Due to the trade wars between the U.S. and China that preceded the coronavirus pandemic, downgrades dominated both global trade and global economic growth forecasts.
While trade wars were being discussed and intense talks ensued regarding the fact that the World Trade Organization (WTO) needs to be reformed due to its helplessness, speculation about the end of globalization following the coronavirus has also become a hot button issue.
So, will changes caused by the coronavirus in many fields be felt in global trade?
Obviously, statements proclaiming the end of globalization which have been frequently voiced by U.S. President Donald Trump will spark debate about globalization in the period to come.
During the coronavirus epidemic, countries experienced serious difficulties in meeting their needs, especially essential health equipment. Because many developed countries were not part of the global supply chain for simple masks.
Meanwhile, during the coronavirus epidemic, certain countries had to impose mandatory export restrictions to become self-sufficient. Many countries, including EU member states, initially applied export restrictions for their personal protective equipment (PPE), such as face masks.
Therefore, we can consider the fact that the World Trade Organization (WTO), which was established for the liberalization of world trade, is allowing exceptions for export restrictions for "basic products" due to the coronavirus pandemic as a watershed moment.
A new period will be ushered in
As the coronavirus pandemic struck, countries were unable to access the products they needed to supply urgently, especially healthcare equipment; in the period to come, each country will start to produce the products it needs, albeit at a higher cost for a certain period of time.
The first step to be taken to achieve this would be to encourage domestic production by imposing high import tariffs on essential health equipment.
We can view this as a different form of the nascent industry approach in the economy.
In other words, states support these manufacturers by protecting them against foreign competition in order to produce essential or strategic products that are not manufactured domestically by local producers. Therefore, the domestic producer is supported starting from nascency until they are capable of standing on their own two feet.
Due to the urgent need of ventilators and respirator parts during the coronavirus pandemic, they’re now being manufactured domestically in Turkey. Maintaining and supporting this process is very important.
However, one should keep in mind the fact that the manufacturing of some health products, many parts of which are procured from different countries, will harbor many difficulties.
Since every piece of high technology products was manufactured in a different country due to their competitive low costs, elements such as competitiveness and stability in this market are as important as manufacturing.
Is this the end of globalization?
The globalization that began after 1980 and the increasing foreign trade volume have been the source of the increase in per capita income, in other words, the enrichment and economic growth of numerous countries. However, as the countries that produce and export these products become richer, those that do not have this advantage that enables them to compete have become impoverished.
The per capita income gap between countries has also seen a sharp increase.
Therefore, it is worth noting that a self-ameliorating globalization process, which includes foreign trade, is set to take place.