THE Covid-19 outbreak will lead to a substantial fall in global trade. The World Trade Organisation suggests that the reduction is in a range between 13% and 32% in 2020.
Even the lowest estimate would represent a larger reduction trade than the 12.2% fall in 2009 when the financial crisis was at its peak.
While an optimistic scenario would see a large fall in 2020 followed by a substantial recovery in 2021, the WTO also make clear that “estimates of recovery in 2021 are uncertain”.
As the remarks made by WTO director general, Roberto Azevedo, make clear, although Covid-19 is primarily a health issue, it is having a serious financial impact and “trade will be an important ingredient to recovery”.
He went on to say that “keeping markets open and predictable will be critical to spur the renewed investment we need”.
It is also the case that trade is likely to fall more steeply in sectors with complex value chain linkages.
However, we cannot return to the pre-Covid-19 approach of trade restrictions. That would weaken prospects of recovery.
Governments around the world must act now to ease the tensions which, for example, led, in 2019, to a fall in global merchandise trade.
Indeed, the last WTO review saw G20 economies implement 28 new trade-restrictive measures estimated at $460.4 billion. More worryingly, again as the WTO have pointed out, the trade coverage of import-restrictive measures in force for the period January-October 2019 is estimated at $1.6 trillion, suggesting that import restrictions have continued to grow.
So while it is obvious we need resilience in our economies and a real focus on food, energy and medical supply resilience, this cannot be an excuse to engage in economic protectionism or simply close down value chains.
That would simply make the situation far worse.
The SNP agree with Dutch trade minister Sigrid Kaag, who said: “We should be even more ambitious when it comes to sustainability. This pandemic is causing a discussion about globalisation and more resistance against globalisation. We have to rethink our trade deals to take a closer look at sustainability in value chains. We want to take the agenda of sustainable trade further.”
But, and this applies to Scotland and the UK as much as the Netherlands, “our point of view as an international-oriented and open trade country is clear: Going back to the past may be the easiest, but the road of protectionism is pointless.”
At Westminster, SNP MPs will press the UK Government to look at how it engages to stimulate global trade and global value chains, but to do so in a way which not only delivers vital resilience to the our economies, but does so in a way which is as sustainable and inclusive as possible, avoids protectionism and is based on the rules of the World Trade Organization.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here