Five Trends for Business: Global Challenges, Global Solutions

As world leaders gather in New York for the United Nations General Assembly this week, the business community will be on the ground in force. The U.S. Chamber of Commerce is organizing events with more than two dozen heads of state and government to share our perspective on many of the pressing issues facing the world, from trade tensions to data rules and health challenges.

The message we carry to each of these executive roundtables is specific to the country in question, but there are key global trends that cut across all geographies and will play a powerful role in the conversation. The following is a brief overview of five key trends and how the U.S. business community is responding.

Trade – Free and fair trade benefits American businesses and workers

Trend: World trade has contracted in the year to date, with weakness in both emerging markets and developed economies. An uptick in new trade barriers — particularly sweeping tariffs and retaliatory tariffs between the U.S. and China — has put a damper on economic growth, particularly in manufacturing and agriculture.

Facts to Remember: For the United States, tariffs applied to U.S.-China trade will soon cost the average American household $1,000 per year, and the related business uncertainty is knocking a full percentage point off U.S. economic growth.

Recommendations: The U.S. needs to return to the negotiating table with China and strike a deal to address long-running trade concerns — and remove tariffs. The U.S. Congress must approve the United States-Mexico-Canada Agreement (USMCA), which will preserve and strengthen U.S. trade with our two most important trading partners. And we need to get back on offense to clinch new market-opening trade agreements around the world.

Data – Over-regulating data impedes economic growth

Trend: Data flows are becoming as important to economic health as capital flows. While the flow of data across borders will continue to rise, the economic growth derived from data and its movement will be uneven: Unnecessarily burdensome privacy, AI, and cybersecurity regulations — along with forced localization measures — will limit digital commerce. The result is these jurisdictions will see slower economic growth rates and fewer jobs created.

Facts to Remember: By 2022, Ericsson has estimated the world will see 29 billion connected devices; Cisco expects internet traffic to be three times what it was in 2017; and cloud computing is expected to become a $620 billion dollar industry by 2023. The potential for economic growth is huge.

Recommendations: Many of the public policy questions raised by the digitalization of the economy are real, but “command economy” solutions only slow economic growth and development. Privacy regulations must accommodate the promise of AI; cyber security regulations need to embrace the private sector as a partner; and policymakers must accept the fact that data localization does absolutely nothing to protect privacy or security. Rules facilitating digital trade should be adopted worldwide, and the e-commerce negotiations at the WTO should be fast-tracked to achieve an ambitious outcome, but most of all governments must limit their increasingly misguided regulatory impulses.

Health – Public-private partnerships will improve global health

Trend: In New York this week, health ministers will state that “health is the precondition for and an outcome and indicator of the social, economic, and environmental dimensions of sustainable development.” Taking health policy out of the vertical and into the horizontal represents a new way of thinking about these critical issues. A whole-of-government, whole-of-business, and whole-of-society approach can be more effective for human health as well as business sustainability.

Facts to Remember: The health of a population has a direct impact on the productivity of an economy. By 2030, the world will lose 8.6% of its GDP to the impacts of health-related workforce absenteeism, presenteeism, and early withdrawal.

Recommendations: Governments must embrace public-private partnerships in the health sector — not just in hospital infrastructure and management, but in the development of new health delivery models, technology deployment, data collection, and community outreach. Recognizing this shared purpose among business and government will contribute to keeping citizens well, and it is imperative that we improve the ways in which we work together in support of effective and efficient health systems.

Defense and Aerospace – Exports will play a growing role

Trend: Commercial aerospace exports will trend up over the next three years while defense aerospace exports are also expected to grow, though less rapidly. Globally, the U.S. has enjoyed historic international defense sales over the past decade. Sales of aviation platforms and missile defense systems, predominantly to allies in Asia and the Middle East, has accounted for the majority of foreign defense sales during this decade. We are soon to reach saturation in these markets for this type of capability, and we will see a shift from platform acquisitions to system sustainment. Finally, we see mounting military industrial competition in which non-U.S. firms promise adequate capability at competitive prices and without the legislated controls that come with U.S.-provided capability.

Facts to Remember: In 2018, the defense and aerospace sector supported more than 2.5 million jobs and accounted for more than $900 billion in sales. Commercial aerospace exports exceeded $131 billion while defense sector aerospace exports exceeded $19 billion. The U.S. defense and aerospace export outlook remains robust, but head winds are brewing that have the potential to challenge our industrial dominance in these two sectors over the next decade. U.S defense spending is expected to decline after 2022, prodding U.S. defense and aerospace firms to pursue an increase in global exports to offset the downshift at home.

Recommendations: U.S. industrial innovation must remain our focus today to ensure we continue to capture lucrative global market share tomorrow. We must partner to ensure policy, procedures, and legislation provide the needed tools for our industries to maintain and grow global market share.

Natural Resources – Business and government must innovate to protect the environment

Trend: In New York this week, world leaders will call for a heightened focus on adaptation to climate change, the cost of lost biodiversity, and the waste of potentially valuable materials that end up polluting the seas and the land. The just-released report by former UN Secretary General Ban Ki-Moon on climate adaptation and the Climate Action Summit that will convene on September 23 call on companies to show leadership and deliver measurable results.

Facts to remember: Electronic waste is growing rapidly, reaching 50 million tons annually with an estimated value of lost materials of over $60 billion. Less than 20% of e-waste is recycled in some way. The accelerating transition to e-mobility will dramatically increase the volume of secondary electronic products that will require reprocessing.

Recommendations: We will encourage UNGA participants to embrace a systemic approach: the key systems that require transformation and strengthening are major urban centers, infrastructure, food supplies, water, and natural environment. Each of these systems requires risk management and finance to improve resiliency and mitigate risks. Each requires business engagement to implement any solutions on a large scale. Governments, consumers, and investors should recognize resource efficiency as a hallmark of good management, responsible governance and quality of production. It is up to the business community to offer sustainability solutions that can work. Given the scale, sophisticated governance structures and global reach of U.S. business, we can and should lead in this effort.