WTO’s Guide to a Quick Rebound Blotted With Export Bans
The bad news is well-known: The coronavirus pandemic could spark the deepest economic downturn of our lifetimes — something between the Great Recession and the Great Depression.
Here’s the good news: If countries cooperate and keep their markets open, they could quickly rebound and avoid a repetition of the two darkest economic periods of the past century.
That was the message World Trade Organization Director-General Roberto Azevedo delivered Wednesday from his residence on the outskirts of Geneva.
During an extraordinary YouTube webcast, Azevedo offered an exit strategy for nations looking to regain their post-pandemic economic footing:
- Provide a robust fiscal stimulus package to consumers and businesses
- Contain the health crisis as expeditiously as possible
- Coordinate international efforts to limit trade restrictions
That third part is crucial, he said, because “a turn towards protectionism would introduce new shocks on top of those we are currently enduring.”
Right now some 70 nations — including the U.S., China and much of Europe — are imposing export curbs on critical medical supplies, according to the University of St. Gallen’s Global Trade Alert.
These measures, the nations say, are essential to protect the health of their citizens and first responders. But some restrictions struggle to pass the smell test.
Protectionism might be a natural instinct in a health crisis that respects no borders, but like consumer hoarding, it can cause more harm to the greater good. A far better way to propel rapid global economic recovery is for nations to cooperate and avoid unnecessary barriers to trade, Azevedo argued.
Global markets should remain free of restrictions “so that we pull each other up and not hold each other down,” he said.
While it’s too soon to say if Azevedo’s call for unity will fully resonate with world leaders, President Donald Trump nodded in that direction Wednesday.
In a tweet, Trump thanked Indian Prime Minister Narendra Modi for releasing stocks of an anti-malarial drug for possible treatment of the disease.
“Extraordinary times require even closer cooperation between friends,” Trump wrote, just two days before a U.S. ban on exports of some personal protective equipment takes effect.
Charting the Trade Turmoil
The coronavirus pandemic may cause a deeper collapse of international trade flows than at any point in the postwar era, the World Trade Organization said. The Geneva-based trade body presented two possible scenarios: In an optimistic case, the WTO forecasts global merchandise trade may fall 13% in 2020, while the pessimistic case sees those volumes drop by 32% this year.
Today’s Must Reads
- No paychecks | Japan’s three biggest automakers are poised to add almost 32,000 people to the unprecedented ranks of North American workers seeking unemployment benefits.
- Export ban | The U.S. government’s ban on exports of some personal protective equipment to fight the virus will take effect Friday and will be in place for four months.
- Output cut | Airbus slashed its aircraft output by a third to about 48 planes a month, in a stark concession to the pandemic and travel restrictions rocking the aviation industry.
- Labor supply | Poland has leaned in recent years on more than a million workers from Ukraine to sustain its economy. The coronavirus is shaking up that relationship.
- Not so handy | Hand sanitizer will be hard to find in the U.S. for a long time because there aren’t enough chemicals and plastic containers to meet demand.
- Stephanomics podcast | Senior trade reporter Shawn Donnan explains how the pandemic has shifted his focus from debates about globalization to looking at the damage happening on the ground right now.
- Britain’s labor woes | Unemployment in the U.K. may have jumped to 6.3% from 3.9%, Bloomberg Economics estimates.
- Brazil challenge | Coronavirus hits Brazil where it hurts the most, turning already-tepid growth into a recession.
- Use the AHOY function to track global commodities trade flows.
- See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
- Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.
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