Tawela Taona Msiska | Associate
As of March 11, 2021, the World Health Organization has confirmed 117,332,262 cases of Covid – 19 worldwide. The Covid – 19 pandemic (the pandemic) has caused an unprecedented global health crisis, indefinite lock downs and global production and employment have been slashed. Inevitably, Countries around the world can no longer exchange services and goods as they used to. International trade has been shaken and left vulnerable. However, international trade remains critical to defeating the pandemic. In fact, the pandemic is an opportunity to improve and reform international trade policies and systems.
The United Nations Conference on trade and development (UNCTAD) reports that the decline in the growth of goods and services began in the first quarter of 2020. The growth of trade in goods and services further declined in the second quarter of 2020 by 18 percent, while trade in services experienced a decline of 21 percent. It is no surprise that trade in travel services was hit the hardest by falling more than 24 percent.
Contrastingly, trade on COVID-19 medical products such as sanitizers and protective equipment increased by 186 per cent by May 2020. As the global community became a low touch society, trade in home equipment such as laptops and Wi-Fi routers prospered. Unfortunately, trade in goods carried by sea also fell in the clutches of the negative impacts of the pandemic, by May 2020 global port calls fell to less than 80 percent. Similarly, foreign direct investment flows are estimated to deteriorate further in 2021.
Reforms on International Trade
Now more than ever uncertainty looms for traders and businesses. Businesses are being run at greater risks and moving goods across borders has become more difficult. The focus is to keep trade and businesses going and develop trade strategies to adapt to the reality of the pandemic.
The UNCTAD have proposed the following reforms to keep trade and business going as the world recovers from the pandemic:
- Restructure of International Production systems and investment for sustainable development
The pandemic has resulted in less tangible production and less dependence on physical assets. However, the pandemic has accelerated technology and digitalization and here lies the window of opportunity for international production systems to rely on digitalized supply chain. The international production system seeks to rely on less physical infrastructure and more on high quality digitalized infrastructure.
Investment policies are critical for the recovery of the international trade from the pandemic. In response to the pandemic, investment policies have adopted online investment facilitation, investment promotion agencies and new incentives for investment in health care. In an effort to protect health care and other strategic industries, several countries have opted to implement stringent foreign investment screening mechanisms. Thus, policy makers in the investment sector are encouraged to accommodate the abrupt changes in international production systems to keep foreign investments flowing.
- Strengthen Innovation, Science and Technology
The international trade community cannot ignore the critical inputs of innovation, science, and technology in the fight against the pandemic. It is through the development of these sectors that local manufacturers and multinational enterprises may have an enabling environment to continue contributing to the international trade community. For instance, member states at the annual session of the United Nations Commission on Science and Technology for Development in 2020, shared how developing countries are capitalizing on the pandemic response to shed light on their innovative and productive capabilities. Some of those developing countries are successfully proving their capabilities. South Africa and the Philippines manufactured ventilators and personal protective equipment through three-dimensional printing.
It goes without saying that technology has played a major role in the pandemic. The global community has relied heavily on teleworking, teleconferencing tools and e-commerce platforms for goods and services. Technology has been given special attention in the healthcare sector to cater to the medical responses of the pandemic. The heavy reliance on technology is said to continue even after the pandemic according to a survey conducted by the UNCTAD.
- Enhance transport networks resilience and implementation of trade facilitation
Expediting imports, delivering goods, exports and transit have come under pressure due to the pandemic. Some of the Problems faced include blank sailings, port closures and labor shortages. Disruptions to the maritime transportation systems threatens the 80 percent global merchandise trade handled by shipping and ports. The UNCTAD calls for ‘Effective collaboration, coordination and cooperation among public and private stakeholders at all levels’ to strengthen border agencies and resolve the new challenges. The challenges may be curbed through strengthened international collaboration, transport and logistics solutions tailored to the growth of e-commerce, investment in transport and logistics, embracing technology and addressing long-term concerns such as climate change and carbon emission from shipping.
Implementation of the International Trade Reforms in Malawi
The Ministry of industry, Trade and Tourism (the Ministry) is the primary institution responsible for Investment and trade in Malawi. The Malawi investment and Trade Center (MITC) operates under the Ministry and is responsible for promoting exports and international markets. MITC is established under the Investment and Export Promotion Act 2012 (the Act). The Act is one of the laws under the UNCTAD Compendium of Investment Laws. Thus, as the institution responsible for trade in Malawi, MITC has every reason to pay attention to the trade reforms post Covid-19 provided by the UNCTAD.
The vision of MITC is to attain sustainable economic growth and create wealth through investment and trade. The MITC intends to achieve economic growth and wealth through exports, nurturing foreign and domestic investment while encouraging a conducive business climate in Malawi. It endeavors to promote and facilitate export products and services of Malawi to international markets. Furthermore, MITC advises the government on policies on the business environment in Malawi. Therefore, it is in the best position to initiate and implement the international trade reforms.
As stated earlier, the pandemic has shifted the tides of global dynamics as developing countries are capitalizing from the dysfunction and Malawi should follow suit. Through the MITC, Malawi can use the pandemic as an opportunity to review her current legislation and policies on trade and investment to capitalize on the gaps created by the pandemic, by taking into account the proposed reforms listed above. Essentially, through the MITC, Malawi can critically review the reforms provided by the UNCTAD and apply them to domestic investment and trade laws and policies.
This is not to suggest that the MITC is not taking any steps to improve the trade and investment in the environment in Malawi. On the contrary, steps are being taken by the government and MITC to unify the trade laws of Malawi with the rest of the world. For instance, Malawi became the 35th member state to ratify the African Continental Free Trade Area on 15th January 2021. This opportunity will provide Malawi with the opportunity to be part of the world’s largest free trade area which will involve the removal and reduction of taxes on some products. It is striding like these that will assist Malawi to recover from the pandemic and achieve the mission of the MITC.
This discussion has been influenced by the UNCTAD in hope that Malawian businesses and traders are encouraged to see opportunities in these tough times. As part of the global village, it is the duty of our country to participate in these reforms, to collaborate, coordinate and cooperate with the rest of the world to recover from the pandemic. Malawi, through the MITC and the government, will do well to participate and contribute to the above areas suggested by the UNCTAD.