As the world goes to the polls, traders need to prepare for another year of change
“In 2024, 60% of the world’s population will be going to the polls,” says Marco Forgione, director general of the Institute of Export & International Trade (IOE&IT), as his attentions turn from one year of rapid growth for the organisation he leads to 2024, another year likely to be full of significant change.
“You’ve got elections in the UK, the US, India and the EU, among others, with the new European Commission to be established, too,” he says, adding:
“Since I joined IOE&IT in 2020, there’s been a lot of change for several reasons, including Brexit, the pandemic and the conflicts in Ukraine and the Middle East.
“The coming 12 months are likely to see further changes, with potential political turning points in a number of countries, including the UK whether there is the possibility of a first Labour government in 14 years.”
Preparing for change in the UK
IOE&IT is a politically independent organisation but, as part of its charitable remit to promote international trade and to represent businesses involved in it, it inevitably works closely with the government of the day.
With the next UK election almost certain to fall in 2024, IOE&IT is carefully considering how it represents its members’ views to would-be decision makers on all sides of Westminster. As Forgione explains:
“We are working hard, across the political spectrum, to ensure the views and opinions of IOE&IT members are heard, and that the wider issues affecting UK businesses are understood by key decision makers, politicians and officials. We are working with all the major political parties to ensure they will have a long-term strategy for business growth that all businesses understand.
“Whoever enters 10 Downing Street next year, we will be looking to ensure their government is committed to free trade and has a strategy in place that enables investment in UK business. This strategy also needs to address some of the systemic problems we face, including declining productivity and the need to bolster supply chain resilience.”
In 2023, IOE&IT hosted panel discussions at both the Conservative and Labour party conferences on the need to bolster services exports across regions and nations in the UK. It was also represented at the Liberal Democrats’s conference.
IOE&IT will continue to engage with senior politicians in all parties – including business and trade secretary, Kemi Badenoch, and her opposition shadow minister, Jonathan Reynolds – on key trade and business issues, Forgione says. These include trade digitalisation and ongoing work to modernise customs processes, the UK’s development of its own carbon border adjustment mechanism, and the response to growing supply chain disruption caused by attacks in the Red Sea and ongoing issues relating to the Panama Canal.
Despite it being almost four years since Brexit, the UK’s trading relationship with the EU will continue to be central to this engagement and the IOE&IT’s policy research output. As Forgione explains:
“Over the next year, we’ll be issuing several research reports to ensure that, both here and in the EU specifically, there is an understanding of how we can get to a better, more compliant trade relationship with less friction.”
Preparing for change globally
As Forgione notes, though, the UK is not the only country where voters are going to the polls, with over 70 elections taking place in countries including India, the US and EU. Each of these will have a significant impact on UK trade. The government has been in negotiations for a trade deal with India for several months and has recently had hopes of a foundational UK-US trade agreement dashed by incumbent president, Joe Biden. The repercussions of these elections will be felt beyond the UK though, as Forgione explains:
“There is going to be a political shift which will impact businesses and the global economy.
“Whether Modi wins in India or not, going into a new term the leader will have different priorities than currently.
“In the US – assuming it’s going to be Biden versus Trump – if Biden wins, he’ll be entering a second term and may therefore become more engaged internationally; if it’s Trump, the whole geopolitical picture could shift again, particularly around climate, China and the ongoing conflicts in Ukraine and the Middle East.
“There’s going to be a new parliament and commission in Europe as well, and what that means for both the EU’s customs reforms and its relationship with the UK will be fascinating to see.
“And the impact of the conflict in Gaza, including on supply chains, is likely to continue for several months.”
This all comes at a time when Forgione says “traditional diplomatic relationships are faced with tectonic geopolitical pressures”. Wars, the pandemic and the energy transition are among recent events that have bought supply chain politics back to the fore, with countries increasingly prioritising national resilience and security, and growing trends towards reshoring, nearshoring and friendshoring all becoming more prominent.
