The trade policy response to COVID-19 and its implications for international business

Abstract

Purpose This paper aims to explore trade policy measures taken in response to COVID-19 and analyses in detail their extent and nature. It assesses their compatibility with World Trade Organisation (WTO) agreements: specifically, whether they were necessary and justifiable efforts to protect the security and health of populations and asks how this widespread recourse to trade barriers may impact on international business? Design/methodology/approach This paper analyses an extensive database from the International Trade Centre of trade measures taken in response to COVID-19. It differentiates by type of country, nature and coverage of measures (imports or exports, type of product…). On the basis of existing jurisprudence, this paper analyses whether restrictive measures were likely to be judged legal under WTO rules. Findings This paper finds that, although the majority of trade measures are probably justifiable, there were nevertheless many measures whose coverage and/or nature was such that a justification under existing WTO exceptions is, at the very least, arguable. Such widespread and intense instigation of potentially WTO incompatible measures in such a short period of time undoubtedly undermines the global trade rules on which international business has relied for decades. Originality/value There is little existing analysis of the legality of measures taken under the security exceptions and no substantial analyses of the measures taken in response to COVID-19. Furthermore, little scholarly attention has been paid to the impacts on international business of the increasing use of WTO “exceptions” to justify trade measures to protect national industries and populations.

Why COVID-19 Will Not Lead to Major Restructuring of Global Value Chains

“…This means that the rules, which have framed the expansion of Global Value Chains (GVCs) around the world in recent decades, are increasingly uncertain. Indeed, there is evidence that since the advent of COVID-19, countries seem to be less concerned about WTO compatibility in their policymaking than in the past (Curran et al, 2021). However, in spite of this, we argue that the current trade policy context does not make widespread 'de-globalization' inevitable; rather the pressures to de-globalize will vary significantly across industrial sectors and national contexts.…”

“…Many countries reacted with outright bans on exports. These trade measures came against a backdrop of already rising protectionism and anti-globalization sentiments, as well as a fragilized World Trade Organization (WTO) (Curran, Eckhardt, & Lee, 2021).…”

“…The most impactful result of this trend was Trump's election in the US in 2016. His administration's widespread antagonism to trade and outright 'Trade War' with China had real, and probably enduring, impacts on trade (Witt et al, 2021), while its undermining of the WTO leaves the global trading system seriously weakened (Curran et al, 2021). Even prior to COVID-19, this context of increasing protectionism and resulting policy uncertainty was posing important new strategic challenges for MNEs (Witt et al, 2021).…”

“…Governments often responded with export bans or other types of trade restrictions. A recent analysis of these policy measures indicates that some are likely to be incompatible with WTO exceptions, including outright bans on trade in products whose relation to the fight against the pandemic was, at best, tangential (Curran et al,2021). These widespread trade restrictions, and the challenge to the rules of world trade which some pose, will impact both trade and policy uncertainty for MNEs going forward.…”

Implementation of Food Retail Functions in Poland in the SARS-CoV-2 Pandemic

“…International markets have not experienced deeper perturbations to date [29][30][31][32][33], but their sustainable resilience cannot be assumed if the pandemic persists and lockdown returns, especially given the weakness of existing international organizations in quality activities (products, institutions, environment) under the sustainable development paradigm [34,35]. Therefore, the performance of this work brings a new cognitive and normative value for the food sector of Poland.…”