Global Trade & COVID-19

Before coronavirus, other deadly pandemics and epidemics ravaged the globe, resulting in horrific death tolls; the phenomenon is not new but the impact of unexpected covid-19 is manifold compared to all of them.

It has affected population worldwide and has proved the cons of technology can be overwhelming.

The world, a global village where not just particular communities but countries and continents depend on each other for their day to day requirements, COVID 19 has influenced and disrupted the movement of not only people, but supplies too.

Some are left with little and others have, exceeding their requirement as global trade is being hurt on both the demand and supply sides 

It has been proved that covid 19 has been a reason of increase in trade barriers as countries like US, EU, India, China and turkey have imposed restrictions on export of medical equipment and drugs, whereas some have started to limit food exports as well. Precautionary lock down has idled not only the manufacturing facility but trucking and distribution facility equally.  “The spread of coronavirus has disrupted global supply chains, leading to shortages and price increases that are cascading from factories to ports to retail stores to consumers, these disruptions in global trade could grow more noticeable in the months to come, as consumers hoard products and countries clamp down on exports of medical supplies and even food. Shoppers may see more shortages of unexpected products, including laptops, toilet paper and medicines. Some companies could find themselves lacking raw materials and components, a recipe for further financial trouble.” (Global Trade Sputters, Ana Swanson, April 10, 2020)

Countries around the world are scrambling for kit. The hottest commodities are personal protective Equipment (PPE) such as gowns and masks, ventilators and chemicals. This demand has not risen at the pace of infection but faster still as there is risk of transferring the virus.

With the demand pressure, policies have been changed even in the Britain’s guidelines and health officials now emphasize to reuse some of the PPE rather that discarding it after every use.

Survival of the fittest applies here, as some of the businesses have switched to production of required commodities from existing possibilities, converting some capacity to making medical equipment. E.g. Linamar is helping to assemble ventilators, Woodbridge an upholsterer is turning out masks, whereas plastic firms are producing face shields; airbag-makers, gowns; others, nose swabs. Fashion firms are turning their supply chain to masks and gowns. Sweden’s H&M has sent 50,000 masks each to Italy and Spain and 1m protective single use aprons to Swedish hospitals. In France LVMH has been retooled to produce hand sanitizers and a lot more examples but it’s not applicable to small scale businesses, resulting in forced closure and thus a rise in unemployment causing more deaths because of food scarcity worldwide and not because of COVID-19.

Organizations like the World Bank and World Trade Organization have urged countries to refrain from imposing new export restrictions, particularly on medical goods, and to map out a coordinated response to ramp up production.

“No country is self-sufficient, no matter how powerful or advanced it may be. Keeping trade open and investments flowing will be critical to keep shelves plentiful and prices affordable.”

(Mr. Azevedo, WTO).

Even if this pandemic is over, it would take weeks for supply chains to get moving again and months to return to complete normalcy. It is crucial that to ease the pain of the pandemic this demand and supply chain be restored at normal pace for smoother, healthier and comfortable life