WTO report finds growing number of export restrictions in response to COVID-19 crisis

Large sectors of the world economy have closed

So far, 80 countries and customs territories have introduced export bans or restrictions as a result of the COVID-19 pandemic, according to a new report from the WTO Secretariat.

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New export prohibitions and restrictions They mainly cover medical supplies such as face masks, pharmaceuticals, ventilators and other medical equipment, according to the report. Some of the measures have extended controls to other products such as food and toilet paper.

 

However, only 13 members of the WTO (or 39 if the member states of the UE are counted individually) have presented information on these new measures in line with the WTO rules for quantitative restrictions. Three of them have notified food export restrictions in accordance with the WTO Agriculture Agreement. The report points out the damage and delays that insufficient information inflicts on countries seeking to acquire materials to fight the coronavirus pandemic. COVID-19 and provides guidance on how WTO members can notify their measures. Only a handful of notifications were submitted in March 2020 and have since increased in April.

 

While the report recognizes exceptions in WTO rules for export prohibitions or restrictions, it also highlights the costs that importing and exporting economies will face in the long term, particularly in terms of lower supply and higher prices for much-needed products.

 

Key points

 

The COVID-19 pandemic presents the world with an unprecedented public health challenge. Measures to curb the spread of the disease have shut down large sectors of the global economy. The global demand for medical products to combat the pandemic is unprecedented. All countries depend on international trade and global value chains to obtain these products. This is challenging in light of the continued disruptions in the international transport, particularly air cargo, which is often accompanied by passenger travel.

 

An additional complicating factor is the growing number of export bans and restrictions, which some WTO members have introduced to mitigate critical domestic shortages. Responding to COVID-19 urgently requires a sharp increase in global production of essential medical supplies. Well-functioning value chains can help rapidly increase production while containing cost increases. As new production becomes available, trade will be essential to move supplies from where they are abundant to where they are lacking, especially as the disease peaks at different times in different places. However, the lack of international development it risks hampering the urgently needed supply response.

 

Information available so far suggests that 80 countries and separate customs territories have introduced export bans or restrictions as a result of the COVID 19 pandemic, including 46 members of the WTO (72 if EU member states are counted individually) and eight non-WTO members. Most of these have been described as temporary measures. At least two members have already removed some of those restrictions.

 

The products covered by these new export bans and restrictions vary considerably; most have focused on medical supplies (e.g., masks and face shields), pharmaceuticals, and medical equipment (e.g., ventilators), but others have extended controls to additional products, such as food and toilet paper.

 

Although the article XI of the General Agreement on Tariffs and Trade (GATT) of 1994 generally prohibits export bans and restrictions, allows members to apply them temporarily to prevent or alleviate critical shortages of food or other essential products. If members move to temporarily restrict food exports, the Agreement on Agriculture requires them to take due account of the food security needs of others. WTO rules also contain more general exceptions, which could be used to justify restrictions as long as they do not constitute a means of arbitrary or unjustifiable discrimination between countries, or a disguised restriction on international trade.

 

Export bans and restrictions applied by large exporters can in the short term reduce domestic prices of the products in question and increase domestic availability. But the strategy is not free: the measures reduce the global supply of the products in question and importing countries without the capacity to manufacture these products suffer. And exporters also risk losing in the long term.

 

On the one hand, lower domestic prices will reduce the incentive to produce the good domestically, and the higher external price creates an incentive to smuggle it out of the country, which may reduce the domestic availability of the product.

 

On the other hand, restrictions initiated by one country can end up causing a domino effect. If trade does not provide safe and predictable access to essential goods, countries may feel they have to close themselves off. imports and seek national production, even at much higher prices. Such a scenario would likely result in lower supply and higher prices for much-needed merchandise. The long-term effects could be significant.

 

Lack of transparency at the multilateral levelIn principle, all these measures should be notified to the WTO as soon as possible in accordance with the 2012 "Decision on procedures for notifying quantitative restrictions" (QR Decision), while those relating to foodstuffs should also be notified to the Agriculture Committee. However, to date, 13 WTO members (39 if EU member states are counted individually) have notified the introduction of new measures under the QR Decision and three have notified food export restrictions under with Article 12 of the Agreement on Agriculture.

 

Economic operators and members have to deal with a high degree of uncertainty, as it is unclear which measures have been adopted by which countries, and new measures are being introduced regularly. Insufficient information makes it difficult for them to efficiently adjust their purchasing decisions and find new suppliers. This could be particularly detrimental to those seeking to obtain materials needed to fight the COVID-19 pandemic.

 

La G20 Ministerial Declaration The statement of March 30, 2020, emphasized that “emergency measures designed to address COVID-19, if deemed necessary, must be targeted, proportionate, transparent, and temporary, and must not create unnecessary barriers to trade or disruption of global supply chains and be consistent with WTO rules.” More recently, the Declaration of the G20 Agriculture Ministers of April 21, 2020 reaffirmed the "agreement not to impose export restrictions or extraordinary taxes on food and agricultural products purchased for non-commercial humanitarian purposes by the World Food Program (WFP) and other humanitarian agencies."

 

El Director General of the WTO, Roberto Azevêdo, urged members to exercise maximum restraint in the use of export restrictions and other measures that could disrupt supply chains. It has also called on WTO members to improve transparency on any new trade-related measures introduced as a result of the COVID-19 pandemic.

 

Possible actions to improve transparency in this area include:

 

Ensure that new measures are appropriately published at national level and, where possible, make them available on the websites of relevant national authorities.

 

Notify as soon as possible any new export restrictions to the WTO in accordance with the QR Decision; in the event that these restrictions affect food, also notifying the Committee on Agriculture.

 

Update, as necessary, the information included in the "transparency notification" of Article 1.4 of the Trade Facilitation Agreement, including relevant information services.

 

Seek to provide additional information to other members beyond what is required by the notifications, whenever possible.