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2023 was an up-and-down year across the globe, and we’re predicting another busy year for international trade in 2024. 

To start off the year, we wanted to set out the top seven trends we’ll be watching through the coming year.

1. Elections, elections, elections

2024 is set to be one of the most consequential years for elections ever, with more people going to the polls in a single year than even before.  This will have profound consequences for international trade.  Some of the main elections we’re tracking:

• The European Parliament elections in July will see a new European Commission installed, and will determine if the EU can reinvigorate its track-record on passing bilateral trade agreements. Several important elections will also take place in Member States, including Austria, Belgium, Croatia, Finland, Lithuania, Portugal, Romania and Slovakia. 

• In the US in November, several Republican candidates have expressed hard-line positions on trade, with proposals ranging from removing normalised trade relations with China, implementing a flat tariff on all imports, and withdrawing from the Indo-Pacific Economic Framework for Prosperity.

• In the UK, speculation abounds when the Prime Minister Rishi Sunak MP will call an election. The opposition Labour Party has set out its own vision for trade policy.

2. Challenging Ministerial for the WTO 

In February, the attention of trade watchers will shift to Abu Dhabi where the WTO will hold its Thirteenth Ministerial Conference. The WTO is facing a crisis as reform negotiations, particularly on the dispute settlement mechanism, deadlocked. Businesses will be watching whether WTO Members are able to renew the E-Commerce Moratorium or if it will be blocked by India, South Africa and Indonesia. 

Other issues on the agenda will include:

• Agriculture and food security
• E-commerce joint statement plurilateral negotiations
• TRIPS Waiver
• ‘Second wave’ of fisheries subsidies negotiations
• Development matters.

Failure to deliver meaningful outcomes and a realistic way forward will further undermine the credibility of the organisation, where some Members are starting to question the size of the WTO’s budget.

3. Green supply chain regulations will start to bite

The EU’s Carbon Border Adjustment Mechanism’s (CBAM) first declaration comes due on 31 January 2024, with all importers of certain covered goods (steel, iron, aluminium, concrete, fertiliser, hydrogen and electricity) imported into the EU in Q4 2023. 

Further changes to the regime will be implemented throughout 2024 and beyond, with businesses having to account for actual greenhouse gas emissions embedded in products from 31 July 2024. 

Other countries will step up their consultations as to whether to implement similar measures, with the UK and Australia probably the most advanced.  

Companies will also have to contend with the entry-into-force of the EU’s Deforestation Regulation that takes full effect from 30 December 2024. Other regulations to watch out for are the Corporate Sustainability Due Diligence Directive and potential progress on an EU Forced Labour regulation.

4. More sanctions and export controls

The modernisation and expansion of sanctions and export control regimes will accelerate across much of the West with a focus on compliance and expansion of coverage. 

In the US, watch for the ongoing development of US export controls and bi-partisan support for strengthening the US export control regime. Focus will be on what can be achieved in the context of the wider US government budget negotiations with Congress and the development of new US export control rules and procedures.  

Whether countries will be able to increase cooperation and alignment on export controls will remain a key discussion point.

5. Strained US-EU relations to continue

The list of outstanding trade negotiation issues between the EU and US continues to grow, leaving a narrow window for progress on some discrete issues.

First on the agenda is a Global Arrangement on Sustainable Steel and Aluminium, designed to remove the threat of USA tariffs on steel and aluminium resuming (and the inevitable EU retaliatory measures if they do). The talks have also discussed the treatment of US steel and aluminium under the EU’s CBAM regime. With the talks faltering, the EU may resume its WTO dispute against the US.

The possibility of a Critical Minerals Agreement, which would allow European producers to be eligible for certain incentive programmes under the US Inflation Reduction Act, is also one to watch.

The US-EU Trade and Technology Council missed its meeting in December, with substantive progress stalled. The next meeting hasn’t been scheduled but is due in the first half of 2024. One of the key issues will be the US position on data flows which has been called into question following its unexpected withdrawal of support for certain provisions in the WTO e-commerce negotiations.

6. Customs modernisation will accelerate

Data and digitalisation of trade processes will continue in 2024, driven by customs agencies wanting enhanced trade facilitation coupled with better risk management procedures and compliance requirements. For companies, better data will deliver greater visibility of their supply chains while giving them the ability to better manage their compliance obligations. 

With the UK’s Electronic Trade Documents Act in 2023, 2024 will see more countries follow suit and commence their own digital trade legislative processes. Cross-industry standards will emerge, unlocking new forms of data that can enhance product allocation and risk decisioning.

7. Trade finance; a story of two halves 

In 2023, we saw the global ‘trade finance gap’ expand to US$2.5trn. While there was no shortage of liquidity in the market, an increasingly volatile geopolitical and macroeconomic landscape has made access to trade finance more difficult. 

These positive developments will be tempered by implementation plans in certain jurisdictions.  Basel 3.1 risk will increase the cost of finance, particularly in the UK due to its implementation choices. In 2024, we expect increased engagement with regulators to ensure a proportionate regulatory response.