Uncertainty is the only sure bet
If businesses depend upon certainty, they should prepare for an uncomfortable 2019. Perhaps the only sure bet is that the volatile, complex international trade landscape will continue, with even more pressure on the global rules-based trading system.
Regardless of the Brexit outcome, after pronouncements that countries would line up to strike trade deals with the post-Brexit UK, reality will hit hard in 2019. Prime Minister Theresa May returned from the Buenos Aires G20 meeting with great talk of bilateral trade discussions but less tangible progress. And according to several of her trade envoys, the proposed UK-EU withdrawal agreement may put dozens of potential trade agreements on hold as the UK and EU resolve issues with the Irish backstop and customs union. This will place countries and companies around the world in trade deal limbo as Brexit nears.
In 2019, President Trump will shift his focus to re-election, and the White House’s rhetoric on trade will likely become even more intense. Expect a continuation of U.S.-China trade tension and misunderstanding and the United States’ showdown with the WTO, even though neither issue was an electoral winner in the 2018 mid-term elections. It will make the prospect of a UK-United States trade deal that is favourable to the UK more unlikely. The President likes deals, but loves winning more.
Defenders of multilateralism, including the EU, will work to find their voice amidst China’s efforts to control the global trade order and the United States’ continued destabilisation of it. At the G20 meetings, leaders agreed on the urgent need for WTO reforms, but absent significant progress, the June 2019 G20 meeting in Osaka could be contentious. The question for 2019 is who will stand up for multilateralism – including whether the world’s leading companies, which depend upon open, free trade, become more forceful.
Finally, emerging markets, darlings when globalisation produced great benefits, will remain under heavy pressure. Domestic, geopolitical and economic factors in countries such as Brazil, Mexico, Turkey and Malaysia will prompt a tricky balance between protectionism, reforms and efforts to be opportunistic amidst the uncertainty.
Smart governments and businesses will use 2019 to plan for political and economic contingencies, while also shaping their reputation and working behind the scenes to shape the agenda. When these challenges start to ease, they already will have established goodwill and support for their needs.
Michael Hartt, Head of International Affairs
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November 18, 2021
November 18, 2021