The twilight of global trade?
By Malcolm Ramsay and Malcolm Wheatley2017-11-06T14:16:00
Globalisation and free trade may be reversing towards regional supply chains for a mix of policy and economic reasons
If there’s one word that sums up much of the last 20 years in terms of the world’s automotive industry, it’s ‘globalisation’. Driven by rising sales in emerging markets, low-cost country sourcing, and the search for economies of scale, carmakers have invested heavily in building international supply chains of finished vehicles and automotive components, not to mention engineering, research and development and software capabilities.
Free trade agreements and a reduction in barriers, both tariff and non-tariff related, have also contributed to these changes. The last 20 years have witnessed China join the World Trade Organization, while the 10 member states of the Association of South-East Asian Nations have grown strongly and the European Union has expanded. There have been bumps along the way. Countries such as Russia and Brazil often seem to go two steps backwards after each effort to reduce barriers. But taken together, trade agreements have contributed to the complex integration of supply chains across a number of regions, from North America to Asia.