Business
3. Who are the Leading Traders?
Figure 2: World merchandise exports by product 2000 and 2007 (in US$
billions)
Note: ‘Others’ includes machinery and transport equipment but excludes both office and telecommunications equipment and automotive products.
Source: Created from data provided by World Trade Organisation (2002), International Trade Statistics 2001, Table IV.1, p. 95 and World Trade Organisation (2008), International Trade Statistics 2008, Table II.2 from www.wto.org
attention. While the exports of Brazil have grown at an annual average rate of 17% since 2000, the country ranked twenty-fourth in exports still only accounts for just over 1% of global trade and has not yet recovered its 2% share of world merchandise exports recorded in 1948. More important, Russia’s growth 2007 over 2006 was similarly dramatic; Russian exports
Figure 3: Leading goods traders in 2007
Source: Created from data provided by World Trade Organisation (2008), International Trade Statistics 2008, Table 1.8, p. 12 of World Trade Developments section.
grew at 17% over the previous year, moving it to twelfth place among exporters while imports grew 36% over the previous year, to confer the rank of sixteenth.
However, both countries continue to play significant global roles in supplying energy, raw materials and food, with manufactured goods being of less importance. India, like Brazil, accounts for just over 1% of global trade and it too has not recovered its post–World War II prominence; it is currently ranked twenty-sixth in merchandise exports, playing a substantial role in IT, office and telecom products. China has been outstripping these three. Since 2001, China’s export trade has grown by four times. Its growth has been sufficiently fast to wedge it into the top 10 traders, firmly in third place after the United States and Germany by the end of 2007 in terms of total trade, and in second place from an
export perspective.10 In 2008, Paul Bingham presented Global Insight’s conclusions that the top four countries with the capacity to buy global products (measured in terms of GDP rank in real dollars) by 2050 will be China, the US, India and Japan, in that order.11 Brazil and Russia will be in the Top 10.
Therefore these countries, and others in close proximity, may well benefit from the transportation demands such growing wealth and resultant spending on consumer goods will encourage.
Before drawing any conclusions about geographic interests in the trade in manufactured goods, and what that might mean for those with an interest in shipping, it is important to examine the major trade flows of manufactured goods and how much of
that trade is intra-regional. Throughout the last two decades, trade liberalisation and the development of the World Trade Organisation as a multilateral forum to encourage such liberalization, when coupled with the global restructuring of supply chains, encouraged intercontinental trade growth. However, the 1980s and 1990s also bore witness to an explosion of regional trade agreements – the European Single Market and the subsequent broadening of the European Union;
the Canada–US Trade Agreement and later the North American Free Trade Agreement; Mercosur in South America–encouraging continental trading patterns. By the end of the 1990s, approximately half of world trade was intra- regional.
The seven regional trade flows in manufactured goods presented in Table 1
account for a significant share of world trade. As shipping best supports intercontinental and inter-regional trade, rising intra-regional trade has a dampening effect on growth in shipping demand. The intra-regional flows of the three largest trade blocs (Europe, Asia and North America) are particularly significant, and account for about half of all trade in manufactured goods. The most integrated market is Europe, with 73.5% of its trade classified as intra- regional.
“[T]rade flows within regions account for a higher share of world trade than flows between regions. Since 2000, this share has fluctuated from between [sic]
55 to 58 per cent. Relatively large differences have occurred in the growth of trade within regions: North America and Asia show a relative [sic] balanced growth between inter-and intra-regional trade; Europe’s intra-trade is growing much faster than its external trade due to the deepening of its economic integration while South and Central America, Africa, the Middle East and the CIS have recorded higher growth in inter-regional exports than in intra- regional.”12
Should the trend of trade integration continue along its current path, a prospect not unlikely given US preoccupation with homeland security and its focus on tighter border controls (resulting in a greater administrative burden), how much trade growth will
be available for ocean transport? The likely answer is a smaller share than is now available. In other words, any rise in protectionism will dampen the demand for shipping more so than already seen from the economic downturn.
This then raises the question of how focused countries are on supporting their future trade to take advantage of global trading opportunities. The World Economic Forum has undertaken to assemble a new report on this issue. The Global Enabling Trade Report assesses factors, other than tariffs and quotas, that become barriers to trade, such as border administration, infrastructure, logistics and the business environment traders must contend with in the foreign market.
Four indices are created (Table 2) based on nine “pillars” that encourage the development of trade,13 of which two reflect strong transportation competitiveness inputs (Table 3).
If the top 10 trading nations by value in Figure 3 are compared with the top 10 in transport and communications infrastructure from Table 2, there is only an overlap of four countries – Germany, the Netherlands, France and the United States. However, it should be remembered that Figure 3 represents a “size of economy” construct that Table 2 does not. The remaining six are all smaller economies without the significant home markets that allow them the luxury of
trade-destroying protectionism. Even more noticeable is the openness of Europe, which has fostered growth in container trade with Asia (noted previously) as well as rising intra-regional trade.