Are we witnessing the end of the golden age of the extended supply chain?
The risk is certainly there if the head of the World Trade Organisation is to be believed.
The long and complex supply chains that we know today, involving the cross-border movement of materials and components owe much to the multi-lateral trade agreements negotiated through the WTO.
And supply chains could just as easily get bogged down by any increase in the level of bureaucracy.
Speaking in Singapore last week, WTO director-general Pascal Lamy pointed out that each member of the organisation now belonged to no fewer than 13 separate preferential trade agreements.
Of course, there are benefits to regional agreements, otherwise why bother. Nevertheless, Lamy warned: “Arrangements such as these impose trade costs.
“I know that some of the business community are frustrated with multiple sets of rules of origin when they are engaged in supply chain production involving several countries.”
And he went on to warn that the continual addition of new preferential trade agreements meant not only that existing agreements were becoming less preferential, they were imparting an instability factor on trading conditions.
But, while regional trade agreements have been growing rapidly, multi-lateral negotiations between governments have stalled – not surprisingly a matter of serious concern to the World Trade Organisation.
Supply chain professionals can testify to the benefits of the growth a multi-lateral trading system. It is important that they are not forgotten and eroded through neglect.