Export prohibitions of countries
In April of this year, 80 countries and customs areas have imposed prohibitions or export restrictions as a result of the COVID-19 pandemic, according to a report by the WTO Secretariat. The report emphasizes the lack of transparency at the multilateral level and the risks to an elongated term that outline export restrictions for the world’s world chains and the well -being of the population.
There is a lot of diversity among products that cover these new prohibitions and export restrictions. In the report, it indicates that the new prohibitions and restrictions towards export primarily affect medical materials such as masks, medications, breathing equipment and other medical equipment.
However, only 13 WTO members have offered information about these new measures in accordance with the WTO standards regarding quantitative restrictions. Three of them have presented food production export restrictions in accordance with the agreement on WTO agriculture. The report indicates the damages and delays suffered by countries that try to obtain materials to fight the Covid-19 pandemic as a result of the lack of information and oriented to the WTO members about how to inform about their measures.
The report highlights the exceptions established in the WTO standards regarding the prohibitions or restrictions on export, although the cost that both importing and exporting economies will face in the long term is also stipulated, particularly regarding reductionof supply and increased prices of fundamental products.
It is pressing that the production of fundamental medical supplies increases quickly worldwide. A good operation of value chains can help expedite production and thus stop the increase in costs at the same time. Once the new products are available, trade will be essential to transfer them from where they have more to where there are less. However, lack of international help can hinder this response of the offer that is needed quickly.
Article XI of the General Agreement on Customs and Trade Tariffs of 1994 speaks in general terms of export prohibitions and restrictions, however, it allows members to temporarily apply them to avoid a shortage of food products or other necessary products. Agriculture Agreement requires that members who apply measures to temporarily restrict exports of food products necessarily take into consideration of food security needs of other members.
Export prohibitions and restrictions that have been applied by large exporters can cause prices to reduce and increase the availability of goods in question in the internal market. However, this strategy is not free of disadvantages: the measures decrease the world supply of products that are being treated, which negatively impact the importing countries that do not have the potential to manufacture these products. Exporters, meanwhile, also run the risk of losing in the long term.
On the one hand, the decrease in prices in the internal market will reduce incentives to produce the goods in question in the country, higher prices in the foreign market will promote smuggling exports of these goods and both situations can reduce the availability of the productIn the internal market.
On the other hand, the restrictions implemented by a country can end up causing a domino effect. If trade does not provide safe access to fundamental goods, countries may feel the need to give up imports and boost national production, even if costs are much higher.
On April 24, the managing director of the International Monetary Fund, Kristalina Georgieva, and the WTO general director, Roberto Azevêdo, made a request together for governments to refrain from establishing restrictions on the export of medical materials and fundamental foodsand other restrictions on the trade of such products, and to quickly eliminate those already applied since the beginning of the year.
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