In a special summer edition of the Distinguished Speakers in International Business Series (DSS), the Center for Global Business and academic director, Kislaya Prasad hosted a conversation with Emmanuelle Ganne, senior analyst in the economic research and statistics division of the World Trade Organization (WTO) on Monday, July 27, 2020. The conversation focused on “Global Trade during COVID-19 and the WTO Response” and in particular, how global trade has been impacted by the pandemic, WTO’s responses worldwide, tools it has to support the economic recovery, and how countries are thinking about the future of trade.
The WTO is a member organization that represents 164 countries that manages rules of trade between nations. The mission of the WTO is to “to help producers of goods and services, exporters, and importers conduct their business.” Ganne emphasized that while the WTO is an institution on its own, that ultimately, agreements that come from the WTO are negotiated and signed by the bulk of its member nations.
“The impact on world trade has been huge,” Ganne exclaimed, responding to the question on the scope of how the pandemic has disrupted global trade. By the WTO’s projections, world trade is expected to fall by between 13% (the optimistic scenario) and 32% (the pessimistic scenario). While the impact has been less severe on some industries and even has boosted some, the pandemic has shocked world trade by 18.5% with emphasis on supply chains, tourism, services, and transportation. Air travel, in particular, has been severely affected. Referencing the World Tourism Association, Ganne said that up to 120 million people working in tourism will be affected by the effects of the pandemic. “There are some winners from the impact of the pandemic on global trade, and that’s IT,” said Ganne.
As the lead on micro, small and medium-sized enterprises (SMEs) at the WTO, Ganne also talked about how SMEs are the epicenter of the crisis and are over-represented in the sectors most impacted by the pandemic. “SMEs are the backbone of the global economy,” Ganne described, and that the WTO is monitoring measures in 150 countries by ensuring that SMEs have access to markets, certain standards, cash flow, and other emergency measures. Prasad further inquired about how digital globalization has fared during this time and if the pandemic will lead to the further expansion of it. Ganne mentioned that there are digital sectors that are continuing to expand, such as online retail services which have increased by 50%. However, she also noted that the actual process of exporting products has been majorly disrupted due to the delay in digitizing trading procedures such as the bills of lading. Ganne stressed that regulators need to step in to rectify this situation to support digitization and therefore speed up the process of moving goods across borders.
Ganne mentioned that several countries had imposed export controls on medical equipment such as PPEs at the onset of the pandemic and that these have eased somewhat as the pandemic has waged on. The situation with food and agriculture has also been good, she noted, because of adequate stocks and low energy prices.
WTO members have taken a number of temporary emergency measures to help manage the impact of the pandemic on their economies. According to the WTO monitoring of such measures, WTO members have implemented 256 trade measures explicitly linked to the COVID-19 pandemic. While most measures were trade-restrictive before mid-May, the majority of measures taken after that date were trade-facilitating. Other pressing issues concerning world trade are the continuing impact on the global value chains which was made apparent by the challenges of exporting PPE products and other medical goods in recent months. Responding to a question about the push in some countries to try and avoid the risks of international trade disruption by reshoring, Ganne said the important takeaway was the importance of diversification. She added that the world will likely see more emphasis on the development of more secure supply chains and diversification of supply chains to ensure they are more resilient when responding to the effects of the pandemic or future challenges. And many small companies producing the same product or supply will be better than relying on one company to do so.
Closing out the conversation, Prasad asked Ganne if she thought global trade in the post-COVID-19 era will be different, or will it go back to the way things used to be. Referring to her statement that the WTO is a member organization, Ganne said that ultimately the future of global trade will be up to its members, but her hope is that the world will be able to learn important lessons from the current crisis.
This DSS is part of our new campaign, #KeepGlobalSmith, which calls attention to our commitment to bringing the world to Smith during the pandemic. Check out the website to learn what else the Center for Global Business is doing now and in the upcoming academic year to engage with the world during this unprecedented time.
This event was supported in part by CIBE, a Title VI grant provided by the U.S. Department of Education.
— By Marina Augoustidis, associate director, Center for Global Business