Question

Based on your perspective, write a short summary of the challenges in international trade and global market due to covid 19.

Answer 1

Globalization relies on complex ties that bind producers across multiple countries – global value chains (GVCs). Such producers also use highly specialized intermediate products, or "inputs," produced by only one distant manufacturer in overseas. COVID-19 badly compromised those relations. While the global economy was weak in early 2020, many expected the US-China Phase One trade agreement would increase international trade. COVID-19 scuppered those hopes, putting the factories of the world at a standstill and severely disrupting global supply chains.

This decline in Chinese trade affected some markets more than others. Comparative figures between the first two months of 2019 and the first two months of 2020 show a decline in Chinese trade with the EU and US. Chinese exports to the EU decreased by 29.9%, while EU imports decreased by 18.9%. US exports and imports were down 27 percent and 8 percent respectively.As the pandemic continues, China's worst-affected exports include capital goods such as nuclear reactors, intermediate goods such as iron and final labour-intensive goods such as furniture.

COVID-19 is a humanitarian crisis on a global scale. The virus continues to spread across the globe, putting health care facilities in the fight to save lives under immense stress. When the epidemic spreads to low-income countries with poor health care systems, the human scale of this catastrophe is likely to escalate.

Keeping trade flowing requires co-operation and trust – for example, that the market will supply essentials, that countries will not impose export restrictions, and that imports do not pose health risks. This is a particular challenge at a time of trade tension, when the international trading system has already been subject to increased numbers of new restrictions and distortions, from tariff increases among major traders to significant government support in key sectors. Mobility constraints are also compounded by attempts at mediation to control and avoid conflicts through ongoing negotiations.

Many governments are taking steps intended to provide their own people with supply that would have the effect of restricting supply to others. Sometimes export controls take the form of special licensing conditions or outright export bans for some goods. Certain steps require the procurement or requisition of promised goods. Those are hard issues. While governments are rightly concerned with protecting their own populations, the effect on other countries and hence on global efforts to contain the virus and prevent damaging recurrences in the second or third waves can be severe.