Governments Roll Back Coronavirus Trade Barriers
Date: Tuesday, June 30, 2020
Source: The Wall Street Journal
More than one-third of export bans on medical gear and other restrictions have been repealed, WTO says
Governments around the world have already repealed more than a third of the export bans on medical products and other restrictions put in place as a response to the coronavirus, the World Trade Organization said Monday.
In a twice-yearly report on new trade policies announced by the Group of 20 leading economies, the Geneva-based body also said that while governments have continued to impose fresh restrictions on imports, they have also introduced measures to lower barriers to overseas sellers.
That mix suggests that governments haven’t responded to the pandemic and the economic contraction it has caused by closing their economies to imports, as some trade experts had feared they might.
”There are signs that trade-restrictive measures adopted in the early stages of the pandemic are starting to be rolled back,” said Roberto Azevêdo, the WTO’s director-general. “There is no room for complacency: building on these positive indicators will demand consistent efforts and leadership.”
The WTO said that, excluding pandemic-related measures, governments had announced measures restricting an estimated $417.5 billion of traded goods during the period from mid-October 2019 to mid-May 2020, the third highest figure since monitoring began in 2012.
However, it said measures to make trade easier—including the elimination of import taxes and the reduction of export duties—affected an estimated $735.9 billion of goods, the highest figure since 2014.
Restrictions on trade have increased significantly over recent years, and most dramatically for goods moving between the U.S. and China. The WTO said the total value of affected goods rose by a further 2.8% in the six months through mid-May.
Those new barriers have contributed to a slowdown in global trade flows, which fell in 2019 and suffered a collapse as economic lockdowns designed to halt the spread of the pandemic were imposed from late January through April.
According to the CPB Netherlands Bureau for Economic Policy Analysis, global trade flows were 12.1% lower in April than in March, a record decline for a single month. That trade freeze has hit growth even in countries that have escaped the worst of the pandemic, since their overseas sales have stalled.
What economists most fear is the widening use of fresh tariffs and export bans in an effort to safeguard jobs and secure supplies of essential items, such as food. June marks the 90th anniversary of the Smoot-Hawley tariffs, a U.S. response to the fallout from the Wall Street crash that prompted retaliation from its trade partners, and deepened the Great Depression.
While G-20 governments appear to have decided against a rush to protectionism as an immediate response to the pandemic and its economic fallout, many have said they would seek to reduce their reliance on imports for essential goods such as medical supplies.
Even without fresh restrictions, trade experts believe the pandemic will prompt companies to simplify and shorten their supply chains, thereby reducing trade. The pandemic, which closed factories and transportation links around the world, compounded growing doubts about the reliability of long supply chains—particularly those involving China—at a time when tariffs and other trade barriers are on the rise.
“Many companies will be streamlining their global supply chains and some nations will take steps to move production of select goods in vital industries closer to home,” said Mickey Levy, an economist at Berenberg Bank.