Protectionism must not prevail

Coronavirus may well represent the biggest health crisis any of us experience in our lifetimes.

That is why the prime minister and government have been quick to act—working to a scientifically-led, step-by-step action plan and taking the right measures at the right time.

This virus has not only impacted our national health, but it has also thrown up substantial economic challenges to the global trading system. In addition to mitigating the economic symptoms of Coronavirus, with fiscal and monetary measures, we must also deploy trade policy as one of our most effective antidotes. It is crucial that we keep trade flowing, keep supply chains open and resist protectionism.

We are already seeing that protectionist impulse appearing across the world. Restrictions on essential-to-life medical equipment are now being enforced by more than two dozen countries. While it might feel comforting in the short term, it has the potential for harm—restricting important supplies and forcing up prices, if unchallenged.

Every morning at the Department for International Trade, I speak via video link to our global team in posts around the world. They are working with their teams day and night to ensure protectionist instincts do not prevail.

Their efforts—and those of other government officials supporting British business around the world—ensure that personal protective equipment, ventilators, pharmaceuticals and other crucial supplies make it to the UK.

Hour-by-hour, it means we are in constant communication with governments, pushing procedures and helping businesses unblock customs and logistical problems.

The truth that this and other previous crises have revealed is that no country is self-sufficient. Trade is critical to us all—it ensures we have what we need to live, that the NHS gets the equipment it needs to save lives, and that developing countries can prosper.

But the call to keep trade flowing, supply chains open and resist protectionism goes beyond this immediate challenge. Maintaining confidence in international trade will be critical to the broader economic recovery in the post-Covid world.

It is because of this wider economic challenge that the UK has been doing all it can domestically to support businesses through this difficult period and in tandem make the case for free trade on the international stage.

We called for a G20 trade ministers meeting, chaired by Saudi Arabia which has the presidency, where I spoke of the need for a united global response to Coronavirus.

The UK has since announced it will drop import tariffs on crucial medical equipment, as have the US and New Zealand.

This international effort provided a strong backdrop for our close working with China to secure the delivery of 300 further ventilators, with hundreds more coming into production in the coming weeks. We’re also using our extensive overseas networks and UK-based expertise to coordinate international procurement of medical and other critical supplies.

My department is working with businesses to help them find secure supply and export routes. This complements the wide-ranging business support the government has already introduced, including export finance support and business interruption loans.

We are not complacent. We are working hard at home and on the international stage to further identify the problems on the horizon and to ensure we reboot trade post-Covid-19.

Part of the trade reboot will involve strengthening the fragility of some trade and supply, as many nations rely on single sources for some important goods. In many cases long international supply chains have been created with little resilience to shocks. However, the answer is not isolation and self-sufficiency—neither of which are credible in the interdependent world we live in.

Instead, we should look to broaden our range of trading relationships, so we are not limited to supply from just one country, bloc or continent. We will then begin to achieve the kind of diverse supply chains that will safeguard us against future crises.

We know that this virus cannot be beaten alone, and a united international response is required. Just as we continue to deploy policies to tackle this global health crisis, we need to pull trade levers to mitigate its economic damage and build an international trade policy fit for the world after coronavirus.

Despite these difficult times, the UK will continue to champion free trade while building our own economic resilience.

 

Liz Truss is Secretary of State for International Trade