COVID-19 and Trade Policy: Why Turning Inward Won’t Work

COVID-19 and Trade Policy: Why Turning Inward Won’t WorkEdited by Richard E. Baldwinand Simon J. Evenett Centre for Economic Policy Research33 Great Sutton Street London EC1V 0DXTel: +44 (0)20 7183 8801 Email: cepr@cepr.org www.cepr.orgThe COVID-19 pandemic sparked broad-ranging resort to export restrictions on medical supplies and food. This eBook asks: Should governments react to the COVID health crisis and collapse of incomes and trade by turning inward? The authors provide an unequivocal answer: No. Turning inward won’t help today’s fight against COVID-19. It won’t foster economic recovery, and it won’t nurture the collaborative spirit that the human race will need to defeat this threat. National trade barriers in a world of internationalised manufacturing processes make it harder for every nation to get vital supplies. The export restrictions and a slide into protectionism following the impending collapse of world trade risks triggering a 1930s-style retaliatory vortex that ultimately destroys the world’s ability to produce vital medical supplies – to say nothing of the billions of doses of vaccine that we will soon need to produce and distribute and the liberal trading system our living standards depend on. Turning inward would be a great folly. There is still time to reverse course. World leaders should embrace the cooperative spirit adopted in 2009 when G20 leaders declared: “A global crisis requires a global solution...”.COVID-19 and Trade Policy: Why Turning Inward Won’t WorkCEPR PressCEPR PressA VoxEU.org Book9781912179305ISBN 978-1-912179-30-5 COVID-19 and Trade Policy:Why Turning Inward Won’t Work CEPR PressCentre for Economic Policy Research33 Great Sutton StreetLondon, EC1V 0DXUKTel: +44 (0)20 7183 8801Email: cepr@cepr.orgWeb: www.cepr.org ISBN: 978-1-912179-30-5Copyright © CEPR Press, 2020. COVID-19 and Trade Policy:Why Turning Inward Won’t WorkEdited by Richard Baldwin and Simon J. EvenettA CEPR Press VoxEU.org eBookCEPR Press Centre for Economic Policy Research (CEPR)The Centre for Economic Policy Research (CEPR) is a network of over 1,500 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision-makers.CEPR’s guiding principle is ‘Research excellence with policy relevance’.A registered charity since it was founded in 1983, CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society.CEPR research may include views on policy, but the Trustees of the Centre do not give prior review to its publications. The opinions expressed in this report are those of the authors and not those of CEPR.Chair of the Board Sir Charlie BeanFounder and Honorary President Richard PortesPresident Beatrice Weder di MauroVice Presidents Maristella Botticini Ugo Panizza Philippe Martin Hélène ReyChief Executive Officer Tessa Ogden ContentsForeword viiiGordon BrownIntroduction 1Richard Baldwin and Simon J. Evenett1 How trade can fight the pandemic and contribute to global health 21Anna Stellinger, Ingrid Berglund and Henrik Isakson2 COVID-19: Demand spikes, export restrictions, and quality concerns imperil poor country access to medical supplies 31Chad P. Bown3 Flawed prescription: Export curbs on medical goods won’t tackle shortages 49Simon J. Evenett4 COVID-19: Expanding access to essential supplies in a value chain world 63Matteo Fiorini, Bernard Hoekman and Aydin Yildirim5 COVID-19: Export controls and international cooperation 77Bernard Hoekman, Matteo Fiorini and Aydin Yildirim6 Trade policy and food security 89Will J. Martin and Joseph W. Glauber7 Export restrictions in times of pandemic: Options and limits under international trade agreements 103Joost Pauwelyn8 Global supply chains will not be the same in the post-COVID-19 world 111Beata Javorcik9 Resilience versus robustness in global value chains: Some policy implications 117Sébastien Miroudot10 Will the post-COVID world be less open to foreign direct investment? 131Przemyslaw Kowalski vi11 An unintended crisis in sea transportation due to COVID-19 restrictio