Connectivity, transport and trade in the era of the pandemic – Working Documents

COVID-19 not only represents a serious global health threat, but also represents a shock to supply and demand, both aspects that influence international trade in goods and services. The following paragraphs point out the main challenges in trade and transportation as a result of the pandemic.

Spread Prevention. About 80% of world trade is transported by commercial transport. Unfortunately, freight transport can contribute to the spread of the virus, as it is not fully computerized. Both documents and goods continue to be subject to physical checks for customs and other regulatory purposes. The staff of port structures, border crossing points and control terminals are exposed to the risk of a pandemic due to the nature of their work. Due to person-to-person transmission of the virus, drivers and other related workers who cross borders may be detained for several weeks of quarantine. Against these risks, mitigation measures require the automated exchange of trade and transportation documents and data, based on international standards.

Shortage of intermediate goods. The blockade policies in the main producing and trading nations of the world, that is, China, Germany, Italy, Japan, Korea and the US, have a strongly “contagious” effect on the regions and countries commercially linked to them, damaging supply chains and international manufacturing. Psychological effects in government and corporate policy reactions can further affect supply chains through a repatriation push. The WTO forecasts a drop in world trade in goods ranging from 12% to 32% in 2020, with a double-digit decline in trade volumes in almost all regions.

Increase in onerous procedures. Border agencies face the challenge of expediting the clearance of imports and exports, including donations and relief shipments, while ensuring epidemic prevention and providing adequate compliance controls. However, the borders are closed or severely restricted for trucks, in some cases for trains, air transport and land and sea transport. Trade restrictions, especially on critical goods, are issued unilaterally, regardless of the impact on the broader economic system or even the efficiency of the COVID-19 response and post-crisis recovery. Border measures such as health or driver permit checks create miles of queues and days of waiting time. Cargo backlogs at airports and seaports are the result of a sudden drop in demand, increased document checks at the border, or other reasons.

Disruptions in the logistics industry. The pandemic poses such a serious threat to port communities and port authorities that they are even considering partially or fully shutting down their operations. To mitigate the negative impact, it is crucial to keep ships moving, ports open and cross-border trade flowing, while ensuring that border agencies can perform all necessary checks and that all stakeholders can stay safe in the process. . Political action is required, but clearly the most effective action would be internationally coordinated action, hence the role of the United Nations.

Proliferation of legal actions. The unprecedented disruptions give rise to a myriad of business law implications affecting merchants around the world. These include the challenges of delays, performance failures, liability for breach of contract, force majeure frustration. The effects of the crisis can lead to large business losses and bankruptcies, which can overwhelm courts and legal systems with broader implications for effective governance at the national and international levels, especially for the most vulnerable developing countries. Consequently, extensive legal implications give rise to a significant increase in the need for competent legal advice for governments, industry associations and traders.

Poorly coordinated responses. Most control and facilitation measures bring more results if they are implemented on a regional and sometimes global scale. Nonetheless, there has been little, if any, regional coordination in the transportation response to COVID-19. Similarly, although National Trade Facilitation Committees (NTFCs) are the forum for coordination between government agencies and the private sector, many NTFCs woefully lack the capacity, resources, and common understanding of international trade procedures, much less fewer emergency actions and coordination. Regional and national collaboration and coordination of cross-border trade are vital during emergency and crisis situations to ensure the uninterrupted flow of trade and transportation, particularly for landlocked and transit countries. In this context, governments must urgently adopt common approaches to address these problems in the global network of supply chains to avoid widespread economic collapse. In the absence of urgent measures in this regard, post-pandemic economic recovery may be severely hampered, which may worsen prospects for long-term sustainable development.

Last but not least, sustainability. The world is likely to emerge a very different place from this crisis. Therefore, let us work to make it more suitable for the objectives of sustainable development, the circular economy and the reduction of harmful effects on the environment. The COVID-19 crisis is likely to roll back the gains of the decades-long effort to curb poverty. An example of desirable action is the need to reorganize international trade to take into account health concerns that were an issue even before the COVID-19 crisis.

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The execution of the Project has given rise to numerous publications of Series and Project Documents that can be consulted in the link of publications of the Division of International Trade and Integration (http://www.cepal.org/es/publications/list/topics /8192).