In race to secure medical supplies, countries ban or restrict exports

New York (CNN Business)The European Union announced on March 15 it was restricting exports of personal protective equipment, including face shields, surgical masks and gowns. India banned the export of ventilators and sanitizers on March 24. On Wednesday, Switzerland began requiring licenses for exports of masks, gloves, goggles and swabs. "It's the least we can do for the Swiss population to avoid a shortage of necessary medical equipment in an emergency situation," said Swiss economic minister Guy Parmelin, according to the national broadcaster's website.

These are just a few of the trade restrictions governments have put in place on medical supplies since the coronavirus began to spread outside China at the beginning of this year. According to Professor Simon Evenett of the University of St. Gallen and the head of Global Trade Alert, 60 countries have introduced new export curbs and more are being added every day. While individual leaders are understandably concerned about providing for their own nations, Evenett and other trade experts argue such restrictions lead to inefficient distribution of essential goods.

Ultimately, prices go up for everyone, and poorer nations can get cut off from crucial technology. "We know there is a tendency of individuals to hoard. This behavior happens also at the international domain," said World Bank economist Michele Ruta. He said national hoarding can lead to overall reductions in production, product scarcity and price increases.

During the increase in global food prices from 2008-2011, many countries began restricting food exports. He and his colleagues calculated that those trade measures drove up food prices by another 13% on average. To try and predict how trade restrictions could impact the global response to the Covid-19 outbreak, he and fellow World Bank economist Aaditya Mattoo took a look at the ventilator market, where they found just seven countries account for 70% of total exports.

“They estimate if just one producer imposed an export ban, world prices would go up by 10%.”

"If more countries do it, the price increase would be much larger," Ruta said. None of the major ventilator-producing countries currently have an official export ban in place, but since March 6, Siare Engineering, Italy's only ventilator producer, said all its production is reserved for domestic use after directions from the government. The company previously exported 90% of its products, which includes ventilators and anesthesia machines "Prime Minister Conte directly called to explain the situation. He said there wasn't an alternative.