Globalization has been at a crossroads for a while. Trade protectionism is on the rise. At the same time, sophisticated technologies inaugurate a new era of threats and opportunities that holds the world in awe.
The Fourth Industrial Revolution transforms and sometimes puts an end to many professions as we know them. Robotics and automation, not cheap labor sources in Mexico or China, are mostly to blame for deindustrialized sectors and towns in the US and Europe.
It is quite paradoxical. Technologies in communications, social networks, co-working and transportation bring us ever closer. But sometimes they also end up becoming the indirect causes of nationalistic industrial policies and protectionist trade measures.
After World War II, trade was clearly the top driver of prosperity. But that changed. WTO statistics show that since the Great Recession defensive trade measures — in one word, protectionism — is expanding. We have moved from a long period of deep globalization to the current stage where deglobalization trends might prevail.
It wouldn’t be unfair to suppose the risk of deglobalization and the emergence of Industry 4.0 as the two most important dynamics unfolding in the world today.
There are certainly many actions beyond the realm of trade that must be taken in order to make both globalization and the Fourth Industrial Revolution work.
Retraining — and therefore the reskilling of the labor force — is one of them.
But by scanning the technological horizon, we feel there are innovations out there that may actually propel trade and globalization forward, in a way that is both inclusive and smart.
That is why we decided to propose an Intelligent Tech & Trade Initiative (ITTI), which will be launched at the World Trade Organization during its Public Forum later this month in Geneva.
‘ITTI’ will bring together technology and business leaders, negotiators and scholars in debating and devising ways on how blockchain and augmented intelligence (AI) can positively impact global trade. Its WTO launch is the first step of a project that gathers representatives from institutions and companies as different as ICC (International Chamber of Commerce), IBM, Gearbulk, UNCTAD and Columbia University.
We see the creation of ITTI an essential move in making blockchain and AI drive trade beyond existing roadblocks. Instrumentally, they can enable more proactive supply chains, enhance compliance software, draft smarter contracts or expand access to trade financing.
But they can also be very inclusive. These technologies will help both SMEs (small and medium sized enterprises) and LDCs (Less Developed Countries) seize a bigger piece of the global trade pie. They allow for de-intermediation, increased trust and agile market access. This will help bridge the gap between large MNCs (multi-national corporations) and SMEs, as well as between post-industrial economies and LDCs.
They both lack access to trade networks or formal credit structures. Through blockchain, SMEs can better access credit, link into a broader investor ecosystem and set up new trading networks. This will result in better transactions and trade agreements for both SMEs and LDCs.
AI can also play a role in leveling the playing field in trade negotiations. Traditionally, countries have a toughtime preparing for trade talks. Delegations, especially those representing emerging economies, are not equipped to face detailed minutiae.
New technologies however will help delegations gather and structure information as well as predict different negotiation scenarios. This is achievable by using AI tools to access and interact with cloud-based resources.
Additionally, we might be increasingly able to use AI in predicting and modeling trade negotiation outcomes. Protectionism often results from subjective, ill-informed analytical dynamics. Up until now, measuring protectionism – or, on the contrary, the potential of free trade – has relied on projection models that have not explored the full potential of new technologies.
By building and applying AI tools to project, predict and weigh the pros and cons of more or less trade agreements, countries will be able to better balance costs and benefits arising from industrial and trade policy decisions.
Many blockchain and AI applications to trade will have to be adapted from other uses in finance, logistics, medicine or the legal world. And most will definitely be built from scratch. That is why we conceived ITTI as a multimedia project that will examine how cutting-edge technologies can bring about new functional and conceptual approaches allowing for international trade transactions and negotiations to advance.
ITTI’s ultimate objective is to stir the debate involving the technology community, trade negotiators, business leaders and scholars on how to better pursue a constructive trade agenda.
It is only by fostering the interaction among these key stakeholders that tech-intensive solutions will be crafted and developed. ITTI will do so by promoting research papers, organizing conferences and producing TV documentaries and interviews series on the future of technology and trade.
We’ve got to make sure this new era that dawns upon us is inclusive of companies big and small, countries rich or emerging, so all can benefit from its endless potential.
By bringing technology and trade closer together, we will not only be lifting flows of exports and imports, but improving the very essence of international cooperation.
Daniel Feffer is president of ICC-Brazil.
Marcos Troyjo is director of BRICLab at Columbia University, where he teaches international affairs.