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ICTA emphasizes the importance of free trade at WTO in face of Covid-19

ICTA emphasizes the importance of free trade at WTO in face of Covid-19
The ability of chemical distributors to deliver the chemicals necessary during the pandemic has been seriously hampered by governments which have introduced export restrictions. In the longer term, precautionary regulations and government-induced localization of supply will further disrupt chemical supply chains. We have three concerns in particular:  
  1. Export restrictions. Open borders enable international division of labor and the utilization of economies of scale. However, at least 72 WTO members have responded to the Covid-19 outbreak by issuing export restrictions. This disrupted supply chains, resulting in unnecessary delays and lost production capacity. The export restrictions have harmed faith in the free trade system. In the longer term the increased uncertainty may delay or even undermine investments decisions.
  2. Precautionary regulations. Even before the outbreak of Covid-19, world trade was already experiencing headwinds due to the tendency of WTO members to create precautionary regulations. Stating the intention to protect their citizens from risks, WTO members implement safety and quality regulations based on the precautionary principle. Such regulations often constitute a form of disguised protectionism by in effect denying market access to foreign products. The pandemic has provided WTO members an incentive to introduce extra precautionary regulations. ICTA believes WTO members should be careful with introducing regulations in response to Covid-19 that may hinder trade.
  3. Local supply chains. Some WTO members now see a need to reinforce local production for certain (chemical) products, thereby interfering with free markets. Look for example at the European Commission, which identifies a need “to promote EU’s strategic autonomy for essential chemicals”. ICTA believes that it is a fallacy to argue that supply chains would be safer if they were solely domestic.

In response to this ICTA has produced a position paper, which has been published on the WTO website, see here. It contains specific actions for WTO to undertake in response to each of the three developments. ICTA has subsequently explained these concerns and solutions to WTO officials based in Geneva. We have also shared our views with ICCA.