All 40 economies positioned as the most important players in global trade have brought the difficulties, twists, “unquestioned” rules and habits in the worldwide supply chain caused by the two “black swans” – global virus outbreaks and the Russia-Ukraine war. Therefore, all the challenges and conflicts in international trade during the three years between 2020 and 2022 show that it is no longer possible to return to the world before 2019. For this reason, both the U.S., the EU and the significant actors of the African and Asian continents are thinking hard about how to establish a “brand new” supply chain model for all strategic areas, such as energy, technology, digitalization, defense and logistics.
The Organisation for Economic Co-operation and Development’s (OECD) latest assessment of global trade and the supply chain last week shows that the trend toward new markets and suppliers in international trade is not limited to Atlantic countries. For example, Russia’s energy exports have shifted from the West to Asia, with China and India being the most important buyers. Due to the sanctions imposed on Russia, the difference between the barrel prices of Ural and Brent crude oil has recently increased significantly, and imports from Russia are advantageous for Asian economies.
Another point highlighted in the report is the ongoing concerns about food security for the current and future periods. The OECD analysis shows that food and fertilizer prices have recently decreased, especially after the Black Sea grain corridor initiative, and have returned to their prewar level; they are still above the pre-COVID-19 level.
Due to the uncertainties arising from the Russia-Ukraine war, fertilizer prices are still high despite the recent downward trend. Another vital point in the OECD’s report is that until the 2008 global financial crisis, the trade restrictions imposed on each other by leading countries affected between 3% and 4% of global goods trade. Today, the same rate has increased to 9%-10%.
Taking into account that in the new March global trade report of the United Nations Conference on Trade and Development (UNCTAD), goods trade reached $25 trillion in 2022 with an increase of 10% compared to the previous year, the trade volume affected by the protectionist measures of countries has increased from $800 billion to $2.5 trillion. This situation also explains the 6% contraction in the trade volume of the group of nations referred to as “south-south” in the UNCTAD report in 2022, especially in East Asia.
The report shows that the global services trade, which is continuing its recovery after the two painful years of coronavirus, has reached $7 trillion with an increase of 15%. Moreover, although global goods trade decreased by $250 billion in the last quarter of 2022 compared to the third quarter, the international services trade maintained its position.
However, the UNCTAD expects global goods trade to increase by 1% quarter-on-quarter and international services trade by 3% in the first quarter of 2023. Furthermore, while there was a decrease in goods trade in China compared to the previous quarter and the same period of the last year, there was an annual increase in terms of the U.S. and the EU, but a decrease was observed compared to the previous quarter.
The findings of the EU Commission are clear: The EU is too dependent on China and third countries in the global supply chain. Therefore, to reduce and manage the risks it will face, the EU must closely monitor and restructure the supply chains of strategic and critical materials. The U.S. gives the same message. As a result, we will all witness together that Türkiye’s role will exponentially increase.
