Coronavirus crisis: Seven trade actions that need to be taken now

NEWS Published

COMMENT The coronavirus outbreak is placing unprecedented pressure on the EU and international trade. The goal should be to lay the foundations for the best possible conditions post-Corona that keeps as many companies – and jobs – viable. We have no time to wait, writes Anna Stellinger, Deputy Director General Confederation of Swedish Enterprise

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"Supply chains are breaking down and components are not reaching industries. In many cases, this is stopping production completely. Export bans inside and outside the EU are compounding this problem", writes Anna Stellinger, Deputy Director General Confederation of Swedish Enterprise.

The coronavirus outbreak is placing unprecedented pressure on the EU and international trade. Everybody’s top priority must be to stop its spread. Countries are acting decisively to limit the spread of the virus.

However, it is clear that this crisis is not limited to people; coronavirus poses an increasing threat to the economy, jobs and trade. The situation is all more concerning as it is impossible to predict how much damage this pandemic will cause. What is clear is that the current circumstances dictate that ‘alone’ is not a strong position. This makes the European Union more important than it has been at any time since its inception. The actions we now take – or do not take –will determine how our societies will look for future generations.

While it may seem tempting to erect barriers for people and goods, ultimately these will not act as barriers to viruses. This is why it is worrying to see how quickly the protectionist reflex emerges in times of crisis. Europe is now being hit by nationalistic, short-term, counterproductive and potentially unlawful measures. We must keep cool heads and ensure we make full use all the tools that are available to us.

We need to use national tools to provide companies with the correct conditions at home; European tools to ensure that the European single market - absolutely crucial to our exports, imports and our competitiveness - is not undermined; globaltools to remove unnecessary costs and unwanted barriers to importing the goods that we need in the current crisis.

Although various national actions to rescue companies and jobs have already been taken– for instance introducing short-term work, improving corporate liquidity, reviewing rules for paying VAT and employer contributions etc. - it is a concern that more forceful and essential European and global solutions have not yet been proposed. Already, in all countries and in all types of business, we have seen hundreds of thousands of job losses. All trade flows are affected, although the movement of people and goods have been hit first. The greatest obstacles are:

    • Supply chains are breaking down and components are not reaching industries. In many cases, this is stopping production completely. Export bans inside and outside the EU are compounding this problem.
    • Supply chains are breaking down and components are not reaching industries. In many cases, this is stopping production completely. Export bans inside and outside the EU are compounding this problem.
    • A shortage of containers is becoming a noticeable barrier to export.
    • Delays at national borders in the EU are causing disruptions and preventing products reaching their destination on time.
    • Limits to personal mobility is making it harder to move key competences across borders.
    • The EU’s own export restrictions runs the risk of encouraging other countries to do the same. This would make it increasingly difficult to procure health care equipment providers for the EU.

      What needs to be done?

      We need to consider all possible actions and use all available instruments. The goal should be to lay the foundations for the best possible conditions post-Corona that keeps as many companies – and jobs – viable. We have no time to wait.

      1. Make essential input goods duty free. With many European countries closed down, input goods will be missing for those industries still producing. At the same time, other countries are opening up again, for example China. Unilaterally removing import duties on components that companies in the EU need could simplify access to input goods for companies.
      2. Temporarily remove various trade defence instruments such as anti-dumping or other protective measures on those raw materials and inputs that companies struggle to access. Given the urgency of the situation this should be a priority for the EU.
      3. Identify ”key competences” at the EU level and restore mobility for people that qualify, as is currently done at national level. Not only are key competencies needed at the national level, they are also needed in other “systems”, such as within companies and value chains.
      4. Remove EU import duties on essential medical equipment. There is no reason to wait; tariffs are not high and there would be limited impact on EU ”domestic” producers.
      5. Remove import duties on essential medical equipment also globally; the EU should be pushing for a removal of such tariffs at a multilateral level.
      6. Prepare for the inevitability of an increasingly digital world. This should be obvious; the digitisation of production and trade has been obvious for years. In recent weeks and months, countries and businesses are adapting to digital working methods. This development gives even more leverage in data flow negotiations - both within the WTO and in more ambitious free trade agreements.
      7. Reinforce the EU single market. Trade should be frictionless, whether between Paris and Toulouse or Paris and Lisbon. The case for the free movement of people, goods, services and capital should also be self-evident. This makes it vital that the current obstacles introduced by national governments are not allowed to fragment the single market in the face of the inevitable calls for greater ”self-sufficiency” following the crisis.

      These are only a few actions that the EU should be putting on the table now. There is no time to lose.

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