Roberto Azevêdo, chief of the World Trade Organization, is urging nations to reject the lure of self-sufficiency. It’s bad for everyone, he insists.
The coronavirus pandemic has seen countries close borders and limit exports of essential goods. Throughout, the goal of the World Trade Organization (wto) has simply been to ensure that curbs on trade are “proportionate”. But what does that mean? And will cross-border trade return to normal once this pandemic is over? We asked the WTO’s director-general, Roberto Azevêdo.
Countries have been competing for medical supplies during this pandemic. Does this mentality worry you?
When you have a crisis, the instinctive reaction of governments is to protect their citizens. That’s absolutely normal – it’s what we do at home; we protect our families – but this is a global pandemic. So it is worrisome because it decreases the availability of products that might be needed more elsewhere. And it reduces trust in the system; in the ability of countries to co-operate in times of crisis.
How do you restore that trust?
We’ve been trying to make sure governments understand that any restrictive measures should be temporary, they should be focused, they should be proportionate and they should notify each other so that countries can plan.
What do you consider ‘proportionate’?
In the early days countries that were major medical suppliers suspended exports to ensure supplies to their own health system. In reality, the health system needed only a margin of what is exported. Proportionality compares your actual need in an emergency to the [response] measure and the degree of disruption that this introduces to the marketplace.
Countries will focus on reviving their domestic economies. What should governments do to keep cross-border trade alive?
After this crisis there will be a number of things on the minds of the policy-makers. One of them is vulnerability, in terms of essential products and [shoring up] supply chains. Whatever we do, we should not fall into the temptation of self-sufficiency as a goal. At the end of the day this would increase the cost of livelihood; it would increase vulnerability instead of reducing it. Maintaining open borders, international co-operation and diversifying supply chains is the way to go.
Some countries are offering incentives for production to be shifted back home. Are you worried this will go too far?
That pressure was there even before the pandemic. We already had a pretty high degree of uncertainty in terms of tariffs because of geopolitical tensions between the US and China, for example. The pandemic might accentuate some of that, particularly with regard to medical equipment, but we have to fight the urge to go for the easy solution of protectionism.
How can you convince countries that free trade is vital for the future?
The first thing is to tell our members to learn from history: self-sufficiency and protectionism have never made sense. That would be the worst outcome of this crisis. So I hope that we’re going to be smarter and that most governments will understand that the best thing to do is to avoid measures that distort market-based decision-making. Because that will inevitably lead to inefficiencies, higher costs and will be a losing proposition for their own citizens.
About the interviewee: Azevêdo has led the World Trade Organization since 2013. A career diplomat from Brazil, he is the first head of the intergovernmental body to come from Latin America.