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Take the Quiz: International Trade

By Karen Lynch

The international trade map shifted during 2017, as new accords were reached, old ones were revisited, and digital technology reshaped the way in which the world conducts trade. For a quick refresher on the facts and trends that shaped international trade in 2017, take this seven-question quiz – and see how well you do.

1. True or False? International trade in goods has recovered to levels enjoyed before the global financial crisis.

 

ANSWER: False. It is true that international trade growth has improved since the crisis, but only to a point. Last September, the World Trade Organization (WTO) raised its estimate for 2017 trade in goods to 3.6 percent (up from 2.4 percent) and projected 2018 growth of 3.2 percent, due in large part to economic improvement across world regions.1 That said, international trade in goods achieved growth of 9 percent in 2004, dropped slightly to 8.5 percent by 2006 and then to 6 percent in 2007, as the crisis began.2,3 In 2009, global trade in goods experienced a 9 percent decline, the biggest contraction in international trade since World War II. Looking ahead, "the fact that trade growth is now more synchronized across regions than it has been for many years could make the current expansion self-reinforcing," said WTO Director-General Roberto Azevêdo, adding that "such a positive outcome would be more likely if countries continue to resist the temptations of protectionism."4

 

2. Which of the following terms does not belong?

 

A. Payables finance
B. Reverse factoring
C. Supplier finance
D. Confirming
E. They all belong.

 

ANSWER: E. In fact, according to the International Chamber of Commerce (ICC), these terms have all been used to describe the exact same thing, which has been creating confusion in the world of supply chain finance. The ICC is working to clear up the confusion, which it says is hindering the growth of supply chain finance.

 

3. How many signatories are in the Trans-Pacific Partnership (TPP)?

 

A. 11
B. 12
C. That's a trick question!

 

ANSWER: C. The TPP hasn't been signed, so there are no signatories. Eleven countries continue to negotiate the international trade pact after the U.S. withdrew early in 2017. And in early 2018, the U.K. was reportedly looking to join,5 which could conceivably increase the interest of other countries beyond the Pacific Rim. Taiwan is also seeking to join.6 Finally, even the name has changed, to Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which some observers say could be signed this year.7

 

4. Which country is it easiest to do business in?

 

A. Norway
B. United States
C. Estonia
D. New Zealand

 

ANSWER: D. According to the World Bank,8 New Zealand ranks No. 1 overall, as well as in the categories of starting a business, registering property, and getting credit. Its rank drops significantly, though, in the category of trading across borders – to 56th, largely due to the cost of customs compliance, in both time and money. (Most of the top-ranked countries in this category are in the European Union; 16 of them tie for No. 1.) As for the other countries listed above, Norway is eighth in the overall ranking, the U.S. is sixth, and Estonia is 12th.

 

5. True or False? The U.S. has a trade deficit with Canada.

 

ANSWER: False. The U.S. has had a trade surplus in combined goods and services with Canada for many years. And, according to the latest annual statistics from the Office of the U.S. Trade Representative, it increased to $12.5 billion in 2016. What also is true is that the U.S. has been running a deficit in merchandise trade with Canada, of $12.1 billion in 2016. When it comes to trade in services, though, the U.S. had a surplus of $24.6 billion that year.9

 

6. Fill in the blank. In the world of international trade finance, the blockchain distributed ledger technique is __________.

 

A. Just a concept
B. Still on the drawing boards
C. Now in the testing phase
D. Already mandated as a standard in several countries
E. Not applicable

 

ANSWER: C. In 2017, companies created functional proof-of-concept projects using blockchain for trade finance, but many of these projects aren't yet ready for prime time, according to PwC. "Today, trade finance is high-volume, costly, and time-consuming," said the professional services firm. "Financial institutions and shipping fleets have been experimenting with blockchain to create smart contracts between parties. We think this could be one of the most interesting areas to watch in 2018."10

 

7. The WTO says that the Trade Facilitation Agreement, which entered force in February 2017, will boost global trade by how much?

 

A. It will add 2.7 percentage points per year to world trade growth by 2030
B. It will add more than the elimination of all existing tariffs worldwide
C. $1 trillion per year
D. All of the above

 

ANSWER: D. The 2013 agreement aims to expedite the movement, release, and clearance of goods across borders, including the digital transformation of border procedures. It was ratified in February 2017 by 110 of the WTO's 164 member nations, which is the threshold for it to go into effect. Its intended impact is to unleash international trade potential for small and mid-sized enterprises (SMEs) and developing countries, as well as to ease transactions among the world's biggest companies and economies engaged in import-export trade. While the general sentiment in the global business and policy world is that this is a very positive development, and some countries began implementation early, other observers expect wrinkles and lags in achieving its full potential.

 

Karen Lynch - The Author

The Author

Karen Lynch

Karen Lynch is a journalist who has covered global business, technology and policy in New York, Paris and Washington, DC, for more than 30 years. Karen also is a principal at Content Marketing Partners.

Sources

1. “WTO Upgrades Forecast for 2017 as Trade Rebounds Strongly,” World Trade Organization; https://www.wto.org/english/news_e/pres17_e/pr800_e.htm
2. International Trade Statistics 2005, World Trade Organization; https://www.wto.org/english/res_e/statis_e/its2005_e/its2005_e.pdf
3. Ibid.
4. “WTO Upgrades Forecast for 2017 as Trade Rebounds Strongly,” World Trade Organization; https://www.wto.org/english/news_e/pres17_e/pr800_e.htm
5. “Britain in Talks to Join Trans-Pacific Partnership after Brexit, Seeing ‘No Geographical Restriction,’” South China Morning Post;http://www.scmp.com/news/asia/diplomacy/article/2126616/britain-talks-join-trans-pacific-partnership-after-brexit-seeing
6. “Taiwan Asks Japan for Support in Seeking Membership of CPTPP,” Focus Taiwan; http://focustaiwan.tw/news/aipl/201712110025.aspx
7. “The Trans-Pacific Partnership Has Been Resurrected – and It’s Happening Without the U.S.,” Vox; https://www.vox.com/2017/11/11/16637826/trump-trans-pacific-partnership
8. “Economy Rankings,” World Bank; http://www.doingbusiness.org/rankings
9. “Canada,” Office of the U.S. Trade Representative; https://ustr.gov/countries-regions/americas/canada
10. “Blockchain in financial services,” PwC; https://www.pwc.com/us/en/industries/financial-services/research-institute/top-issues/blockchain.html

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