U.S., EU Are Far Apart on Reshoring Making of Medical Gear
Top trade officials in the U.S. and European Union seem poles apart on whether nations should move production home or not as the coronavirus causes supply shortages on both sides of the Atlantic.
Sabine Weyand, the European Commission’s director-general for trade, says that moving supply chains home is inefficient.
“Self-sufficiency is not an option for any country. It’s not an option even for any continent,” she said last week during a webinar hosted by the Washington International Trade Association.
To make her point, Weyand gave the example of ventilators, the breathing-assistance machines in short supply across the world and desperately needed in the fight against the outbreak. Depending on the model, they can contain as many as 900 pieces sourced from all over the world. To make supply chains resilient, it’s best to involve as many countries as possible and diversify, she argued.
For now, this puts the EU in stark contrast with President Donald Trump’s administration and its policy goals. Trump this month invoked the Defense Production Act to direct manufacturing of medical equipment and is mulling an executive order that would seek to re-shore the making of U.S. medical supplies. This push has support from a bipartisan group of lawmakers that’s already talking about legislation to be considered immediately after the crisis.
Peter Navarro, whom Trump picked to coordinate domestic supply policy, went on the CBS News program “60 Minutes’’ on Easter Sunday night and blamed America’s dependency on globalization for its shortages: “If we made it here, we wouldn't be faced with this. That was, that was the original sin.”
Still, there might be a meeting of the minds further down the road, Weyand indicated. That could come when it’s time to take a look at and potentially roll back the subsidies major economies handed out to stem the health and economic crisis — especially if they concern China.
Weyand hopes for “a coordinated effort to get out of the necessary subsidization” — especially among like-minded economies like the EU, U.S. and Japan — because China will come out of its lockdown first and will otherwise be able to subsidize and support a lot of production.
“Just like before the crisis, there is a joint interest of market economies to make sure that we do not kill the market that we will need in order to get out of the crisis,” she said.
Such hopes for cooperation should spark lively debates at this week’s spring meetings of the International Monetary Fund and World Bank, which are being held, of course, via video conference.
Charting the Trade Turmoil
Romania became the first country to cut off grain exports during the pandemic, a dramatic move that could fan worries about the global food supply. The government passed a decree banning the sale of grain to countries outside the EU during a state of emergency, which is expected to last until at least mid-May.
Today’s Must Reads
- China pledge | China’s ambassador to the U.S. said his country is still implementing the phase-one trade agreement with the U.S., while China’s trade slump is expected to extend though the second quarter.
- Saving your bacon | The world’s biggest pork producer is shuttering a major U.S. plant indefinitely after a coronavirus outbreak among employees, warning of potential shortages.
- Satellite dish | As the pandemic leads to anxiety over the strength of the world’s food-supply chains, everyone from governments to banks are turning to the skies for help.
- You’ve got mail | Americans have been reminded through the health crisis of the role the oft-derided Postal Services plays in their life: perhaps the nation’s oldest essential service.
- Depressed exports | Pakistan is reopening some factories amid a national lockdown as the south Asian nation expects exports will drop 50% in the next two months.
- Life in lockdown | Thousands of firms in Europe — from family-run hotels to cafes — have lost business and are relying on state support to get them through. Here are some of their stories.
- Truck stops | Food lifeline runs through truckers and many of them can’t find bathrooms or a place to eat.
- European stimulus | The EU’s 540 billion-euro fiscal package helps Italy, Spain and the European Central Bank.
- 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.
©2020 Bloomberg L.P.