The COVID-19 pandemic has thus far cost the world economy around USD $ 3-4 trillion with 100s of millions of people left unemployed globally.
This is a major problem for us all.
World leaders must work together to not only better anticipate, manage and resolve complex issues such as pandemics but also to address the changing world of work, poverty and space travel among other things.
That is a lot of things to do.
But one thing is clear; all this cannot be solved in isolation.
Outward not inward-looking strategies is what is needed; decision-makers must operate, think and act beyond the doorstep to help fix issues on our doorstep and vice versa.
The blame game is over.
Conflict cannot survive without participation.
Trade policy must align with the times to effectively govern (new) economies ‘real time’ by enforcing the appropriate measures, protocols and standards to fix the issues mentioned earlier.
As an example, the World Trade Organisation is run by its 164 or so members yet e-commerce policy was left neglected for decades, directly impacting the sourcing, management and distribution of products and services in a timely, efficient and high-quality manner.
The Internet of Everything was not for Everyone.
This cannot go on.
Supply chain networks cannot function properly in a world full of uncertainty, ambiguity and risk.
Countries, markets or people foremost want structure, clarity and consistency.
The (business) case for globalisation is that every country faces the same issues, problems or opportunities yet to a different degree.
So why not open up to develop together each at a different pace.
The blueprint for development already exists, it is a case of leveraging our comparative (dis-)advantage.
For this to work, International Trade Agreements must converge to Standard Form Contracts to govern each sector, product or enterprise across every country (see diagram enclosed).
The date of the Main Confirmation Agreement (or MCA), comprising the general Legal, Operational and Economic language, definitions and terms agreed between parties, can then be referenced in a transaction supplement to produce a short form contract to be executed between enterprises themselves primarily outlining the core details of that specific deal.
The practice of referencing the MCA date avoids endless, unnecessary paperwork for everyone because the agreed standards do not need to be re-stated for each transaction.
More time to enforce these standards instead.
And the date of the MCAs changes with different negotiation rounds to move in line with the environment.
These type of short form contracts allow trade agreements to be onboarded onto electronic repositories or platforms where each country, sector or organisation can upload their side for (non-)economic matching purposes.
Using technologies such as blockchain, the trade record is immutable, secure and confidential to enable smart contract settlement leveraging digital currencies.
With the help of artificial intelligence, cross-border checks & controls become easier to complete by cross-referencing transparent electronic records versus the goods, products or other things transported.
Based on digital identification, tax authorities can now also pro-actively produce an electronic bill, subject to verification, to outline what is owed based on facilities used, income produced or profits generated to make sure tax becomes less taxing.
And regulatory bodies are better equipped with analytical tools, data and information for scenario modelling purposes to anticipate change in policies, procedures or protocols.
Besides the necessary support infrastructure creating many jobs by itself, the resulting increase in productivity spurs job growth in (new) economies to address the current levels of unemployment stated already at the beginning of this piece.
As said, every country may be at a different stage of development across different sectors however a ‘Development Quotient’ ensures a level playing field in negotiations targetting tariffs or subsidies.
For example, a country like China may be considered developed in the Technology sector yet developing in Healthcare or other sectors.
A framework like this supports norms, diversity and inclusivity as it becomes immediately clear, using insight solutions, which sector requires focus to move it up the respective ‘league table’.
In parallel to this, countries can reference a ‘Country Performance Index’ supported by independent surveys to ensure their environment is conducive to sustainable growth.
Like International Trade agreements, this may all sound difficult, challenging and impossible however Over-The-Counter Derivative contracts are bespoke, complex and specialist too.
And yet, this kind of framework already exists for Over-The-Counter Derivative contracts.
The International Swaps and Derivatives Association (ISDA) and Depository Trust & Clearing Corporation (DTCC) play a key role among other organisations to make this all happen.
Similar to the World Trade Organisation, ISDA and DTCC are organisations used, owned and governed by their members.
ISDA bridges the gaps between standards across jurisdictions, identifies and reduces risk in the market and improves the overall operational infrastructure.
DTCC settles, nets and clears transactions between parties among other things through use of its central repository or platform.
The reason for their existence is to promote trust, safety, transparency and liquidity in the system.
The purpose of the World Trade Organisation is to ensure that trade flows as smoothly, predictably and freely as possible.
Doesn’t this sound similar and isn’t this what we all want?
To catch up with time, existing trade pacts must implement the outlined concept between themselves with the World Trade Organisation playing a key, central role to secure a consistent, transparent and robust global roll out.
Looking beyond our doorstep to solve issues on our doorstep.
Let’s open up trade to get this world fit to work again.Get More Information
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