Never before have small businesses and start-ups been so connected – in digital tools, technology, access and ideas. Entrepreneurial innovators are leading with passion and counting on connectivity to expand their businesses across borders, seize niche opportunities and shape the global economic future.
So why then does evidence show that SMEs are failing to access trade deals – one of the most significant tools there is for multiplying business growth and opportunity? And what do agreements like the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) offer?
Trade agreements are designed to lower the barriers between participating countries – giving domestic companies better access to more customers and larger, international markets – while reducing tariffs and customs duties which slow global commerce.
That’s why the CPTPP is arguably one of the most important trade deals in decades – it removes tariffs on about 95 per cent of goods traded between member countries.
The agreement, which came into effect in December 2018, creates a trade community accounting for an extraordinary 14 per cent of the global economy and that figure is only projected to rise.
Yet the biggest surprise is just how little many “born global” SMEs and entrepreneurs know about these deals – let alone how to translate their potential into business success.
In markets like Australia, concerns that SMEs are not seizing the opportunity have triggered a government inquiry. Further afield in Singapore, there’s broad recognition that SMEs are having difficulties reaping the benefits.
What’s more, SMEs are finding that agreements remain too tough to interpret or navigate, especially for those who are inexperienced in international trade.
So what’s the answer? It starts with making trade deals a part of business strategy – and ensuring that businesses clearly understand the “why” of how they can benefit from improved terms of trade.
For instance, companies that use agreements experience stronger export growth, access to new markets, a wider client base and the creation of new business opportunities.
But the challenge is also more specific– SMEs often lack the resources and expertise to navigate complex trade rules.
Other than lowering tariffs for almost all goods traded between member companies, the CPTPP also makes moving goods among member states easier by streamlining paperwork, increasing transparency, and setting up rules that reflect modern supply chains. That means SMEs will be able to trade in 11 CPTPP markets with a single set of rules and document requirements, greatly simplifying access to markets representing almost 500 million people.
The “how” is increasingly critical in equalising the opportunity. The choices are many – and growing. For instance, SMEs in CPTPP markets can team up to target a third, and entirely different market – saving time and money by pooling resources. Counsel and technology tools are critical, helping SMEs with knowledge and resources, as well as automating as many shipping processes as possible, will ensure their shipments clear customs confidently and quickly.
No matter what, the goal is clear – ensure innovation flows from all deals to all kinds of businesses. For if SMEs can put the benefits into practice, the possibilities different are endless.
Karen Reddington, President, FedEx Asia Pacific