In race to secure medical supplies, countries ban or restrict exports

“It’s the least we can do for the Swiss population to avoid a shortage of necessary medical equipment in an emergency situation,” said Swiss economic minister Guy Parmelin, according to the national broadcaster’s website. of the national broadcaster.

These are just a few of the trade restrictions governments have put in place on medical supplies since the coronavirus began to spread outside China at the beginning of this year.

According to Professor Simon Evenett of the University of St. Gallen and the head of Global Trade Alert, 60 countries have introduced new export curbs and more are being added every day.

While individual leaders are understandably concerned about providing for their own nations, Evenett and other trade experts argue such restrictions lead to inefficient distribution of essential goods. Ultimately, prices go up for everyone, and poorer nations can get cut off from crucial technology.

“We know there is a tendency of individuals to hoard. This behavior happens also at the international domain,” said World Bank economist Michele Ruta. He said national hoarding can lead to overall reductions in production, product scarcity and price increases. During the increase in global food prices from 2008-2011, many countries began restricting food exports. He and his colleagues calculated that those trade measures drove up food prices by another 13% on average.

To try and predict how trade restrictions could impact the global response to the Covid-19 outbreak, he and fellow World Bank economist Aaditya Mattoo took a look at the ventilator market, where they found just seven countries account for 70% of total exports. They estimate if just one producer imposed an export ban, world prices would go up by 10%.

“If more countries do it, the price increase would be much larger,” Ruta said.

None of the major ventilator-producing countries currently have an official export ban in place, but since March 6, Siare Engineering, Italy’s only ventilator producer, said all its production is reserved for domestic use after directions from the government. The company previously exported 90% of its products, which includes ventilators and anesthesia machines

“Prime Minister Conte directly called to explain the situation. He said there wasn’t an alternative. We had to organize a plan with the government in 48 hours with us and the civil protection and defense ministries,” said Gianluca Preziosa, Siare’s director general.

Siare is working with Italian auto giants like Ferrari, Fiat Chrysler and Lamborghini to obtain the parts it needs to raise its ventilator production from 166 to 500 a month to meet demand. Preziosa said his company is advising other countries’ ventilator producers, including GE, on similar collaborations.

He acknowledges, however, that nations without a domestic ventilator producer will likely have difficulties getting their hands on the number of machines needed during a large Covid-19 outbreak.

“The countries which are fortunate enough to have a national producer are lucky,” he said.

Many nations without their own ventilator manufacturers are likely to be poorer countries without the industrial or technological base to produce such products. Evenett found that there are no nations in Africa, the Middle East or South Asia that export ventilators and only one nation in Latin America does. While countries in these regions may have domestic ventilator producers, he argues it’s unlikely they would be producing the most advanced versions.

If nations stop letting ventilators leave their borders, that could effectively be “denying a life saving technology to literally billions of people,” Evenett said.

Instead of restrictions, trade economists are calling for global cooperation and coordination around the deployment of life-saving medical supplies. After years of trade tensions, tariffs and counter tariffs — many initiated by the Trump administration — and the weakening of global bodies like the WTO and the G20, there is a lot of bad blood and mistrust around trade negotiations. That will make it all the more challenging to foster international cooperation.

“We’ve had 10 to15 years of drip-drip-drip non-cooperation on trade, especially the last two years” Evenett says. “Now no one thinks about doing things together anymore.”

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