De-globalization. Onshoring. These have become two of the new buzzwords for some economic media stars in promoting policies that respond to the COVID-19 crisis. Not in Geneva circles. Here such ideas are mad, bad and dangerous to sow. But when the pandemic struck early this year, governments were naturally tempted to turn inward through export restrictions and localize most production at whatever cost. They were wrong, as anyone tuned into Geneva internationalism will tell you. Peter Hulm reports.
Export restrictions really provide a false sense of security," says Anabel Gonzales, Senior Fellow at the Peterson Institute for International Economics. "They raise prices, they discourage investment and they invite retaliation. They are nothing but a lose-lose proposition."
Currently, the international world faces another challenge related to COVID-19. Gonzales sounded the alarm at an international webinar organized on 10 December 2020 to suggest what to do before the next pan(dem)ic: "The tragedy of vaccine nationalism must be avoided at all costs," she said, "with equal distribution guaranteed across all countries." The 75-minute session is now available on YouTube (LINK).
A petition signed by over 900,000 people was delivered online to the Geneva-based World Trade Organization (WTO) the day before urging all governments, including WTO members and pharmaceutical companies, to "ensure access to lifesaving COVID-19 vaccines, treatments and equipment for everyone in the world".
The Council for Trade Related Intellectual Property Rights (TRIPS) was meeting in Geneva on 10 December. WTO members are in discussion (still) on a proposal to waive obligations in the TRIPS Agreement in relation to the prevention, containment or treatment of COVID-19. WTO has admitted: "Considerable differences remain between members over this proposal" (LINK).
Or, as India Today's website declares: "it's rich vs. poor" (LINK). India and South Africa are co-sponsors of the proposal. "Most developing countries are in support of the proposal but rich and developed countries, such as the European Union nations, the US and Canada oppose it," the site says.
Resilience and rebound
In the meantime, WTO's latest figures show "signs of a rebound" back from the national decoupling from international trade in the first months of COVID-19. "The WTO now forecasts a 9.2% decline in the volume of world merchandise trade for 2020, followed by a 7.2% rise in 2021," it said on Friday, 11 December. "Current data suggests a projected decline for the current year that is less severe than the 12.9% drop foreseen under the more optimistic of two scenarios outlined in the WTO's April trade forecast" (LINK).
The previous estimate for 2021 was 21% growth, and GDP (gross domestic product, a standard gauge of economic health) "fell more than expected in the first half of 2020," said WTO, which downgraded its earlier estimate of a 2.5% decline to -4.8%. "Global merchandise trade recorded its sharpest ever one-period decline since 2005 in the second quarter, falling 14.3% compared to the previous period, but the impact differed strongly across regions.
But WTO also noted indications of unexpected resilience, particularly in Asia. "The trade decline in Asia of 4.5% for exports and 4.4% for imports in 2020 will be smaller than in other regions," it noted.
Risks remain. But resilience and rebound were also the message from the WTO webinar.
WTO's new trade barometer suggests: "World merchandise trade appears to have rebounded strongly after plummeting in the midst of the COVID-19 pandemic. … A sharp rise in the barometer index was driven by a surge in export orders."
The barometer has a current reading of 100.7 for goods – "a dramatic improvement from the 84.5 recorded last August. All of the barometer's component indices were rising in the latest months."
World goods trade barometer
The services trade, as you might expect, was harder hit. "But the latest reading from the WTO Services Trade Barometer also shows modest gains in some key sectors, suggesting a degree of resilience in the face of the pandemic" (LINK).