As the toll from COVID-19 exceeds 51,000 deaths and one million confirmed cases, most of the attention globally has been on the health dimension of the pandemic, while governments struggle with inadequate global supplies for a rapidly growing crisis. With a lack of a vaccine and with the virus having reached most countries in the world, the focus of governments has understandably been on trying to “flatten the curve” to reduce the challenges to national health systems and the likely death rates.
But the need to engage in social distancing, usually reflected in stay at home recommendations or orders, is causing extreme disruption to many economies. The country with the largest number of confirmed cases, the United States, has witnessed roughly 10 million people filing for unemployment in just the last two weeks with many more likely in the coming weeks. The United States has passed three pieces of legislation to address various aspects of a national response to COVID-19 to address the economic challenges from the shutdown of large parts of the economy with a cost of more than $2 trillion (the Administration has used a figure of more than $6 trillion). Other countries are passing emergency legislation to deal with the human costs and extraordinary nature of the crisis. More than $5 trillion has been teed up globally by governments trying to help their economies and citizens survive the lockdown situations being imposed on many to stop the spread of the disease. That figure will certainly increase in the coming months as the full scope of the economic challenge becomes clear and hot spots shift from current locations to other countries.
Because of the extraordinary ramp up in infections in global “hot spots,” demand for medical equipment and supplies has outstripped prior global supply and inventories, leading a number of countries to push their industries to ramp up additional production in the hope of being able to get supplies up to demand levels and avoid the situation seen in some countries of medical staff having inadequate supplies and needing to determine who will get life saving equipment (e.g., ventilators) and who won’t because of shortages. Ability to meet local demand is complicated by export restraints, travel restrictions, lack of information (in some cases) and the level of coordination of government actions.
Prior posts have looked at various aspects of the COVID-19 crisis including communications from the G20 countries and the growing number of countries imposing restraints on export of agricultural products out of concerns for food safety.
This post looks at recommendations for government actions made by two global groups of businesses, the ICC and the Global Services Coalition. There can be little doubt that getting through the crisis requires not only action by governments but a strong relationship between business and governments to identify practical consequences on businesses and their employees and the ability of businesses to contribute to the needs of society.
The International Chamber of Commerce
On April 2nd, the World Trade Organization’s Director General Roberto Azevedo and the International Chamber of Commerce’s Secretary-General John Denton issued a joint call for greater communication with the business community to ensure government policies are effective in addressing COVID-19 while reducing damage to economies. https://www.wto.org/english/news_e/news20_e/igo_02apr20_e.htm.
“2 April 2020
“Heads of ICC1/ and WTO call for increased action on trade to ensure an effective response to COVID-19 pandemic and announce virtual business roundtable to provide concrete advice to governments.
“We are profoundly saddened by the suffering and loss of life the COVID-19 pandemic is causing around the world. This health crisis is also becoming a social and economic crisis, and we support governments’ efforts to mitigate the pandemic’s effects on jobs and growth, and lay the foundations for a strong and inclusive recovery.
“G20 leaders have clearly recognised the need for the international community to step up global cooperation in response to this crisis. The business community is—and will continue to be—an important partner in this response.
“Trade and trade rules have a crucial role to play in both the health and economic response to the crisis. We welcome the G20’s endorsement of this view, including their assertion that any pandemic-related trade measures should be ‘targeted, proportionate, transparent, and temporary.’
“We also underscore the importance of ‘actively working to ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders,’ as well as the G20’s broader commitment to ‘minimise disruptions to trade and global supply chains’.
“We deeply share the G20’s concern about the impact of the pandemic on the most vulnerable, including developing and least developed countries, and on workers and businesses, including micro-, small-, and medium-sized enterprises (MSMEs).
“We are concerned about the severe disruptions to value chains in many sectors—with major implications for employment and the supply of goods, especially essential medical and food supplies. Bold and urgent leadership is required to keep trade moving and to secure jobs.
“Now is the time for concrete measures to respond to the economic dimensions of the pandemics. Business can play a key role in signalling where trade flows and production chains are being affected, helping to identify solutions that maximize health outcomes while minimising economic damage.
