Revisiting Our International Trade Policy

It is necessary to urgently revisit our international trade policy and gauge the real trade-off benefit between market access for our limited range of exports and opening the floodgates of highly competitive imports from trading powerhouses.

By Mrinal Roy

The dire socio-economic fallouts of the Covid-19 pandemic and rising energy, grocery and commodity prices caused by more than six months of war in Ukraine have woken countries across the world to the jolting reality that they should be as self-reliant as possible and not be dependent in the current state of supply chain uncertainty in the world on costly and erratic imports for their existential necessities.

“The true spirit of entrepreneurship does not need state props and assistance. Entrepreneurs and economic actors such as vegetable and fruit growers only want a level playing field, equal opportunities and the removal of artificial bottlenecks which hamper their activities and growth. In order to provide efficient support for production and trade facilitation, government and the authorities must first fathom and address the various operating constraints faced by the economic actor…”

It also dawns on economic actors, governments and people at large that globalisation and wanton trade liberalization and the elimination of trade barriers with all and sundry, epitomized by the indiscriminate proliferation of free trade agreements (FTAs) and the delegation of production of key products overseas to take advantage of cost advantages, which have been the bedrock of international trade policy over recent decades, are fraught with pitfalls. Especially, if strategic industries have not been securely protected against duty-free and highly competitive imports from economic giants like China, India or as the country found out to its dismay in Comesa with competitive countries like Egypt.

It is therefore necessary to urgently revisit our international trade policy and gauge the real trade-off benefit between market access for our limited range of exports and opening the floodgates of highly competitive imports from trading powerhouses. The country cannot be blind to ballooning trade deficits which weigh on and drain our foreign reserves through triggered by bilateral FTAs with unequal trading partners.

Global chip shortage

The chronic global shortage of chips in a digitally driven world since 2018 and 2019 when trade wars triggered supply chain uncertainty caused by outsourcing its production to high quality producers in low-cost countries is a case in point. This shortage was exacerbated in 2020 by the Covid-19 pandemic which seriously impaired production by chipmakers. After more than two years of global chip shortage, a wide range of chip-dependent manufactures are still finding it very difficult to source chips.

This has adversely affected the supply of Graphic Processing Units(GPUs), microprocessors and even vehicles and hobbled production. Thus, many carmakers unable to meet the demand for their vehicles are storing them in warehouses awaiting the availability of one or two crucial microchips to complete production and delivery to their customers. Analysts predict that the chip shortage could continue well into next year and beyond.

Picking up on this immense market opportunity, the Taiwanese electronics giant Foxconn and Indian conglomerate Vedanta will invest $19.4 billion to make semiconductors in India backed by the Indian government push to boost tech self-reliance in the wake of the global chip shortage.

No end to the war

The protracted proxy war in Ukraine is having disastrous socio-economic consequences in the EU, the US and the UK. It has caused inflation to reach record high levels, cut down global growth forecast to 3.2% and is imposing tremendous hardships on people across the world. Soaring UK food prices continue to rise at their fastest rate over more than 40 years. The war is not likely to end any time soon. The UK and the EU countries are therefore facing the prospect of a massive hike in winter energy bills amid calls for an urgent energy price cap. In the UK, Prime Minister Liz Truss is under pressure from her own party to reveal details of the government’s plan to tackle the country’s energy crisis as soon as possible. Read More… Become a Subscriber

Mauritius Times ePaper Friday 16 September 2022

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