26 Apr 2021

showCASE No. 116 I Does Protectionism Matter in the Time of Pandemic?


The Covid-19 pandemic and the health and economic crises that emerged in its aftermath have once again reinvigorated the long-lasting debate on the effectiveness and appropriateness of protectionist measures. Therefore, in this edition of showCASE, we discuss the ever-rising trend of protectionism, its recent effects on the global economy, and its impact on the efficacy of the global emergency response.


CASE Analysis

Written by Abdoul Karim Zanhouo 

The rise of nationalism in recent years globally as well as related arrival to power of nationalist politicians in many countries are some of the factors that have contributed to resurgence of trade protectionism all over the world. This is particularly the case in the United States, the United Kingdom, and several European countries. Indeed, Washington under the Trump administration has introduced import duties on aluminium and steel originating from many countries (including the EU member states). Besides, Euroscepticism and the Brexit have challenged the principles of free movement and economic integration in Europe in recent years. Indeed, protectionism and nationalism were already on a rise in the pre-COVID-19 period, and the ongoing health crisis has further exacerbated them. In a bid to protect domestic markets and healthcare systems against the adverse effects of the pandemic, many countries have introduced protectionist measures that range from export restrictions to bans on exports of personal protective equipment and other medical and food items. Recently, the EU extended its export authorisation scheme for COVID-19 vaccines until the end of June This is not entirely surprising as, in general, periods of crisis like the one we are facing now tend to be conducive to a return of protectionism. While trade protectionism might be justified by arguments such as the need to protect local jobs and industries, ensure national security, and boost domestic consumption, its economic effectiveness and, in particular, its effectiveness in mitigating spill-overs from global crises are often questioned

Rising Protectionism and its Implications for the Global Economy

In general, trade protectionism includes all actions that aim at impeding or limiting a given country's exchange with the rest of the world. Common protectionist measures include trade tariffs, subsidies, import and export quotas, Sanitary and Phytosanitary Measures, and other trade restriction measures. Figure 1 displays the number of both protectionist and liberalising measures implemented across the world between 2009-2020. As it can be seen, while both have been on rise, the number of the protectionist measures is higher throughout the entire period.

The number of protectionist policies peaked in 2018 with 3,145 measures introduced across the world. That very year marked the beginning of the process of imposition of import tariffs by the Trump administration on selected products from several countries, including China, Canada, Mexico, and the EU Member States. The trade war was triggered in June 2018 when the US imposed 25% tariffs on steel imports and 10% tariffs on aluminium imports from Canada, Mexico, and the EU Member States, a move that was followed by a series of retaliatory measures. Indeed, the EU countries decided to respond by levying a 25% tariff on a range of US products worth USD 3.2 billion, which went into effect that same month. During the same period, tensions between the US and China have been intensifying. In July 2018, the US administration initiated further trade measures, including 25% ad valorem duties on 1,300 types of products imported from China, which were followed by the introduction of new measures in September 2018 that targeted USD 200 billion worth of Chinese exports. In response, China levied tariffs on US exports worth USD 60 billion.

After this escalation, a downward trend in terms of several new protectionist measures could be observed right until the end of 2019, when the pandemic started to unfold the world.


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