Sicken thy neighbour: The initial trade policy response to COVID‐19

• Published date: 01 April 2020
• DOI: http://doi.org/10.1111/twec.12954
• Date: 01 April 2020

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wileyonlinelibrary.com/journal/twec World Econ. 2020;43:828–839.

© 2020 John Wiley & Sons Ltd

DOI: 10.1111/twec.12954

ORIGINAL ARTICLE

Sicken thy neighbour: The initial trade policy

response to COVID-19

Simon J.Evenett

Department of Economics, University of St. Gallen, St. Gallen, Switzerland

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INTRODUCTION

In our interconnected world, whenever a global crisis occurs governments must decide whether dis-

criminating against foreign suppliers is part of the solution—or whether foreign know-how and re-

sources can be tapped for mutual advantage. Decisions to sacrifice open borders on the altar of some

other goal are typically influenced by the steps—real or perceived—taken by other governments. At

such times, written and unwritten international rules are tested, with consequences that can last well

after the crisis-dominated headlines. The COVID-19 pandemic is no exception.

That COVID-19 is now a crisis—medical, societal and commercial—is not in doubt. What remains

to be seen is how governments tackle the spread of this virus—and trade policy is quickly implicated.

States under pressure may be tempted to ban exports of medical supplies, even if that dulls the incen-

tives of local firms to ramp up production and denies much-needed medicines to citizens in trading

partners. Alternatively, officials desperate to obtain medicines could scrap import taxes that have

protected local firms.

Given the apparentcentrality of China to many international supply chains, there is considerable

interest in the impact of COVID-19 on global trade flows (Baldwin & Tomiura, 2020) and on the

amount and location of foreign direct investment (UNCTAD, 2020). However, there is a troubling trade

policy dimension that has now come to light. To appreciate its significance, recall that the Director-

General of the World Health Organization (WHO) has argued “We can't stop COVID-19 without

protecting health workers” (WHO, 2020). Those workers require gloves, medical masks, face shields,

gowns and the like—and as COVID-19 has spread—glaring shortages have arisen. Consequently,

the WHO has called on governments to increase production of protective equipment by 40% and to

rollback export restrictions.

The objective of this study was to characterise and assess current trade policy stance towards the

imported goods used by hospitals and front-line medical professionals to tackle COVID-19. To that

end, here medical supplies are taken be those found on “an indicative list” of goods used during the

COVID-19 pandemic that has been published by the World Customs Organization (WCO). Each

relevant product and its associated HS code have been placed by the WCO into one of six groups,

I thank members of the Global Trade Alert team for assembling the data used in this paper. An earlier, shorter version of this

paper (Global Trade Alert, 2020) was circulated as a note to trade policy analysts, officials, policymakers and journalists on

11 March 2020. All errors are mine.