According to a report released by the World Trade Organisation (WTO), there is a growing number of countries around the world who are placing restrictions on exports in order to secure domestic supplies of certain products in response to the current crisis.
The report found that 80 countries have introduced restrictions on the export of medical supplies such as face masks, medicine, and other medical equipment, with some also limiting exports of certain foodstuffs and toilet paper.
Out of the 80 countries which imposed restrictions on trade, 72 of them are active members of the WTO. This is particularly worrying with the main aim of the WTO to ensure that trade flows as smoothly, predictably and as freely as possible.
With existing trade agreements in place between WTO members, countries are generally prohibited from placing new bans and restrictions on exports. There is room though for finding a way around this as the WTO stipulates that members can temporarily limit exports to prevent critical shortages of essential products within their own borders… and this is exactly what many are doing!
As the coronavirus continues to cause havoc around the world, global supply chains for many essential products are being brought to a halt. This has resulted in many countries being forced to stockpile on what they have so they can reduce the threat of national shortages.
In some countries though, the breakdown of regular trade flows could be devastating due to their reliance on importing much needed medical equipment for health workers and food supplies which usually fill the gap left by domestic production shortages.
The WTO is now working around the clock to urge members not to impose export restrictions and other measures which could disrupt supply chains further and put more pressure on economies which are already struggling immensely to deal with the economic and social fallout from Covid-19.
THINK LIKE AN ECONOMIST!
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