begin scrutinising everything from bailouts to food protectionism in the interest of protecting against unfair subsidies.
Australia’s international freight coordinator general Michael Bryne said that that’s got a long way to go, particularly as countries re-evaluate what they’re doing in their own national interest. This is regarding support to a certain product, industry, airline or type of manufacturing type.
“There will have to be a different framework about what is deemed ‘compliant’ or not, and I think the political class will have to take a fair bit of time looking at that,” said Byrne.
Regarding renewed nationalism, founder and executive director of the Singapore based Asian Trade Centre Deborah Elms said that these questions have worsened global frictions between open and closed economies, which are set to intensify soon.
“The default will be: closer to home, regional agreements, bilateral agreements, where firms — if they’re smart — will start leveraging these opportunities,” said Elms.
The Bloomberg article also outlined other supply-chain lessons during the panel discussion, lessons insightful right now during the crisis and afterwards.
One such lesson is that human relationships count. According to Nick Mann, Australia and New Zealand managing director for H&H Group, the demand signals have been all over the place, making a rethink on supply chains difficult.
However, he maintains that this was made easier with close relationships with their partners.
Another lesson outlined was on supercharging your digitisation, which was further elaborated by Maggie Zhou, Australia and New Zealand managing director for Alibaba Group.
As businesses serve a digital audience, Zhou said that you will better understand your consumer, and supply better for your consumer.
Lastly, the article outlined being wary of the blockchain boom, which may take some time to catch on widely.
The panel discussion was held on Thursday, 15 October, hosted by Bloomberg senior Asia economy reporter Michelle Jamrisko.