ANAHEIM, Calif. - The “new normal” in the global trade of fruits and vegetables is uncertainty, but a panel of trade experts said exporters and importers can still find opportunities by mapping supply chain risks and exploring new markets.
In a Produce Marketing Association Fresh Summit session moderated by Richard Owen, vice president of global membership and engagement for PMA, Devry Boughner Vorwerk, CEO of DevryBV Sustainable Strategies spoke extensively about the current trade environment and what the next few years might bring.
In the session, called “The New Normal in Global Trade: Proactivity=Opportunity,” Pablo Borquez, president and founder Campos Borquez and a fourth-generation Mexican grower, also talked about the prospects of USMCA passage in Mexico and the strained trading relationships related to the tomato suspension agreement between Mexican tomato growers and the U.S. Department of Commerce.
Doug Grant, executive vice president and COO of The Oppenheimer Group, spoke about how the company navigates an ever-changing trade environment with trusted global partners.
Past and future trade
Boughner Vorwerk said much of the work in the last 25 years was devoted to bringing the world together with multi-lateral trade deals.
Lately, with the U.S. withdrawal from the Trans-Pacific Partnership, the trade tensions between the U.S. and China and Brexit, forces seem to be fracturing trust in free trade.
However, it is wrong to oversimplify what is going on now, she said.
“I don’t want us to think that we’ve always had free trade and now all of a sudden we have this disorderly world,” she said. “As an industry, we’ve always had to fight for free trade.”
At the same time, the missed opportunities from the U.S. pulling out of the Trans-Pacific Partnership are real.
“The strategic plan with TPP, for example, was to stitch together all of our North American partners and find a way to engage as a powerhouse region with an integrated supply chain in the Asia Pacific,” she said. ”In fact, it was a strategy to engage and get at many of the very issues that are being negotiated in this trade dispute between the U.S. and China; state-owned enterprises, intellectual property rights, digital trade (were) in there,” she said.
Both political parties have had a hand in the direction of trade policy, she said.
“We have to recall and remember that nobody in the last election - not one of the candidates - was for trade; it was very hard to have any conversation around getting trade support on the Hill for the Trans-Pacific Partnership,” she said. “There has been very little support for strategic trade in the last eight years or so.”
The U.S. and other countries are moving from a strategic approach to trade to more of a tactical approach, seeking more bi-lateral trade agreements as opposed to multi-lateral pacts.
Boughner Vorwerk said world trade growth is predicted about 1.2% by the WTO for 2019, down from earlier estimates of 2.6% growth. For 2020, the WTO is projecting 2.7% growth, down from earlier estimates of 3% growth. The WTO also has said that “downside” risks remain high.
While there is risk, she said there also is an opportunity for trade to grow. Brexit may lead to a trade agreement between the U.S. and the United Kingdom, she said and a trade deal between the U.S. and the European Union could be revived. The U.S. wants to engage with Asian countries on trade, and expanded trade between Latin American countries is an opportunity.
Strategies for the future
Boughner Vorwerk encouraged traders to map their supply chain risks and opportunities and to lean on trade organizations like PMA to help them keep abreast of trade developments.
She also urged traders to innovate and differentiate from competitors in product offerings and services.
Transparency and sustainability will be product attributes that will be valued by global consumers, she said.
“Don’t panic, because if you have a diversified plan and have a backup plan, you can adapt,” she said.
Boughner Vorwerk urged produce leaders to advocate for regional multilateral trade agreements since bilateral deals are less efficient and take longer to put in place.
While the impeachment inquiry is grabbing the attention of Congress now, she believes USMCA will pass before the 2020 elections occur. Grant and Borquez also said all North American trading partners should be motivated to approve the deal.