Frequently asked questions: The WTO and COVID-19

from WTO homepage

1.The COVID-19 crisis looks like bad news for the global economy and trade - what does the WTO think the impact will be?

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The WTO issued its annual Trade Outlook on 8 April, and as Director-General Roberto Azevêdo said, the “numbers are ugly.” World merchandise trade is set to plummet by between 13 and 32% in 2020 due to the COVID-19 pandemic. WTO economists believe the decline will likely exceed the trade slump brought on by the global financial crisis of 2008-09. Trade is likely to fall more steeply in sectors characterized by complex value chain linkages, particularly in electronics and automotive products. Services trade will also be highly impacted due to the imposition of transport and travel restrictions and the closure of many retail and hospitality establishments.

On the positive side, DG Azevêdo noted that a rapid, vigorous rebound is possible, provided that policymakers show businesses and households reason to believe the pandemic was a temporary, one-time shock. To do this, fiscal policy, monetary policy, and trade policy must all pull in the same direction. Keeping markets open and predictable, as well as fostering a more generally favourable business environment, will be critical. A turn towards protectionism, on the other hand, would introduce new shocks on top of those we are currently enduring.

2.There are lots of stories about countries imposing trade restrictions and export bans on medical products in reaction to the COVID-19 virus outbreak - are WTO members allowed to do that?

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It is important to note that trade plays an important role in ensuring the availability and affordability of vital medicines, medical products and health care services, particularly among its most vulnerable members. International trade is crucial to ensuring access to medicines and other medical products - no country is entirely self-reliant for the products and equipment it needs for its public health systems.

That said, each WTO member is free to determine what is necessary to protect its citizens and take the measures it deems appropriate. In general, WTO rules provide broad space for members to adopt trade measures deemed necessary to protect public health and public welfare (including import and export bans, quantitative restrictions on imports and exports, and non-automatic import licensing). These measures should be applied in a manner that does not discriminate between WTO members and should not constitute a disguised restriction on international trade.

The general exceptions are set out under two of the WTO’s cornerstone agreements – the General Agreement on Tariffs and Trade (GATT) 1994 and the General Agreement on Trade in Services (GATS).

The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) also provides members with flexibilities to ensure that life-saving drugs are available and affordable for their citizens. Among other tools, governments can use WTO-compliant compulsory licensing procedures in cases where patented drugs have been unaffordable or not widely available. Voluntary licensing of patents and pooling of intellectual property for different drugs or medical technologies are additional options within the scope of WTO rules.

In addition, two WTO agreements address measures adopted by members to protect public health or public safety – the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement).

The SPS Agreement establishes that members have the right to restrict trade by taking SPS measures necessary for the protection of human, animal or plant life or health. These measures should only be applied to the extent necessary to achieve their objectives, be based on scientific principles and be supported by scientific evidence. In situations where relevant scientific evidence is insufficient, members may provisionally adopt SPS measures on the basis of available pertinent information.

The TBT Agreement aims to ensure that technical regulations, standards and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade. At the same time, it recognises WTO members' right to implement measures to achieve legitimate policy objectives, such as the protection of human health and safety.

Both the SPS and TBT agreements require WTO members to notify others of any new or changed requirements which affect trade, and to respond to requests for information on new or existing measures.

3.How many of these restrictions aew in place and which countries are imposing them?

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The WTO has several tools in place to help governments as well as the general public follow the COVID-19-related measures being imposed and notified by members to the WTO. A full list of the measures notified to the WTO is available on a dedicated webpage. The WTO also maintains on this webpage a non-exhaustive list of COVID-19 trade and trade-related measures compiled by the WTO Secretariat from official sources.

The ePing SPS & TBT Notification Alert System allows users to receive daily or weekly email alerts about new SPS/TBT notifications and to search for existing SPS and TBT measures covering products or markets of interest to them. ePing is a collaborative effort between the WTO, the United Nations Department for Economic and Social Affairs (UNDESA) and the International Trade Centre (ITC). More than 63,000 SPS and TBT notifications are included in this system.

In addition, the WTO’s Sanitary and Phytosanitary Information Management System and Technical Barriers to Trade Information Management System allow users to search all notified SPS and TBT measures and specific trade concerns (STCs) raised in the WTO’s SPS and TBT committees. Users can also browse information on SPS and TBT enquiry points and other related documents circulated at the WTO.

Other notifications regarding members’ import and export bans, quantitative restrictions on imports and exports, and non-automatic import licensing are made available through the WTO’s Committee on Market Access and posted on the WTO’s “Document Online” webpage.

4.What else is the WTO doing in regards to trade measures imposed by members?

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The WTO serves as a forum for members to exchange views on each other’s trade policies and practices. These concerns may be raised in the regular committees (as specific trade concerns in the SPS and TBT committees) or occasionally in the WTO’s councils, including the General Council, the WTO’s highest regular decision-making body. For example, around 1,000 specific trade concerns related to SPS and TBT measures have been raised and discussed in the respective committees to date.

While in-person meetings at the WTO have been postponed up to the end of April, members continue to submit notifications to the WTO regarding their trade-related actions.

The WTO also monitors trade-restricting and facilitating measures imposed by the Group of 20 leading economies as well as the WTO membership as a whole through its biannual trade monitoring reports. These reports are issued towards the middle and end of each year.