The 26TH Global Trade Alert Report: Collateral Damage: Cross-Border Fallout from Pandemic Policy Overdrive
November 17, 2020
Simon J. Evenett and Johannes Fritz
Executive Summary
The onset of the COVID-19 pandemic meant governments faced their second systemic economic crisis in under 15 years. This year policymaking went into overdrive as states rightly took steps to protect public health and to stabilize their national economies. The impact of those steps did not stop at national borders. Once more the world trading system faced a major stress test.
When crises happen, overwhelmed officials and policymakers try stifling concerns about trade fallout with the following knee-jerk arguments:
Collateral damage to trading partners is inevitable at times like this.
Crisis policy response is temporary and so poses no long-term threat to the world trading system. No across-the-border tariff hikes (like those witnessed in the 1930s) have occurred and so trade distortions are under control.
It is unrealistic to expect trade reform during crises.
Trade rules should not get in the way of national crisis response.
Having documented and analysed information relating to over 2,000 policy interventions taken during the first 10 months of 2020, in this report we marshal evidence to reject every single one of these points. We also compare the policy response this year to that in 2009, during the dark days of the Global Financial Crisis. Doing so reveals there is no single crisis playbook. Governments have a choice in how they respond to crises. Once again states made dissimilar choices with different repercussions for their trading partners. Collateral damage was not inevitable. In fact, we show the fallout across nations this year was very uneven.
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