Liberalize, Sanitize, Digitize: Three Urgent Trade Policy Priorities in a Pandemic Age

Abstract

Within a few short weeks, the COVID-19 pandemic has accomplished what multiple wars (hot and cold) failed to achieve over the past 75 years: massive simultaneous disruptions of international and local supply chains. Policymakers operating at the base of Maslow’s hierarchy of needs understandably seek to keep their countries safe. However, increasing barriers to trade during this vulnerable period is likely to backfire. Rather than delivering security of supply for domestic populations, these barriers will trigger a range of inefficient reactions (such as panic-buying and hoarding), make it difficult for domestic manufacturers to acquire the supplies they need, and increase prices for buyers in a worsening economy. Bold action now will enable the World Trade Organization (WTO) and the global trading system to be part of the economic solution, once people emerge from social distancing and the supply chain attempts to restart. Policymakers interested in keeping trade lines open and preparing the international trading system for a post-pandemic world must take three steps immediately: 1. Eliminate import tariffs, at least temporarily. 2. Sanitize the supply chain. 3. Digitize more of the supply chain.