SLIDE 1 https://voxeu.org/content/covid-19-and-trade-policy-why-turning-inward-won-t-work
SLIDE 2 The eBook addresses a simply questions
Should governments react to:
- plummeting national income
- collapsing world trade, and a
- Looming 2nd wave of COVID-19
by turning inward and further weakening cross-border commercial ties?
SLIDE 3
Answer: No
1. Turning inward – especially with export bans – won’t help nations fight Covid 2. It violates basic humanitarian concerns but harming poor and vulnerable nations 3. It won’t foster the international cooperation we will need to defeat the disease
SLIDE 4 The shocks
Chart 1 - World merchandise trade volume, 2000-2022 Index, 2015=100
40 50 60 70 80 90 100 110 120 130 140 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Merchandise trade Optimistic scenario Pessimistic scenario Trend 1990-2008 Trend 2011-2018
Stylised quarterly profile for US activity data in each scenario (Q4 2019 = 100)
Dec 2020 Dec 2021
SLIDE 5
Export restrictions: US and EU export bans on PPE, Chinese new quality checks
Matteo Fiorini, Bernard Hoekman and Aydin Yildirim document case studies “A typical example occurred on the quays of the port of Gioia Tauro in Southern Italy, with Italian custom authorities seizing 364,200 pairs of surgical gloves coming from Malaysia and 9,720 devices for tracheal intubation from China during what would otherwise have been standard transshipment operation, with part of the consignment intended for customers in France.”
SLIDE 6 Won’t work due to interconnectedness
In 2017, the top five importers of Personal Protective Equipment from: Importer: From the World $ billion Importer: From China $ billion Importer From US, $ billion US 15.0 US 6.4 Mexico 3.4 EU 11.7 EU 5.1 Canada 2.6 China 9.7 Japan 2.7 EU 2.0 Mexico 5.9 Hong Kong, China 1.3 China 1.4 Japan 5.1 Mexico 1.0 Japan 0.6
Table 1: Top five importers of Personal Protective Equipment from the World, China and US, 2107
SLIDE 7 Reliance of GVC hubs’ manufacturing production
- n each other’s inputs – high and for US and
Germany, higher than in 2008-09 Crisis
0% 2% 4% 6% 8% 10% 12% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
United States Germany China
The figures are the value-added share of direct and indirect inputs from the two GVC hubs in the other hub’s total manufacturing output.
SLIDE 8
Fig igure 4: : Total exposure of f row nations to column nation’s manufacturing sectors
SLIDE 9
A retaliatory spiral of export bans could ruin the manufacturing capacity of all nations - Historical perspective
1929 = retaliation in tariffs (attempt to steal demand) 2009 = export subsidies (attempt to export excess supply) 2020 = export bans (attempt to boost local availability) Each is self-defeating, if all do it.
SLIDE 10
Immoral – harms poor nations
SLIDE 11
Ruin international cooperation: How do we make a few billion doses of vaccine?
SLIDE 12
End – thanks for listening
