WTO: Export restrictions growing in response to COVID-19 crisis


WTO: Export restrictions growing in response to COVID-19 crisis


April. 24, 2020

Global Korean Post


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 swathes of the world economy. Worldwide demand for medical products to fight the pandemic is unprecedented.

All countries depend on international trade and global value chains to source these products. This is challenging in light of ongoing disruptions to international transport, particularly air cargo, which often goes together with passenger travel.


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 by the WTO Secretariat. 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 products covered by these new export prohibitions and restrictions vary considerably; most have focused on medical supplies (e.g. facemasks and shields), pharmaceuticals and medical equipment (e.g. ventilators), but others have extended the controls to additional products, such as foodstuffs and toilet paper.


Export prohibitions and restrictions applied by large exporters may in the short run lower domestic prices for the goods in question and increase domestic availability. But the strategy is not costless: the measures reduce the world’s supply of the products concerned and importing countries without the capacity to manufacture these products suffer. And exporters also risk losing out in the long run.


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


On the other hand, restrictions initiated by one country may end-up triggering a domino effect. If trade does not provide secure, predictable access to essential goods, countries may feel they have to close themselves from imports and pursue domestic production instead, 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.