IMF, WTO Urge Caution on Trade Restrictions

0

By Ndubuisi Francis

The International Monetary Fund (IMF) and the World Trade Organisation (WTO) at the weekend warned that export restrictions on medical supplies and food “can be dangerously counterproductive” as countries grapple with the COVID-19 pandemic.

In a joint statement urging caution on such restrictions, the two multilateral organisations also said they were concerned by the decline of trade financing needed to ensure that food and medical supply imports get to the countries that need them most.

The IMF and WTO said export restrictions “disrupt supply chains, depress production, and misdirect scarce, critical products and workers away from where they are most needed. Other governments counter with their own restrictions.”

Eighty countries and customs territories so far have introduced export prohibitions or restrictions as a result of the COVID-19 pandemic, according to a new report obtained from the WTO website.

The report, which is based on information from official sources and news outlets, draws attention to the current lack of transparency at the multilateral level and long-term risks that export restrictions pose to global supply chains and public welfare.

The statement, issued by the IMF Managing Director, Kristalina Georgieva, and WTO Director-General, Roberto Azevêdo, called on governments to refrain from imposing export and other trade restrictions on key medical supplies and food and to quickly lift those put in place since the start of the year.

In response to the COVID-19 pandemic, some governments have adopted measures to facilitate imports of medical products, such as cutting import duties, curbing customs-clearance processes and streamlining licensing and approval requirements, the two agency heads noted.

They added that similar attention should be paid to facilitating exports of key items such as drugs, protective gear and ventilators.

Both organisations added that while global trade rules allow for temporary export restrictions to prevent or relieve critical shortages, “we urge governments to exercise caution when implementing such measures in the present circumstances. ”

Noting that this time is different, they observed that taken collectively, export restrictions can be dangerously counterproductive.

“What makes sense in an isolated emergency can be severely damaging in a global crisis. Such measures disrupt supply chains, depress production, and misdirect scarce, critical products, and workers away from where they are most needed. Other governments counter with their own restrictions.

“The result is to prolong and exacerbate the health and economic crisis — with the most serious effects likely on the poorer and more vulnerable countries.

“To ramp up the production of medical supplies, it is essential to build on existing cross-border production and distribution networks.

“What makes sense in an isolated emergency can be severely damaging in a global crisis. Such measures disrupt supply chains, depress production, and misdirect scarce, critical products, and workers away from where they are most needed.

“The result is to prolong and exacerbate the health and economic crises — with the most serious effects likely on the poorer and more vulnerable countries,” they warned.

Georgieva and Azevêdo also expressed concern about the decline in the supply of trade finance, which ensures that imports of food and essential medical equipment reach the economies where they are most needed.

In addition, despite strong supply, export curbs on some food items are beginning to appear.

“The experience in the global financial crisis showed that food export restrictions multiply rapidly across countries and lead to ever greater uncertainties and price increases,” they added.

The WTO and the Group of 20 offer two fora for global policy coordination on these important matters, the agency heads stated.