This write-up is a summary of the joint commentary by four trade ministers about the current COVID-19 and the resulting trade stance.
They are (1) Simon Birmingham, Australia’s Minister for Trade, Tourism, and Investment; (2) Elizabeth Truss, United Kingdom Secretary of State for International Trade; (3) Chan Chun Sing, Singapore’s Minister for Trade and Industry; and (4) David Parker, New Zealand’s Minister for Trade and Export Growth.
The ministers noted that much work is needed to protect their countries during this difficult period. Long-term efforts to protect ways of life and livelihoods need to be paired with the important battle against COVID-19 to save lives.
Since 1950, advances in health, technology, and knowledge have extended global life expectancy by 25 years. In the last 20 years alone, more than one billion people have been saved from extreme poverty. All over the world, people are leading better and long lives.
Trade promotes productivity and innovation while also increasing employment, incomes and bolstering social cohesion, the ministers remarked.
Market liberalisation and trade growth across the world have allowed these social advances to take place. Through open trade, comparative advantages have improved global productivity while also accelerating innovation. Thus, not only has trade delivered goods and services at the cheapest cost to those who need them, but more jobs have also been created globally.
The four ministers highlighted that each of their country are four independent trading nations who have achieved success by functioning globally. Almost two-thirds of Singapore’s gross domestic product is contributed by external demand. Britain’s economy comprises two-thirds of trade whereas one-fifth of jobs in Australia are trade-related. In New Zealand, the ratio is one-fourth.
Even at the best times, trade is crucial, they noted. The routine before COVID-19 was possible due to the deep trade routes allowing individuals to receive supplies of food, drink, technology, and clothing. Businesses depend on trade for their supplies of critical inputs as part of crucial investment, essential services, and value chains.
Free-flowing trade plays an important role in crises like the current pandemic as vital supplies can still be obtained when they are most needed, despite the current temporary change in daily routine, the ministers said.
They added that not a single country is fully self-sufficient to provide all necessary medicines, medical supplies, and equipment. This is especially for the provision of critical agricultural products or other essential goods and services that move between borders.
Due to this, the ministers welcomed the commitment by the G-20 trade ministers regarding COVID-19 to work together as opposed to isolation in the quest to combat the common enemy that knows no national boundaries.
After all, a global response is needed in order to overcome a global problem. More cooperation between countries is required to overcome the crisis, not less, they stressed.
The ministers have also agreed to remove trade restrictions on essential goods like food and medical supplies as well not imposing unnecessary export restrictions or tariffs on those goods, hinting that such restrictive trade policies will only harm the response to the pandemic.
In addition, necessary measures implemented to protect public health should be proportionate, time-limited, and transparent. The ministers will also ensure that the running operation of critical infrastructure – such as air and sea ports – so that the supply chains remain strong and viable globally.
Addressing the future outlook, the ministers touched upon the concerns of many that the crisis will usher in less trade and the onshoring of supply chains in the future. Many people have started championing for the trade liberalisation to be rolled back, even as that has been the cornerstone of much of the global economic growth of the recent decades. Protectionist tendencies will slow the economic and employment growth from the pandemic, they stressed.
Although there are merits to strategic reshoring of truly essential capabilities, those people should not be allowed to undo many years of progress amid this crisis, the ministers commented.
They also noted that their countries can be more resilient against future shocks if they share challenges and diversify where each country sell to and buy from. Supply chains that are diverse not only enhance just-in-case resilience but also improves just-in-time efficiency.
Due to these reasons and many others, erecting trade barriers would be the worst approach to handling the global economic uncertainty, they reminded. Business confidence and investment will be damaged by trade barriers, crippling the economies from restarting. Developing countries which have benefited much from open policies, will experience lower prosperity and employment if they are isolated from the global markets.
In light of this, the four ministers are committed to lead the world in restoring and deepening global trade. The countries’ commitment to shared rules for the governance of global trade and investment should be deepened during this COVID-19 crisis, much like how nations are compelled to negotiate the Bretton Woods agreement after World War II.
The four ministers settled on three commitments. The first is to strive to reform the World Trade Organisation (WTO) by improving its transparency, streamlining its settlement of disputes, and modernising its rules. The second is to urge countries that have imposed trade borders to open them again for trade. The third is to advance forward with the various trade negotiations to expand business opportunities in the era of post-COVID-19.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which the UK is looking to join, is a crucial element in promoting liberal free trade agenda globally, they concurred.
With the four countries paving the day, the ministers hope that their cooperation will enhance confidence and provide leadership. They aim to ensure that other countries also recall the economic and social benefits brought about by open, rules-governed trade before the pandemic struck. They also urge those countries to continue with policies that enhance livelihoods and lives even when the crisis is over.