Forgione’s doesn’t think this is the beginning of the end for globalisation more broadly, but instead frames it as the emergence of a “different flavour” of global order.
“Groupings of nations are establishing stronger trade relationships, while there’s a trend towards governments looking to build more resilient supply chains, and this is as much to do with economic growth as with security.
“A lot of this was initiated by China which, even before the Belt and Road Initiative, had a strategy of building supply chains for goods, services, commodities and components that it didn’t have the natural resources or ability to produce.
“The US has recently responded to Chinese pre-eminence in the manufacturing sectors that will be needed for the energy transition by introducing the Inflation Reduction Act and increasing the support it provides for its own industries.
“The EU has also taken a more protectionist approach with the introduction of the carbon border adjustment mechanism, deforestation regulations and other regulatory approaches. And there been export restrictions announced on key commodities by China and India.
“The global picture has changed rapidly over recent years, with a more selective form of globalisation, based on geopolitical links and the decoupling of certain relationships, such as that between US-China, emerging.”
Forgione adds that it was significant that at the BRICs conference in South Africa in the autumn of 2023 there were calls from some nations to establish a rival reserve currency to the US dollar – a measure that, if realised, would significantly alter the financial underpinning of international trade and the global economy.
But in the broader, historical context, Forgione thinks the world is already going through a “China and southeast Asia century, following the US century in the 1900s and the European period in the 1800s”. All things that come must pass, though, and Forgione believes the world should prepare for an African century.
“The next century will be an African one. You’re seeing it with the customs union being established over the whole of the continent with the African Continental Free Trade Area (AfCFTA).
“When that’s fully realised, Africa will have a power like no other region or country has had before, because of the volume of its natural resources and its rapidly growing, young population.”
What does this mean for the UK? Forgione says the UK has no choice but to “build a large network of relationships with countries that positions the UK as a hub near the centre of this realignment of global trade”. He thinks the UK will inevitably need to position itself “between the US and EU, while looking to forge links with the growing economies of the future in southeast Asia and Africa”. He says foreign investment needs to be a “key tool to build soft power and support nations to trade”.
“This can’t be purely in self-interest, but it needs to be done to forge closer trading links,” he says.
Navigating 2024
The number of elections taking place in 2024 will inevitably lead to change in global politics, affecting British businesses that trade internationally. The geopolitical and supply chain trends identified by Forgione, that have been in motion for several years already, mean that many traders have already, to some extent, learned how to manage and navigate a changing regulatory and political landscape.
IOE&IT’s role in 2024 will be to continue expanding its own services and support for businesses to understand and navigate further changes, while continuing to represent business’ needs to decision makers, whatever their political persuasion. Forgione explains:
“We will need to help businesses not only manage regulatory or legal changes, but also to interpret the new global environment that will emerge over the next 12 months, so that businesses can continue to develop and grow their trade.
“It’s really important that IOE&IT’s members, and businesses more generally, are represented to ensure that a long-term approach to the challenges we face are addressed, whether that’s domestic and global economic stagnation or the impacts of wars and a changing climate.”
To meet this changing world head on, IOE&IT will itself continue to evolve, Forgione says.“We are updating, upgrading and building the technology behind our services, to ensure we deliver more and better for our members, including a more tailored individual experience of our services, as well as new ways of coalescing our community more effectively.
“At the start of December, we had over 600 people attending one of our webinars. That’s testament to our convening capabilities online and something that wouldn’t have been imaginable just a few years ago.
“But we can be more effective and have more impact in how we use technology as an organisation, which is why we’re investing significantly in our internal systems, as well as investigating how further technological changes could impact international trade and how our members can take advantage of them.”
Despite the challenges that 2024 will inevitably pose, Forgione is excited for what IOE&IT and its members can achieve.
“It’s fair to say that 2023 was a busy and successful year for IOE&IT and 2024 looks like it’s going to be even busier, with even greater potential for IOE&IT to play an important role helping to define the future of international trade.”
