Delegates attend the opening ceremony of the WTO General Council at the organisation’s headquarters in Geneva, December 2019. Photo: © SALVATORE DI NOLFI/EPA-EFE/Shutterstock

The government's meagre attempts to manage the coronavirus trade shock

WTO figures predict that global trade will fall by between 13 per cent and 32 per cent this year. How resilient is the UK?
April 26, 2020

Covid-19 has presented major and lasting challenges to global trade. As a result of the pandemic, we are seeing unfamiliar and unpredictable pressures being placed on sensitive supply chains, travel restrictions in many countries and upended patterns of demand. Combined, these have caused huge disruption, the scale of which can be seen in recently published World Trade Organisation (WTO) figures that predict global trade will fall by between 13 per cent and 32 per cent this year. 

The choices made by world leaders in the coming weeks and months on how best to mitigate the impact of the virus will have profound consequences for businesses, public authorities and the wider trading system. And in turn, the implications of those choices for individual consumers and workers will be considerable. In the UK, the Department for International Trade is leading the work to mitigate the trade-related impacts of Covid-19. It is my committee’s role to scrutinise this work and make proposals to improve it. 

With that in mind, we are conducting an urgent inquiry into the short, medium and long-term consequences of the pandemic on international trade. We will examine the UK’s response, such as the support it is providing to exporters and the actions it is taking to facilitate trade in essential goods. We will also be considering how the government could engage with countries at both the WTO and bilaterally to promote international co-operation and a co-ordinated global response to the pandemic. 

Debate is under way about whether one of the lasting impacts of Covid-19 will be increased protectionism, which we have already seen with the imposition of export bans in some countries for goods deemed essential to combat the virus. In the midst of the crisis, export bans are clearly one of the policy levers governments will look to pull. But the decision to do so should not be taken without considering the long-term impact on the global trading system. 

Ensuring co-operation and dialogue between national governments as they scramble to respond will be no small task, but it is undoubtedly an essential one. When it comes to trade, the WTO would seem to be the most appropriate forum for these discussions, but it was already facing major challenges before the crisis hit, with no end in sight to the impasse over membership of its Appellate Body. How it responds in the face of this pandemic may go some way to deciding its future. 

My committee will focus on these areas in the coming weeks, and we have first turned our attention to considering the pressing issues surrounding the production and supply of medical and food products, as well as manufactured goods.  

In addition to the immediate impacts of the pandemic on global trade, coronavirus has also started to have knock-on effects on other UK policy priorities, with negotiations on a trade agreement with the US reportedly having been postponed indefinitely, and the government’s consultation on establishing a network of freeports given a lengthy extension. My committee recently launched separate inquiries into these issues, as it is important that they remain subject to the rigours of parliamentary scrutiny—even in these unprecedented times.