Emerging markets will seek concessions from the UK in post-Brexit trade deals, new research from Ti reveals

Survey respondents appear to have a broadly pessimistic view on the UK’s negotiating position in post-Brexit trade negotiations. The UK has a stated position that it will seek early and numerous trade deals with a number of markets in the period after Brexit.

Currently, as an EU member, the UK’s trading relationship with external partners is governed via the EU’s wider trade agreements. Survey respondents indicated that their expectation in aggregate is that these agreements will form the basis of bilateral agreements and emerging markets will seek to roll over or, more aggressively, seek concessions from this starting point.

The survey is part of the 2019 Agility Emerging Markets Logistics Index, the 10th annual snapshot of industry sentiment and ranking of the world’s 50 leading emerging markets, produced by Transport Intelligence and Agility. The Index is a broad gauge of countries’ competitiveness based on their international and domestic logistics strengths and business fundamentals.

The Index ranks 50 countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors. The top 10 are: China, India, United Arab Emirates, Indonesia, Malaysia, Saudi Arabia, Mexico, Qatar, Turkey and Vietnam. China, India and Indonesia rank highest for domestic logistics; China, India and Mexico are tops for international logistics; and UAE, Malaysia and Qatar have the best business fundamentals.

Elsewhere in the survey, respondents highlight the potential downside risks of a potential trade war between the U.S. and China – survey respondents are clearly pessimistic, indicating a belief that trade volumes between the U.S. and China will fall more than 10% in 2019 as tariffs and wider uncertainty see businesses in both markets seek alternative sourcing and sales opportunities. There will be winners, though, with 56.1% demonstrating a belief that Southeast Asian markets stand to benefit from ongoing trade tensions between the U.S. and China.

John Manners-Bell, Chief Executive of Ti, says: “This year’s Index highlights the range of challenges and opportunities many markets face. The uncertainty which surrounds trading relationships, combined with implementation of new trade barriers, threatens to derail integration of emerging markets with the rest of the world. It is essential that obstructive trade policy does not stand in the way of commercial opportunities which help drive growth in emerging markets.”

Agility Emerging Markets Logistics Index 2019 highlights:

• China and India top the 2019 rankings based on their size and strength as international and domestic logistics markets, but lag smaller rivals in Business Fundamentals, a category that ranks countries based on regulatory environment, credit and debt dynamics, contract enforcement, anti-corruption safeguards, price stability and market access. China ranks No. 7 and India is No. 10 for Business Fundamentals.
• The strongest clusters of emerging markets are in the Arabian Gulf and Southeast Asia, thanks to business-friendly conditions and core strengths – the Gulf’s energy wealth and Southeast Asian manufacturing power – that draw logistics activity. In the Gulf, UAE (No. 3), Saudi Arabia (6), Qatar (8), Oman (12), Bahrain (16) and Kuwait (18) rank highly. Among ASEAN countries, Indonesia (4), Malaysia (5), Vietnam (10), Thailand (11) and Philippines (20) are strong.
• Several countries would surge in the rankings if they could improve Business Fundamentals: Brazil, Philippines, Argentina, Bangladesh, Nigeria, and Bolivia. African economies with relatively strong logistics markets and potential – Uganda, Libya, Mozambique, Angola – are severely hamstrung by weak Business Fundamentals.
• Against a backdrop of trade friction and data showing China’s economy slowing, survey respondents see India as the market with greatest potential over China, their second choice.
• Trade bureaucracy is the biggest obstacle to small and medium-sized companies trying to do business across borders, survey respondents say. But when it comes to what size companies will grow fastest in emerging markets, SMEs are their top pick over multi-nationals and big regional or local companies.
• Iran’s near-term potential has evaporated as a result of re-imposed U.S. sanctions. Nearly 75% of those surveyed say Iran is “less promising than before” or “not at all promising.” Iran ranks 49 the of 50 countries as an international logistics opportunity.
• Sub-Saharan Africa is a mixed picture. South Africa (24) is an underperformer. But in rankings of Business Fundamentals, Ghana and Kenya do relatively well at No. 19 and No. 21. Nigeria, which vies with South Africa to be the region’s largest economy, suffers from poor business conditions, an area where it ranks 44th.
Source: Transport Intelligence (Ti)

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