Shipping containers line the Ever Most cargo vessel docked at the Port of Oakland on April 3, in Oakland, Calif.Noah Berger/The Canadian Press
Henri-Paul Rousseau is the delegate-general of Quebec in Paris.
While it is impossible to predict the next moves by Donald Trump’s administration – let alone their full consequences – it is clear that global trade and international geopolitical relationships are facing a radical disruption.
Ultimately, the U.S. will rediscover the limits of self-sufficiency, just as its historical partners are realizing how difficult it is to rapidly reduce their dependence on the U.S. Recognition of such interdependency should eventually bring all concerned parties to the negotiating table.
International trade will remain critical, as autarky is simply not an option. But there is no going back. It will become increasingly regulated, with restrictions on certain trade partners and the origins of products for geopolitical reasons. In a world of globalized and integrated supply chains, tracking a product’s origin will be impossible without full access to data tracing its journey, as well as that of its components, from production to distribution.
Countries negotiating with the U.S. will need transparent and reliable databases to prove the traceability of their supply chains. The rupture caused by the Trump administration actually presents Western countries with a unique opportunity: the creation of what I would call an Alliance for Smart Trade (AST).
The AST would include the 27 EU countries, as well as several non-EU European countries (e.g., Britain, Switzerland, Australia, New Zealand, Japan, South Korea and Canada). Countries from Asia, Africa and Latin America could also join.
Although Western countries’ dependence on the U.S. for defence and security is frequently highlighted, their digital dependence is even greater. Creating a national and international traceability system from scratch across about 40 countries would be prohibitively costly, technically complex and difficult to implement across all industries and products. A more feasible solution is to digitize the existing collection systems for value-added tax (VAT), such as the goods-and-service tax in Canada.
The digitizing of this system should follow common digital architecture standards across countries. These standards would allow for the digitization of economic activity, enabling secure, standardized data sharing while preserving the confidentiality and competitiveness of both individuals and businesses. Safeguards for privacy and business data must be integral to the design of such a platform.
All proposed AST members already rely on VAT for revenue collection, making them ideal candidates for implementing this digital solution.
The Smart Trade Alliance would thus equip member countries with national and international digital infrastructures capable of tracking all transactions within and between their economies. Many of these countries already utilize traceability systems in the food sector for public-health purposes, making the concept familiar and implementable.
In a digitized system, taxes are automatically paid to the authorities at the point of transaction, and sellers are instantly credited for taxes paid to suppliers. As a VAT-based system, the digital record also provides immediate access to information about the domestic and foreign origin of all inputs used in a given product or service.
This infrastructure would thus offer public and private actors a shared digital platform that facilitates both domestic and international trade, while ensuring traceability.
Perhaps most importantly, this digital infrastructure would lay the groundwork for large-scale, non-American cloud computing systems and data centres, free from U.S. legal constraints such as the Patriot Act and Cloud Act. Those acts give U.S. authorities the right to access any data stored in cloud systems owned by a U.S. company, even if the company is operating outside the United States. The AST infrastructure would bring digital sovereignty within reach.
The benefits of smart trade and digital sovereignty would be undeniable – not just for AST members in need of diversifying their international trade but for the global economy, including the U.S. By leading the digital transition, these countries would strengthen international trade while reducing dependency risks related to security, health and supply chain resilience.
In a world where regulatory, tax and environmental policies often hinder trade, smart trade is the key to economic growth. It provides a viable response to Mr. Trump’s outdated neo-mercantilist policies while presenting an opportunity to make economies more competitive, diversified and globally integrated.
The Alliance for Smart Trade might seem an ambitious project, but the current situation demands practical solutions supported by projects that must be proportionate to the challenges that we face with this crisis. Our hope is that the purpose of such an alliance and its practical implementation could be discussed at the next G7 (G6?) meeting in Kananaskis, Alta., in June.