WITA Webinar: Impact of COVID-19 on Global Supply Chains and the Future of Trade Policy
Wendy Cutler with the Washington International Trade Association (WITA)
On Thursday, April 23, the Asia Society Policy Institute (ASPI), along with the Washington International Trade Association (WITA), cohosted a webinar about how supply chains could change as a result of the COVID-19 pandemic. ASPI Vice President Wendy Cutler and WITA Executive Director Ken Levinson were joined by Beth Baltzan, founder of American Phoenix Trade Advisory Service, Anabel González, Senior Fellow at the Peterson Institute for International Economics, and Nicole Bivens Collinson, President of the International Trade and Government Relations practice at Sandler, Travis & Rosenberg, PA.
Cutler highlighted the way that functioning supply chains were being used to counter the pandemic. She pointed to a recent joint statement by G20 Agriculture Ministers that committed the group to working together to ensure food supply chains continued to function, and she also underscored the importance of a recent pledge by 23 WTO members, including the United States, to avoid unnecessary export restrictions on food. "They have come together to put forward their commitment on export restrictions, maintaining open trade in this area, and really urging others to exercise restraint in any food stockpiling," she said.
The conversation also involved a debate about what the future of supply chains would eventually look like — and how much they will permanently change as a result of the ongoing crisis. Baltzan predicted that companies and governments would no longer be satisfied with existing supply chains, emphasizing that, "We have to have a radical rethink of the way we've been doing things for the last 40 years." She indicated that this would involve a less traditional trade approach, such as simply slashing tariffs, which she claimed could simply benefit the same countries where supply chains were already concentrated. "The mantra has been efficiency. And now we're seeing efficiency is at odds with resiliency," she explained.
Bivens Collinson provided the business perspective, noting that many firms had already been brainstorming potential changes to their supply chains as a result of the climate crisis and the desire to move toward "a more sustainable supply chain." One idea that she said has been discussed is "vertical sourcing," where companies would have vertically integrated manufacturing in each country in which they operate. González noted that, despite strains, functioning supply chains have been helpful during the crisis. "Trade policy, in some places, is actually helping us fight COVID-19 and save lives," she said. While she emphasized that broad, collective responses would be critical going forward, González did not believe sweeping changes will occur. "In my view, supply chains will be driven by the factors that have driven global value chains thus far," she said.