EDITORIAL: COVID and Global Trade

WITH trade protection still an issue in the global trading arena, we are forced to ask what will be the fate of small island states like Barbados looking to trade as an option for economic survival in the post COVID 19 environment.

Small countries have invested many resources and energies in trade policy reforms, having recognised the benefits that trade brings to economic viability.

They have done this through their membership of the World Trade Organization (WTO) or when entering financial agreements with the International Monetary Fund. However, recent commentaries are indicating that protectionist trade policies are likely to pick up – and in places where they are least expected.

The COVID-19 pandemic has turned everything upside down. It has devastated economies; it has crippled international travel; it has brought companies to their knees; it has thrown thousands of people out of employment and it has caused millions of deaths around the world.

In that environment therefore, it is no wonder that countries have continued to erect trade barriers to protect their economies and where necessary to safeguard their industries from external competition. The key however, to effecting change and to make trade more beneficial to all countries and not just the few, resides within the bosom of the WTO.

It is against this background that we will follow the work and the agenda of the new WTO Director General, Dr. Nogozi Okonjo-Iweala.

When she took office about two months, the Director General told  a WTO General Council meeting that members need to do things differently to achieve reforms so as to keep the organization relevant.

She pointed out that the prospects for a successful 12th Ministerial Conference later this year were good, once members target a manageable number of deliverables and set up longer work programmes to address issues within certain time frames.

Small countries including Barbados have insisted they have boldly proclaimed a solid foundation and experience with competition policy as manifested via the various pieces of legislation that they have passed.

Trade opens up opportunities for countries to grow their economies, earn foreign exchange, keep nationals in employment, and improve their external current account deficits. By engaging in trade companies contribute to aggregate demand by raising the bar when it comes to economic activity.

In undertaking trade reforms the small states have been slashing tariffs, opening up industries to import competition, and providing assistance where appropriate to exporters. They have also been canvassing the idea that larger countries end their support to industries and ceased engaging in granting protection to industries since that in itself distort trade.

Here in this country, trade has been a key component in economic activity. As for exports they are necessary to rebuild the foreign reserves which had taken a beating prior to 2018. Before COVID more than one million dollars had flowed into the country by way of goods exports and re-exports. Additional inflows came from services (tourism and international business) exports.

So if this country and others have to earn more in the post-COVID environment, trade offers one such opportunity for doing so.

Protectionist trade policies do hurt countries, both large and small and in the event that this takes place. The WTO has a role to stamp this out.