While declining trade is largely a reflection, not a cause, of the current economic contraction, rising trade costs – from transport, logistics and supply chain disruptions, as well as additional border controls and documentation requirements – act as additional brakes on both trade flows and the global economy. The World Trade Organization (WTO) forecasts the fall in world merchandise trade to be larger than the decline in GDP, with estimated declines ranging from 12% to 32%, given the high degree of uncertainty about the duration and severity of COVID-19 and the measures necessary to contain it. The rise in trade costs from additional border controls, transport and associated logistics-related disruptions is estimated to account for up to a third of this decline (WTO, 2020).
Disruptions experienced in the transport and logistics that move goods to and beyond the border, leading to as shortages in sea, air and road cargo capacity1 are impacting trade routes worldwide. Additionally, to limit the spread of the pandemic, many governments have put in place measures such as channelling traffic through fewer border crossings; conducting at-the-border health checks; or, in some cases, reintroducing border controls that had previously been removed. These measures place additional demands on border agencies that are also wrestling with how to efficiently carry out their functions while implementing containment measures such as social distancing.
Yet the smooth operation of logistics chains in the midst of the COVID-19 outbreak depends on reconciling the fast and efficient movement of goods and services with increased control measures, temporary disruption to staffing, and restrictions on human contact.
Early information from interviews with businesses across a range of sectors indicates that the speed and facility with which shipments are being cleared has already been negatively affected by the COVID-19 crisis. For instance, within the European Union, enhanced border checks are reported to have led to more than three-hour average border delays at the end of March 20202. With keeping the flow of goods moving quickly across borders critical to many countries’ food supply, to the global economy and most importantly to the supply of pharmaceutical and sanitation products essential for facing the pandemic, there is a need to find solutions fast. The trade facilitation measures that countries have already agreed to implement as part of the WTO Trade Facilitation Agreement can help quickly. Indeed, implementing these measures is more important than ever.