Supply Chain Financing via Blockchain Expected to Reach $34.6 Billion by 2034
Non-Oil Trade Between the UAE and India Projected to Grow by 20.5% in 2024, Totaling AED 240 Billion
Recommendation to Localize Manufacturing and Processing Activities in Cooperation Council Countries Based on Comparative Advantage
A report titled “Smart Trade Diplomacy: Strengthening Alliances in a Multipolar World” released at the World Government Summit in collaboration with PricewaterhouseCoopers identifies four key focus areas for governments to navigate significant changes in global trade.
The four areas include: enhancing supply chain resilience, fostering coordination among regional nations, investing in digital infrastructure, and integrating green trade with energy sector transition.
The first area emphasizes the importance of strengthening supply chain resilience. The report stresses that considering resilience a strategic and measurable goal can be achieved through clear resilience indicators in trade agreements and infrastructure investments.
This involves diversifying suppliers, ensuring transport integration, and maintaining a seamless flow of information, which enhances the readiness of trade networks to address crises.
The second area pertains to enhancing coordination among regional nations and trade governance. The report advocates for the harmonization of customs systems, environmental standards, and digital regulations across the region to reduce fragmentation and boost policy effectiveness. It also suggests developing green trade agreements that lay the groundwork for a low-carbon integrated trade area by 2035, strengthening the Middle East’s position as a regional and international trade hub.
The third focus is “investing in digital infrastructure.” Reliable data and shared digital systems are deemed essential for future trade. The report recommends adopting blockchain-based digital certifications, AI-supported risk assessment systems, and standardizing data exchange protocols to minimize bureaucratic barriers and expedite the movement of goods across borders.
The fourth area involves “merging green trade and energy sector transformation.” The report highlights the importance of establishing low-carbon shipping corridors, broadening carbon pricing frameworks, and integrating sustainable fuels in ports and industrial zones to ensure compliance with carbon border adjustment mechanisms and enhance financial and commercial sustainability.
A Pivotal Moment
The report highlights the transformative shifts occurring in the global trade system, indicating that the global trade framework has entered a critical phase characterized by escalating disruptions and uncertainties. The traditional model based on globalization, efficiency, and cost reduction— which has underpinned the world economy for decades—is diminishing due to geopolitical tensions, fluctuating trade policies, and unstable energy markets. The focus solely on cost reduction and supply chain optimization is no longer sufficient to assure competitive sustainability.
The report asserts that the concept of “cost of variability” in international trade— which encompasses indirect costs incurred by governments and companies for managing political risks, price volatility, and supply chain disruptions— has emerged as a significant influencing factor. In this context, resilience is recognized as a vital competitiveness metric alongside efficiency in a business landscape marked by persistent uncertainty requiring contingency plans and proactive strategies.
Trade Corridors
The report discusses a shift in Gulf trade diplomacy towards enhancing the resilience of trade corridors rather than merely lowering tariffs. This approach incorporates interoperability, investment protection, and supply chain stability. It notes that the UAE has signed 13 comprehensive economic partnership agreements by October 2025 with various countries in Asia, Africa, and Europe.
Among these, the 2022 partnership agreement with India is highlighted as a significant success, eliminating tariffs on 80% of goods, which resulted in non-oil trade exceeding $84 billion during its first year. In 2024, trade is expected to grow by 20.5%, reaching AED 240 billion ($65.35 billion), compared to AED 199.3 billion ($54.27 billion) in 2023.
The report also underscores the Middle East’s role in enhancing global trade resilience and transitioning to intelligent trade agreements. The UAE, through its “We the Emirates 2031” vision, aims to diversify its economy, targeting an increase in its non-oil foreign trade to approximately $1.1 trillion by 2031, achieving a notable milestone of $817 billion in 2024, representing 75% of the target.
Supply Chains
The report warns that the disintegration of supply chains resulting from political shifts could lead to a significant decline in the economic integration achieved over the past three decades.
Estimates suggest that further disintegration could reduce global output in the long term by up to 7%, attributed to duplicative production systems and slowed technology transfer.
Additionally, trade restrictions have notably expanded in recent years, with rising tariffs, sanctions, and export controls leading to increased compliance costs and diminished long-term planning capabilities, especially in emerging markets most affected by sudden shifts in trade policies.
According to the report, research indicates a growing reliance on blockchain technology in supply chain financing, with projections estimating that this market will surge from $1.8 billion in 2024 to $34.6 billion by 2034, reflecting a 64% growth that underscores its escalating role in bolstering and stabilizing digital trade systems globally.
Five Priorities
The report reveals five primary priorities for businesses operating within the region: modernizing supply chains towards agility by transitioning from cost-cutting models to establishing flexible supply networks through diversified suppliers, adopting near-shore or friendly sourcing strategies, and utilizing predictive analytics to anticipate disruptions.
Another priority is to promote local production and regional value chains, with a recommendation to localize manufacturing and processing activities in Gulf Cooperation Council countries based on comparative advantage, while enhancing value-added activities such as assembly, packaging, and re-exporting, which supports origin rules and reduces delivery times.
Additionally, there is a priority to adopt digital trade requirements, indicating that companies should invest in data systems, document e-commerce processes, and automate business operations to ensure rapid and secure information exchange, thereby enhancing transparency and lowering costs.
The report also emphasizes the priority of integrating sustainability into business strategies, noting that disclosing carbon emissions has become a prerequisite for entering many markets. It recommends tracking emissions along supply chains and implementing low-carbon transport and packaging solutions.
Furthermore, there is a call for building effective public-private partnerships, stressing the need for collaboration in developing logistics centers, special economic zones, and renewable energy projects to enhance commercial connectivity and align business priorities with governmental policies.
Resilience and Trust
The report concludes that resilience and trust will be the foundational pillars of the global trade system in the coming decade, moving past a long phase defined by efficiency and cost reduction. It highlights that Middle Eastern countries have a strategic opportunity to transform from mere crossroads of trade routes into a pivotal component of a stable and sustainable global trade system by investing in smart corridors, flexible infrastructure, transparent digital systems, and clean logistics.