WTO and IMF heads call for lifting trade restrictions on medical supplies and food

IMF News, April 24, 2020

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Press Release No. 20/187 — April 24, 2020 — IMF Communications Department.
The heads of the IMF and the World Trade Organization call for more attention to the role of open trade policies in defeating the virus, restoring jobs, and reinvigorating economic growth.
They urge governments to refrain from imposing or intensifying export and other trade restrictions and to work to promptly remove those put in place since the start of the year.
The WTO and the G20 are identified as forums for global policy coordination on these matters.
Direct quote from WTO rules referenced: export restrictions "applied to prevent or relieve critical shortages".

Trade has made cutting-edge medical products available throughout the world at competitive prices.
Last year global imports of crucial goods needed in the fight against COVID-19, such as face masks and gloves, hand soap and sanitizer, protective gear, oxygen masks, ventilators, and pulse oximeters, totalled nearly $300 billion.
Governments have taken dozens of measures to facilitate imports of COVID-related medical products—cutting import duties, curbing customs-clearance processes, and streamlining licensing and approval requirements.
The statement welcomes actions that accelerate imports of critical medical supplies, noting that doing so translates into saving lives and livelihoods.
It emphasizes that similar attention should be paid to facilitating exports of key items like drugs, protective gear, and ventilators.

Taken collectively, export restrictions can be dangerously counterproductive.
What makes sense in an isolated emergency can be severely damaging in a global crisis.
Such measures:
- disrupt supply chains,
- depress production,
- misdirect scarce, critical products and workers away from where they are most needed.
Other governments may counter with their own restrictions, prolonging and exacerbating the health and economic crisis, with the most serious effects likely on poorer and more vulnerable countries.
To ramp up the production of medical supplies, it is essential to build on existing cross-border production and distribution networks.

The IMF and WTO express concern about the decline in the supply of trade finance, noting that adequate trade finance is important to ensure that imports of food and essential medical equipment reach the economies where they are most needed.
Institutions are tracking developments and engaging with key suppliers of trade finance.
Curbs on some food items are starting to appear, despite strong supply.
Evidence from the global financial crisis shows food export restrictions can multiply rapidly across countries and lead to greater uncertainties and price increases.
Additional risks highlighted:
- If critical agricultural workers are not able to move to where the harvest is, crops could rot in the fields.
- Where new cropping seasons are starting, planting could be hampered, lowering both domestic and international supplies and increasing food insecurity.
The statement urges governments to address these challenges in a safe and proportionate manner.

Reference to the 2008 global financial crisis: global economic leaders jointly committed to refrain for a year from new import, export, and investment restrictions; that pledge helped avoid widespread trade restrictions that would have worsened the crisis and delayed recovery.
The statement argues a similarly bold step is needed today.
Policy recommendations (explicit):
- Refrain from imposing or intensifying export and other trade restrictions.
- Promptly remove restrictions put in place since the start of the year.
- Use the WTO and the G20 for global policy coordination.
Closing normative statement: "History has taught us that keeping markets open helps everyone – especially the world’s poorest people."

Source: Press Release No. 20/187 — April 24, 2020 — IMF Communications Department.