The New Empty Argument Against Trade
To those already predisposed to favor domestic production over international trade, the COVID-19 pandemic seems like a case in point. Yet a closer look at the facts shows that, if anything, the current crisis offers powerful evidence of why we need global supply chains and widely distributed production.
NEW HAVEN – The COVID-19 crisis has emboldened advocates of protectionism and deglobalization. Familiar concerns about lost manufacturing jobs and rising inequality, or the desire in some circles to “punish” (scapegoat) China with higher tariffs, have now been augmented by an argument against global supply chains. According to this view, widely distributed production has made economies less self-sufficient, and therefore less resilient. The solution is to reshore existing business operations, offshore less in the future, and reduce reliance on trade more generally.
The argument for resilience is not new. Concerns about “food security” are regularly used to justify protectionist interventions in the agricultural sector. And, taken at face value, the claim – made frequently in recent months – that food supply chains are more secure because they are domestic seems valid. But, upon closer consideration, the situation is much more nuanced, especially if one adopts a reasonably broad view of “resilience.”
To be sure, trade skeptics would say that the COVID-19 crisis has revealed global supply chains’ vulnerabilities to export restrictions and external shocks. Many countries, including EU member states, initially imposed export restrictions on personal protective equipment (PPE) such as face masks, which may have meant that some importing countries could not obtain these items when they were most in need.