Page 19 - The South China Business Journal
P. 19
ernational trade is a source of resilience for A World Bank study had similar findings: “Policies
companies and economies. By the same token, that are supportive of, not hostile to, trade could
raising tariffs and other trade barriers doesn’t just prove critical to strengthening recovery from the
make countries poorer: it frays supply chains and pandemic, supporting greater diversification, and
makes economic disruption more likely. reducing extreme poverty.” The report estimates
that policies that reject protectionist approaches will
The global trading system is increasingly under lead to 25% trade growth between 2019 and 2030;
pressure as it weathers disruptions stemming reshoring policies would cause a decline by 22% and
from the ongoing pandemic, trade disputes, and thrust 52 million people into extreme poverty.
Russia’s invasion of Ukraine. The U.S. approach to
trade is also being questioned by some politicians In an example of how protectionist policies reduce
and interest groups who deem international trade resilience, consider the global food crisis. Russia’s
harmful to American workers. invasion of Ukraine and its blockade of Ukraine’s
Black Sea ports have disrupted global agricultural
In the wake of the World Trade Organization’s trade. Making matters worse, 31 have countries
(WTO) 12th Ministerial Conference, it is important imposed export bans or licenses at some point
to recognize that while these shocks and during the past four months, covering about
frustrations illustrate real challenges facing global 13% of all food traded worldwide (“global calorie
commerce, trade liberalization has delivered huge markets”), according to the International Food
benefits to workers, industry, and consumers that Policy Research Institute. Happily, a number of
should not be overlooked. these restrictions have been dropped, and those
in force affect about 5% of global food trade
The resilience provided by international trade today. Even so, these measures have prevented
networks has proven especially important in recent wheat, corn, and other foodstuffs, of which
years, as WTO leaders have suggested. Ukraine is a significant global producer, from
leaving the country.
Consider how “offshoring” was blamed for
shortages of personal protective equipment (PPE) Protectionist moves are thus wreaking havoc on
early in the pandemic. In fact, U.S. production had an already delicate agricultural supply chain and
always been sufficient for the top manufacturers harming all parties involved. Export restrictions
of N-95 masks to meet U.S. demand. But COVID-19 and retaliatory measures exacerbate shortages
caused U.S. demand for N-95 masks to surge by an by reducing global supply and driving up prices.
astonishing 40-fold, soaring from about 25 million Import-dependent nations are at further risk of
in 2019 to about 500 million in 2020. extreme food insecurity, and producing nations
subject to restrictions are unable to take advantage
Public health experts had long warned about such of the opportunity to fill those gaps.
a potential crisis, as in the 2005 “National Strategy
for Pandemic Influenza,” which called for new International investment also makes companies
investments in PPE stockpiling (and which federal and economies more resilient. Even as the
budgets never funded adequately). The focus on sharpest recession in a generation caused the U.S.
stockpiles is a recognition that current production economy to shed eight million jobs between 2007
— whether domestic or foreign — cannot keep and 2009, U.S. multinational corporations added
pace with pandemic demands. a net 289,000 American jobs, according to the U.S.
Bureau of Economic Analysis. They added 2 million
Even so, international trade proved a lifeline in more U.S. jobs between 2009 and 2013. The impact
the medium term. While world trade decreased of the “Great Recession” was far more severe for
by 7.6% in 2020, trade in medical goods increased companies with a purely domestic footprint.
by 16%. International trade allowed much-needed
medical supplies to be delivered worldwide even Geographic diversity of suppliers can bolster
as countries worked to boost domestic production resilience against future shocks, but eliminating
as well. trade and investment — and depending on a
limited number of domestic suppliers — may end
The IMF’s most recent World Economic Outlook up doing more harm than good.
deems global supply chains adaptable and
resilient, suggesting that “policies such as reshoring Trade officials returned home from the WTO’s
are likely misguided.” The authors point to the ministerial conference with a mixed bag of
pandemic and note that international trade deliverables, but the lesson is the same: The world
played a large role in accelerating the global should invest in the multilateral trading system
economic recovery. They warn that localizing rather than turn away from it. Countries are more
production may leave countries poorly prepared resilient when they trade than when they try going
for the next disruption. it alone.
