How digitalization averted cross-border trade disaster in Asia
Cross-border trade has been a key driving force in the development of most of the world since the existence of the first civilizations. From the Silk Road that connected the East and West in ancient times to the goods we purchase online today, it has been essential to the growth of a multitude of civilizations, empires, and nations throughout the course of history.
Decades back, countries in the European Union (EU) collaborated on facilitating cross-border economic activity with free trade agreements. However, the Asia Pacific region (APAC) had been a little on the laggardly side when it comes to improving its processes, laws, regulations, tariffs, and access to financing, especially in relation to global value chains.
Countries in APAC, especially Asia, have primarily focused on improving trade within its sub-regional perimeters, such as within Southeast Asia, or Greater Asia. This can be largely attributed to the proximity of these countries with each other, and the similarity of cultures driving demand for variations of goods similar to theirs.
Although improvements in cross-border trade have dramatically improved over the past decade, the Covid-19 pandemic has been rather disruptive to this industry due to border closures and movement restrictions that interrupted domestic and external supply chains.
Despite escalating trade tensions over the past half-decade between China and the US, or political disputes between China and Japan, the region at large has so far been successful at growing and reducing poverty.
This can be largely attributed to nations sticking by their strategies to boost regional and international trade, such as by keeping trade lines open and free. Access to precious resources such as the exchange of capital, talent, and knowledge on a regional and international scale translated into improvement of their own workforces and eventually, domestic economies.
Asia, which heavily depends on international trade, shows great promise for a post-pandemic recovery — surpassing others even. Admittedly, whilst trade was impacted negatively by the pandemic, heavy damage was largely averted through several approaches.
Strong and proactive domestic, bilateral and multilateral cooperation; prudent fiscal regulations and access to financing, and the rapid pace of technological adoption helped businesses streamline operations, generate more economic activity, and ensure business continuity.
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