“It is increasingly clear that the economic downturn caused by the pandemic will necessitate a significant rebuild of domestic policies—and of international cooperation. In this time of uncertainty, leadership requires not only responding to the crisis at hand but providing a clear vision for the future. On-going efforts to improve and strengthen the global trading system, including the WTO, must therefore continue.
“With a view to providing additional concrete business recommendations to governments, ICC will work with its partners, supported by the WTO, to host an extraordinary virtual business roundtable. This virtual session will look to provide constructive recommendations to governments on trade policy measures that can be readily deployed to speed the response to the COVID-19 pandemic in the immediate and mid-term.
“1/ The International Chamber of Commerce is the institutional representative of over 45 million businesses. ICC’s recommendations on
trade policy and post-pandemic rebuilding were sent to governments and international agencies in a 28 March letter available here.”
The ICC in its 28 March 2020 letter to governments and international agencies had identified ten actions they recommended should be taken. https://iccwbo.org/content/uploads/sites/3/2020/03/g20-trade-ministers-letter-280320.pdf.
Specifically, the ICC made the following recommendations, the last three of which look to the future of the trading system versus dealing with the immediate challenges of COVID-19:
- “Eliminate tariffs on essential products
- “Expedite trade facilitation for essential products
- “Eliminate export curbs on essential products
- “Suspend all national public procurement regulations and state-required localisation measures that frustrate the cross-border sourcing of essential medical supplies
- “Keep cargo and transport moving
- “Extend timeframes for payments of duties and fees
- “Keep trade finance flowing
- “Comprehensively reform the WTO
- “Speed up the transition to digitally enabled trade
- “Enable digital trade through standardisation.”
Many businesses have suffered from reduced cash flow, reduced access to key inputs flowing from export restraints, and service challenges from travel restrictions. Government actions may address the health crisis but exacerbate the business challenges.
Some of the challenges to business may depend on technology developments/deployment, improved national and global information on medical supplies and equipment availability especially in light of ramped up production.
For example, Abbott Laboratories has developed a test that can be applied with results available within 15 minutes. Understandably, the early deployment of the tests are to hospitals anxious to have greater capacity for testing patients. But until there is greater availability of such time efficient tests and coordination with trading partners on testing crews of cargo planes, ships and other modes of transport, it is hard to see how countries with raging infection rates and general stay-at-home or lockdown requirements will be comfortable with the type of liberalization for transport personnel necessary to maximize keeping transportation avenues open.
The same types of concerns for wholesale testing, along with adequate personal protection equipment may be the key to ensuring farm labor and other labor shortages because of border restrictions can be addressed without jeopardizing health needs.
So hopefully the wealth of experience from the business community will be able to dialogue with governments not only on governmental needs and business recommendations on trade policy options to consider, but also on how business can help governments achieve important objectives where major impediments currently exist in terms of dealing with the health emergency.
Global Services Coalition
In an interconnected world, many service providers are in fact essential to addressing the COVID-19 pandemic both on the healthcare side and on supporting economic and other activity critical to the functioning of societies. Transport, food processing, distribution, grocery stores, information and technology communication services, financial services, installation and service workers for medical equipment would be some obvious examples.
On April 1, 2020, the Global Services Coalition issued a document urging governments to ensure the continued operation of essential services to address the COVID-19 challenges. https://www.thecityuk.com/assets/2020/Reports/100bfdd80d/Ensuring-resilience-of-global-supply-of-essential-services-in-combating-COVID-19.pdf.
So much of the public attention has been and continues to be on the availability of goods (medical or agricultural), but little public attention has actually focused on the broad role of service providers in helping countries address the national and global needs during the COVID-19 Pandemic. The full statement from the Global Services Coalition is provided below. Just as was true for the ICC recommendations, the important points raised by the Global Services Coalition do not address what is needed to help governments in fact support essential services while protecting the public health and control the spread of COVID-19. That said, the role of services is critical to understand for those considering actions at the national, local or global level.
“Ensuring Resilience of Global Supply of Essential Services in Combating COVID-19
“1 April 2020
“As the world continues to grapple with the global COVID-19 pandemic, the members of the Global Services Coalition wish to express solidarity with the work of governments and international institutions to combat its spread. As associations representing all segments of the services industry, we call on governments to take a range of critical measures to maintain resilience in the supply of essential services during this time of crisis.