SOUTH CHINA BUSINESS JOURNAL 16
companies and economies. By the same token, that are supportive of, not hostile to, trade could
raising tariffs and other trade barriers doesn’t just prove critical to strengthening recovery from the
make countries poorer: it frays supply chains and pandemic, supporting greater diversification, and
makes economic disruption more likely. reducing extreme poverty.” The report estimates
that policies that reject protectionist approaches will
The global trading system is increasingly under lead to 25% trade growth between 2019 and 2030;
pressure as it weathers disruptions stemming reshoring policies would cause a decline by 22% and
from the ongoing pandemic, trade disputes, and thrust 52 million people into extreme poverty.
Russia’s invasion of Ukraine. The U.S. approach to
trade is also being questioned by some politicians In an example of how protectionist policies reduce
and interest groups who deem international trade resilience, consider the global food crisis. Russia’s
harmful to American workers. invasion of Ukraine and its blockade of Ukraine’s
Black Sea ports have disrupted global agricultural
In the wake of the World Trade Organization’s trade. Making matters worse, 31 have countries
(WTO) 12th Ministerial Conference, it is important imposed export bans or licenses at some point
to recognize that while these shocks and during the past four months, covering about
frustrations illustrate real challenges facing global 13% of all food traded worldwide (“global calorie
commerce, trade liberalization has delivered huge markets”), according to the International Food
benefits to workers, industry, and consumers that Policy Research Institute. Happily, a number of
should not be overlooked. these restrictions have been dropped, and those
in force affect about 5% of global food trade
The resilience provided by international trade today. Even so, these measures have prevented
networks has proven especially important in recent wheat, corn, and other foodstuffs, of which
years, as WTO leaders have suggested. Ukraine is a significant global producer, from
leaving the country.
Consider how “offshoring” was blamed for
shortages of personal protective equipment (PPE) Protectionist moves are thus wreaking havoc on
early in the pandemic. In fact, U.S. production had an already delicate agricultural supply chain and
always been sufficient for the top manufacturers harming all parties involved. Export restrictions
of N-95 masks to meet U.S. demand. But COVID-19 and retaliatory measures exacerbate shortages
caused U.S. demand for N-95 masks to surge by an by reducing global supply and driving up prices.
astonishing 40-fold, soaring from about 25 million Import-dependent nations are at further risk of
in 2019 to about 500 million in 2020. extreme food insecurity, and producing nations
subject to restrictions are unable to take advantage
Public health experts had long warned about such of the opportunity to fill those gaps.
a potential crisis, as in the 2005 “National Strategy
for Pandemic Influenza,” which called for new International investment also makes companies
investments in PPE stockpiling (and which federal and economies more resilient. Even as the
budgets never funded adequately). The focus on sharpest recession in a generation caused the U.S.
stockpiles is a recognition that current production economy to shed eight million jobs between 2007
— whether domestic or foreign — cannot keep and 2009, U.S. multinational corporations added
pace with pandemic demands. a net 289,000 American jobs, according to the U.S.
Bureau of Economic Analysis. They added 2 million
Even so, international trade proved a lifeline in more U.S. jobs between 2009 and 2013. The impact
the medium term. While world trade decreased of the “Great Recession” was far more severe for
by 7.6% in 2020, trade in medical goods increased companies with a purely domestic footprint.
by 16%. International trade allowed much-needed
medical supplies to be delivered worldwide even Geographic diversity of suppliers can bolster
as countries worked to boost domestic production resilience against future shocks, but eliminating
as well. trade and investment — and depending on a
limited number of domestic suppliers — may end
The IMF’s most recent World Economic Outlook up doing more harm than good.
deems global supply chains adaptable and
resilient, suggesting that “policies such as reshoring Trade officials returned home from the WTO’s
are likely misguided.” The authors point to the ministerial conference with a mixed bag of
pandemic and note that international trade deliverables, but the lesson is the same: The world
played a large role in accelerating the global should invest in the multilateral trading system
economic recovery. They warn that localizing rather than turn away from it. Countries are more
production may leave countries poorly prepared resilient when they trade than when they try going
for the next disruption. it alone.
SOUTH CHINA BUSINESS JOURNAL 16
