In today’s globalized economy your company’s next business opportunity could be located anywhere in the world. The three T’s – Trade Agreements, Trade Financing, and Technology — provide the doors for small businesses to take advantage of these international business opportunities.
Hundreds of trade agreements are in force around the world. Countries sign trade agreements to reduce the costs to their companies of doing business with other countries. Trade agreements are used to reduce import tariffs and taxes, remove quotas and other trade barriers, and to harmonize the laws and regulations of the trading partners. As a result, the costs of importing and exporting goods around the world are being reduced and new and accessible markets are being created for goods and services.
The United States has trade agreements with 20 countries and is in the process of negotiating others. The share of European Union (EU) trade covered by free trade agreements has doubled between 2006 and 2013.
Financing for international trade provides a form of insurance that minimizes the risk that you will either not be paid or not receive the goods for which you have paid. Many governments, notably in the United States and other industrialized countries offer not only export credit insurance, but also export working capital that advances the business the capital it needs to deliver on an export order that it has received. The list of countries that offer export credit insurance is growing. Other providers of trade financing include banks and other financial service providers. The World Trade Organization (WTO) has indicated that 80% to 90% of world trade relies on trade finance.
Today’s technology allows a buyer across the other side of the world to use a cell phone to locate your company’s website and to make a purchase. As of 2011 there were 2 billion Internet users around the world and a significant portion of them use it to shop. As of August, 2013, it was estimated that e-commerce accounted for just over 5% of total global sales to the tune of US$1 trillion dollars. And it’s growing fast! This figure is a 20% increase over 2012, according to a 2013 report on global e-commerce. Furthermore, B2B (business-to-business) transactions account for 90% of e-commerce.
Technology also facilitates payments and access to information about where you may locate your next foreign business opportunity.
To Learn More
If you think that your business is ready to take the next step or to learn more about how you can use the three T’s — Trade Agreements, Trade Financing, and Technology — to expand your business globally, contact us.