THE unprecedented Covid-19 pandemic has adversely impacted global trade. The World Trade Organization (WTO) projected that global trade would plummet between 13 per cent and 32 per cent in the second half of 2020 across regions and sectors.
If the bleak scenario continues, it will be the steepest contraction of world trade volumes since the Great Recession of 2008. In February 2020 alone, world trade has shrank by 5.7 per cent compared to February 2019.
Further concern, trade barriers went up across borders over the shortages of domestic supply for Personal Protective Equipment (PPE) products such as face masks and surgical gloves.
When the World Health Organization (WHO) declared Covid-19 as a global pandemic on March 10, 2020, the Asean leaders gathered in Da Nang, Vietnam on the same day to express joint statements.
The leaders collectively committed to keeping the market open for supply connectivity, and strengthening Asean regional cooperation against the pandemic.
The Asean leaders also further pledged to refrain from imposing new and unnecessary non-tariff measures that impede the smooth flow of essential goods.
Yet, the trend in world trade during the pandemic reflects a popular rise of non-tariff measures (NTMs) globally. NTMs generally aim to reduce import or export in the imposing countries.
Trade experts found that export restrictions have become the most common trade measure introduced by the governments during this crisis. The restrictive export measure mainly prohibits trade of PPE products and medical kits.
The International Trade Center (ITC) reported that since the start of the pandemic, 127 restrictive export measures, from 94 countries were issued as of 30 July. 89 of the restrictive measures are in the form of export prohibition.
Asean countries alone imposed 14 restrictive trade measures since March, of which 11 measures are export bans. Malaysia too has embarked on such a course by imposing an export ban on face masks, joining its neighbouring countries.
Although the export restrictions introduced around the world are predominantly intended as temporary measures, a majority of the current export bans have no termination date.
In April 2020, Asean conducted seven virtual joint statements within member states and dialogue partners (RCEP, US, EU) in regard to committing for supply connectivity of Covid-19-related goods.
Despite that, there were only two termination of export bans on PPE products, and four on food from Asean. ITC reported that currently there are still five active export prohibitions from the Asean Member States (AMS), in which all of them are on PPE and medical products.
Alas, Malaysia's export ban on face masks in March is still on the list. This Covid-19 pandemic has shown that regional cooperation between countries have been lacklustre despite lessons learned from the 2008 crisis.
When governments introduced export restrictions during the global crisis in 2008, it drove up world prices for food, ultimately hurting all countries.
The protectionist behavior does not exempt the advanced economies countries, who paradoxically, have been imposing trade restrictions more than the emerging market countries.
While some may argue that being protectionists are reasonable and legitimate, protectionism is unlikely to address the root causes of challenges presented by the pandemic.
This curbing-trade behavior is a worldwide problem when critical Covid-19 goods are concentrated in few suppliers.
Germany, the US, and Switzerland supply the world's 35 per cent medical supply, and 40 per cent of PPE products are exported from China, Germany and the US.
Considering when countries have similar access to essential goods and medical services, it helps to contain the spread of pandemic more effectively, particularly for the import-dependent countries.
Plus, export restrictions are self-inflicted wounds because they trigger retaliatory measures from the trade partners – as in the case now – and red
irect supply from the imposing country. Not to mention, such inward-policies reduce investments around the world that might exacerbate economic shocks.
Countries must actively commit to the free trade agreements to ensure a steady supply connectivity of Covid-19 critical products in times of emergency. Protectionism makes the pandemic more lethal and free trade policies must be part of the equation to build resilience against the pandemic.
The writer is a researcher at Economics, Trade, and Regional Integration (ETRI) Division, ISIS Malaysia