THE BUSINESS OF INTERNATIONAL TRADE
The Deputy Director General of the World Trade Organisation (WTO) has highlighted the importance of international trade to the global recovery from coronavirus, in a speech delivered to the 2020 Havencongres Rotterdam.
In his speech, Mr Wolff noted that Covid-19 has highlighted the importance of international trade in terms of manufacturing and supplying medical equipment around the world. He remarked that "When the pandemic first hit, medical equipment, from simple hand sanitizer and masks to more sophisticated protective garments and ventilators were suddenly in short supply. Domestic manufacturing could not immediately respond. In many places, the immediate response from governments, which were taken by surprise, was to unilaterally restrict exports to shore up the availability of supplies at home."
Addressing the reaction to shortages in medical supplies, Mr Wolff noted a shift in strategy on supply chain management, explaining that "The experience of shortages in a relatively few, but essential, product lines, and of being unable to rely on international markets, has injected new urgency into the debate over on-shoring and near-shoring supply chains."
However, Mr Wolff argued that some of these shifts could be costly, could take a substantial amount of time to be actioned, and could offer a "false sense of security". Noting that "The pandemic has exposed some of the fragilities inherent to value chains and economic interdependence", Mr Wolff went on to say that "I do not believe that global value chains are a relic of the recent past. I do think, however, think we can expect what I call Global Value Change ... I think we will see more flexibility in these networks, moving towards more diversity in sourcing and increases in inventory. Trade will still be a most important source for most of what industries and individuals consume. A shift from “just-in-time” to “just-in-case” manufacturing does not mean that all components can or should be made next door."
During the speech, Mr Wolff also looked at challenges facing the WTO and the trading system, technology and other trends in world trade.
To read Mr Wolff's speech in full, go to www.wto.org/english/news_e/news20_e/ddgaw_29sep20_e.htm
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