Exporting what you need most in a crisis sounds absurd. So it comes as no surprise that in the Covid year 2020, 209 export restrictions on medical goods and medicines were imposed worldwide. World Trade Organization (WTO) rules state that restrictions on exports are generally prohibited as they can, among other things, create an unfair advantage: they result in the sale on the home market of a good intended for export, theoretically lowering the domestic price of the said product. Such measures – imposed, for example, on natural resources such as metals – allow the exporting country’s own manufacturing industry to produce at lower costs. If the country is large enough, this leads to tighter supply and higher prices for trading partners.
Provided the measure is temporary and limited to essentials, exceptions are possible, for example, in health-related emergencies where a country’s own supplies are at risk. In 2020–21, several states made use of this option (Evenett 2021). But it remains questionable whether some export restrictions are legal under WTO rules (Horn and Mavroidis 2021). The EU’s export restriction of (2021/111), for example, remain in place even after its scheduled end. The longer this condition lasts, the less credible the temporary aspect becomes. Moreover, the EU treats trading partners differently. There is a list of states that are exempt from the restriction, which could also violate the principle of non-discrimination.
It is an ominous sign for world trade when export restrictions in crises only appear to play by the rules. Also worrying is that this development might signal a further step towards a power-based trading system, as the WTO has already been in a crisis of its own for some time (cf. Avenir Suisse 2019).
For small states like Switzerland in particular, this is a disadvantage, as they can hardly oppose the measures of their larger trading partners. Yet they are heavily dependent on the exchange of goods – for instance to be able to produce vaccines themselves. Nationalizing the entire value chain would involve very high costs, with no guarantee of improving security of supply (see Avenir Suisse 2020). Instead, it is worth remaining integrated in the global supply chain (Evenett et al. 2021). A country that imports components for further processing is unlikely to impose export restrictions on its trading partners.