COVID-19, the pandemic where almost everyone in the world is dealing with, is impacting the lives of nearly every person. The pressure is not only on the citizens but as well on the businesspeople, diplomats, ambassadors, ministers, and leaders of countries. Each state needs to deal with COVID-19 and is struggling with its national operations. Some nations and states are putting their territory under lockdown and forced to stop with global trade. It shows that governments are focused on protectionism and that the uncertainty is high. In this blog, I will elaborate more on what this pandemic is doing with the international trade -and relations of countries and what the future challenges and opportunities will be for them.
Where did it all start?
China, the country where a virus, so-called Corona started with spreading among the citizens and probably is going to impact our economies like never before, is the hot topic of every news channel. There are several stories on how this virus became so dangerous for China, and currently, for everyone in the world. Many journalists are claiming that the virus is a bioweapon against the world, and other journalists are stating that the little bat-soup was the origin of the pandemic. For now, the background is not essential, but the consequences, on the other hand, are crucial. This pandemic is putting pressure on almost every person in the world and either for example via working from home, not going on holiday, not able to have a simple drink at the café or to be ready to visit your (grand) parents. But how did the virus change international trade and what were the first signs that this virus would harm more than only the economy of China?
Let’s start with that China is one of the biggest manufactories in the world and is vital for international trade. In one of the reports of UNCTAD (United Nations Conference on Trade and Development), it states that the outbreak in China resulted in many problems for the Chinese suppliers. The suppliers were not able to receive the right number of products because the fabrics in China closed because of the virus. Regarding (UNCTD,2020), the value chains of many nations like the EU, East Asian countries and America disrupted because of the high dependency of China. China is such a big player in the world, that their economic problems are affecting the whole world and that the globalization is starting to feel the pressure. Even me, a student who lives in the Netherlands, could see that certain webshops like Coolblue did not have enough Lenovo laptops in stock because of the delivery problems with China. It is strange to feel the pressure of something that is happening on the other side of the world, while you are still in your own country where everything seems fine till…
Yes, as we did not expect, the first cases of COVID-19 start spreading all around the world and in enormous numbers. Countries such as Italy, Spain, Iran, America have to deal with an extremely high number of victims and hospitals are running out of safety materials and intensive care products. Many countries decided to put their country on total lockdown, and that resulted in significant challenges for international trade and international relations. It looks like a lot of countries are putting themselves on number one and try to protect their country at all costs. Total lockdown regulations add insult to injury on international trade -and relations.
What is the pressure on international trade?
The airline flees in Canada are, for instance, facing big problems because their aeroplanes grounded because of the restrictions on outgoing flights. According to (Ganges & Van Asshe, 2020), both professors in the field of economics, are stating that Canada is facing a lot of difficulties with exporting their products to other countries like the US and Mexico because of one-third of the export transported via passenger flights. The passenger flights are almost grounded everywhere and, therefore, Canada needs to transport the goods via other ways which lead to a doubling of costs for shipping and the transit times. Since passenger travel might take some time to recover, this will likely be a massive problem in international trade for Canada and other countries who are exporting their goods in this way.
Another vital part of international trade is international relations between countries. Currently, many governments are doing their best to limit the virus impact on the health and the financial status of the citizen. Regarding (Ganges & Van Asshe, 2020), this results in that nations took steps to cut export of medical products and medicines to other countries which impacts international relations. Certain countries are expecting mutual export of products and the restrictions of medical supplies to other countries are putting pressure on the line. Countries that cannot produce the medical equipment by themselves are under pressure and are in desperate need of help from other countries. Fortunately, it is the term international relations covering more than only the relationship between states. The UN, regional organizations, and WHO are working on worldwide cooperation of the information exchange for research on a vaccine. According to (Perthes, 2020), the director of the German International and Security Affairs, can the pandemic lead to more acceptance from nationalist leaders and their worldwide cooperation. The help of the United Nations will give a high priority to help weak health systems and provide collaboration with the WHO to contribute to the public health of those countries.
And the future.. What are the challenges and opportunities?
Predicting the future is difficult, especially in this situation, where a pandemic developed in less than five months. But still, it is essential to look forward and try to investigate what will happen with international trade and relations. Regarding (Duffer, 2020), a researcher at Statista, is mentioning that the Corona will affect most sectors in the wrong way, but some industries might benefit from this situation. The health care sector, food retail, and certain manufactories are gaining a lot of revenue from the COVID-19 pandemic. Other areas, such as the catering industry, are having a difficult time because their cafe’s, restaurants or pubs closed because of the virus and do not gain currently any profit. They still need to pay their employees and fixed costs, which are sometimes really high, The outbreak can result in that when the crisis is over, a lot of customers cannot spend their money on holidays or leisure activities. Furthermore, the sectors which were hit by the COVID-19 will need a longer time to recover from the crisis and have to deal with lower demand for goods and services. It affects international trade in such a way that the lower order can result in shortages and higher prices. The international relations, on the other hand, might get better since this pandemic pressure the countries to cooperate, despite the relationship and the government of the country. It could result in an opportunity for better cooperation in the future, and when the economy stabilizes a better international trade between new states and nations again.
What a situation… I believe this whole situation about COVID-19 is unusual to follow because almost every country is involved and feels the pressure from the pandemic. Never before, so many countries need to work together to solve this virus, and I believe this will lead to better trade opportunities in the future and better international relations among states to prevent more pandemics like this.
Thank you for reading and if you have questions, feel free to leave a comment.
Duffer, E. (2020, April 3). Impact of the Coronavirus pandemic on the global economy, statistics & factos. Retrieved from https://www.statista.com/topics/6139/covid-19-impact-on-the-global-economy/
Ganges, B., & Van Asshe, A. (2020, March 27). The trade is among the casualties in the COVID-19 pandemic. Retrieved from https://policyoptions.irpp.org/magazines/march-2020/trade-is-among-the-casualties-in-the-covid-19-pandemic/
Perthes, V. (2020, March 31). The corona virus and international relations: open questions, tentative assumptions. Retrieved from https://www.swp-berlin.org/en/publication/the-corona-crisis-and-international-relations-open-questions-tentative-assumptions/
UNCTD. (2020, March 4). Global trade impact of the Coronavirus (COVID-19) epidemic. Retrieved from https://unctad.org/en/PublicationsLibrary/ditcinf2020d1.pdf