“Financial services, ICT services, retail and distribution, and transportation and logistics services are all examples, though not exhaustive, of critical enablers of trade in goods and agri-food products, as well as services that enhance social welfare. As governments curtail commercial activity and social interaction to fight the global pandemic, it is critical for them to allow for continuation of these and other essential services, while of course ensuring the health and safety of the personnel involved.
“Cargo flights must be able to continue in order to move critical life-saving medical equipment and supplies, as well as other goods that consumers rely for daily sustenance. It is crucial that governments work together to develop standards that ensure – within reasonable safeguards – that cargo pilots are not subject to mandatory 14-day quarantine periods. Government should also consult about facilitating greater use of passenger aircraft for essential deliveries of critical supplies.
“Sophisticated medical equipment and therapies cannot be put in place without key medical services. For instance, the work of individual service suppliers, such as technicians that service (e.g. maintenance & repair services) critical medical equipment, is also crucial to fighting the pandemic. Governments should therefore ensure that travel restrictions justifiably put in place do not have unintended consequences that inhibit the cross-border movement of critical services.
“Banks, insurers, reinsurers, electronic payment service suppliers, mutual funds and pensions, and related professions supporting them, including call centre and in-person customer support functions, must be allowed to facilitate the purchase and delivery of those goods and food supplies. These are services that citizens and businesses rely on and ensure stability in global financial markets. Proposals in some markets to retroactively add coverage for pandemics and other causes of loss not included in existing insurance policies – and therefore not funded by premium payments – risk the stability of the insurance industry and should be avoided.
“Information and communications technology (ICT) services are crucial and must remain available so that essential supply chains can continue to function and “digital” options can help governments and citizens to overcome the challenges of “lock-downs” and “social distancing”, It is these business services that will allow continuous access to the goods and services that are needed to protect against COVID-19.
“Some ICT services are especially critical. They include: remote exchanges among research teams to fight against the virus and look for medicines and vaccines; e-health services to allow daily medical services be delivered to millions of patients; e-learning services to allow teachers to continue the education of millions of pupils and students; teleworking facilities to allow workers to stay at home but continue to sustain economic activity; and connectivity services that minimize the adverse affects of social distancing. Free flow of anonymous medical/health data among trusted partners should be ensured in this context.
“It is therefore vital that countries cooperate multilaterally to avoid constricting the global supply of these essential enabling services through an uncoordinated patchwork of country lockdowns. There have been public statements highlighting the need for international cooperation in facilitating delivery of essential goods. But governments need to focus equally on the critical role of essential enabling services. The evolution of the crisis has demonstrated the resilience and innovative capacity of the global services sector, which has made rapid shifts in work practices and supply-chain adaptation. Governments must broaden their approach to recognise essential services as systemically critical to the smooth functioning of the global economy at this time.
“Lastly, the necessary measures to respond to COVID-19 cannot become cover for countries to introduce unjustifiable protectionist measures further disrupting the global economy. This is the time for building bridges, not barriers. We wholly support the World Trade Organization Director-General in his appeal of 24 March for governments to be transparent about the measures that they are taking nationally to respond to COVID-19, including in services sectors. We also support the G20 Summit statement of 26 March. An open, coordinated and transparent approach can only reinforce the spirit of global collaboration that is essential to combat this pandemic.”
The COVID-19 pandemic requires an “all hands on deck” approach. Governments and international organizations need the input and benefit of the real world experience of businesses who can explain the challenges that particular government policies present to achieving what are governmental objectives of beating the health crisis and minimizing the harm to the economy (whether local, national, regional or global). Examples of business engagement, such as that by the ICC and the Global Services Coalition, are useful in themselves and should be embraced by governments and international organizations. The recommendations would be more useful if coupled with an articulation of how governments achieve some of the recommendations with the very real limitations that exist on supplies, tests and equipment.
An ongoing dialogue between stakeholders and governments along with the efforts to expand capacities, find innovative solutions to existing needs and pursue research and development of a vaccine are all part of the all hands on deck global needs. May the dialogue intensify and speed the ultimate resolution.