Air Cargo Newsdesk

Air cargo needs to wake up to global trade chaos

Air cargo needs to wake up to global trade chaos

WORLDWIDE economic recovery is in dire jeopardy as mounting global trade restrictions increase at the double, reveals a new World Trade Organisation (WTO) report.

The warning comes after 39 new protectionist measures were applied by G20 economies between 16 October 2017 and 15 May this year, reveals the WTO.

The measures, which include tariff increases, stricter Customs procedures, and the imposition of taxes and export duties, equate to an average of almost six new restrictive measures per month – significantly higher than the three measures recorded during the previous review period, it notes.

The marked increase in trade restrictive measures among the G20 nations – comprising Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Republic of Korea, Japan, Mexico, the Russian Federation, Saudi Arabia, South Africa, Turkey, the UK, the United States, and the European Union – are of real concern to the air cargo industry, which depends on speed of delivery as its unique selling point, writes Thelma Etim.

At the start of this month, Alexandre de Juniac, director general and chief executive of the International Air Transport Association, highlighted the “growing friction” among governments on trade.

“We still expect demand to grow, but those expectations are dampened with each new tariff introduced,” he observed.

“For many USA importers, that’s their future profit margins evaporating overnight…”

Zvi Schreiber, chief executive of freight procurement and data platform Freightos, is equally worried about the impact of punitive trade tariffs.
“Following weeks of uncertainty, last Friday 25 per cent tariffs were slapped on hundreds of products each way in China-US trade, ” Schreiber observes.
“For many US importers, that’s their future profit margins evaporating overnight. This change will play out in freight rates in the coming weeks. But for now, just like Asian stock markets which closed higher on Monday (based on strong results for US June employment) other factors are at play.”

The WTO report highlights that whilst the global economy is finally beginning to generate sustained economic momentum following the global financial crisis,” the uncertainty [now being] created by a proliferation of trade-restrictive actions could place this economic recovery in jeopardy”.

Further escalation “could carry potentially large risks for the system itself,” it underscores.

Commenting on the report, Roberto Azevêdo, director-general of the WTO, has urged G20 leaders to show restraint in applying new measures and to “urgently de-escalate” the situation.

“Additional trade-restrictive measures have been announced in the weeks since this reporting period and therefore the deterioration in trade relations may be even worse than that recorded here,” Azevêdo warns.

“This continued escalation poses a serious threat to growth and recovery in all countries, and we are beginning to see this reflected in some forward-looking indicators. I will continue working with the G20 governments and all WTO members to this end.”

Read more stories about global trade here

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