Ensuring access to medical equipment and medicines is one of the most immediate issues arising from the COVID-19 crisis. Health services not only need these to fight the virus, but also to protect their workers and others from infection. Increasingly, workers employed in other critical sectors, and the wider public, are also relying on protective garments, such as plastic gloves or facemasks, to reduce transmission.

This note looks at the trade links between countries in some of the products that matter for the fight against COVID-19 (referred to as COVID-19 goods). It uses a recently developed World Customs Organisation (WCO) list identifying COVID-19 critical products, which includes test-kits, protective garments, medical devices and disinfectants1 and trade data from the BACI database to identify trade in these products during the latest available year (2018).2 While slightly dated, this trade data can nonetheless help identify top suppliers and consumers of some of the products that matter for the fight against COVID-19.

While this data can provide a useful illustration of some of the issues and interdependencies, several caveats need to be noted.

• While the WCO has provided guidance on the types of products that matter for the fight against COVID-19, the list is unlikely to be static. As new issues arise, new products might be added.3 Moreover, some products which may be critical intermediates for the production of these products are not captured (e.g. rubber for the production of rubber gloves). As such, others, including the World Bank Group and the World Trade Organisation, are developing more detailed and complementary lists.

• Comparable international trade statistics often only cover more aggregate products (i.e. at the HS 6-digit level) than those directly relevant to COVID-19 (e.g. HS code 481890 covers a broad category of paper articles, of which only some are paper bed sheets on the COVID-19 list and similar aggregation issues arise for face masks (HS 630790), protective garments for medical use (HS 621010), and other products).

• Since the data refers to trade before the COVID-19, the analysis does not capture what trade in these products looks like today. It also does not include products such as the COVID-19 tests (including HS 382200 and HS 300215) which were not produced prior to the crisis.

Global exports of COVID-19 related goods are concentrated in a few, mostly OECD, countries: over 86% of global exports are from just 20 countries. The top 5 global exporters, which together account for 49% of trade, are Germany, the United States, Switzerland, the People’s Republic of China (hereafter “China”), and Ireland. Similar patterns emerge for imports, where the top 20 countries represent 76% of trade in COVID-19 related goods; the United States alone represents 18% of global imports (Figure 1).

While, in aggregate, there is strong concentration in trade in COVID-19 products, product-level information shows a much more dispersed picture, with a high degree of specialisation (Figure 2 and Table 2).4 Indeed, OECD countries are the main exporters of items such as medical devices and instruments and apparatus for diagnostic testing. However, exports of medical consumables and protective garments are dominated by China and, for the latter in particular, other Southeast Asian countries. For imports, across all categories of products, the United States is the largest importer, with Germany also appearing as an important importer across all categories.

There is considerable overlap in top suppliers’ imports and exports of COVID-19 products, as measured by indicators of intra-industry trade (Table 3).5 Countries tend to be both importers and exporters of COVID-19 goods, highlighting a high degree of interdependence among countries on these essential items. That is, a country might be a top supplier of one COVID-19 good, but an importer of others. For instance, for every euro of German exports of COVID-19 goods, Germany imports EUR 0.72 of related COVID-19 goods. Likewise, for every dollar of COVID-19 goods the United States imports, it exports USD 0.75 of related COVID-19 goods (Table 3). This high degree of aggregate intra-industry trade reveals that countries need each other to satisfy demand or production needs.

Mapping the extent of bilateral intra-industry trade in COVID-19 products among OECD and other G20 countries further highlights interdependencies (see Figure 3 for selected countries). For example, 65% of the value of bilateral trade in COVID-19 products between China and Germany is two-way trade. The data show that, in 44% of all bilateral trade relations between G20 and OECD countries, the value of imports and exports of COVID-19 goods overlaps by more than 50% (green shading). That is, more than half of bilateral trade is two-way. This high degree of intra-industry trade reflects the fact that, while some countries specialise and export some products, such as medical equipment, others specialise in and export other products such as protective gear.

By contrast, for many developing and low-income countries trade in COVID-19 products is much more one-way (Figure 4). Only in 0.6% of all possible bilateral trade interactions is the overlap in trade over 50%. This means that these developing and low-income countries do not engage in trade in these products with each other, or either import or export COVID-19 goods but do not do both. Critically, the data highlight that trade on COVID-19 goods among developing and low-income countries is relatively limited; that is, there is strong dependence on OECD and G20 countries for access to COVID-19 goods.

The countries that are the largest suppliers of COVID-19 goods are also those which – to date – have been most severely hit by the COVID-19 pandemic. At the same time, these are also the countries that rely most on imports for other COVID-19 products (Figure 5).6

Tariffs on COVID-19 products remained in 2017-2018 across all groups of countries (OECD, G20, and other developing and low-income countries).7 In relative terms, these were highest in developing and low-income countries but they were also relatively high in some non-OECD G20 countries for disinfectants (Figure 6). Unless lifted in response to the crisis, this could have implications for the ability of all countries to move quickly to deal with the increased demand for these goods.

At the same time, an increasing number of countries are adopting import liberalisation measures, including removal of import licensing requirements, tariff reductions and suspension of anti-dumping duties. In the second week of March, only China, Ecuador, and the United States had taken steps to liberalise import barriers on medical supplies; however, from the week of 9 March onwards, a considerable number of OECD and G20 countries have taken steps to liberalise the inflow of medical supplies, including through plurilateral initiatives seeking to remove existing trade restriction on medical supplies.8

That said, countries are also increasingly imposing export restrictions on COVID-19 products, many of which are identified as temporary (Figure 8). As at end-April, 2020, there were 69 countries with at least one export restriction on a COVID-19 good, with a large proportion taking the form of export prohibitions.9

However, export restrictions are not limited to COVID-19 goods: 64% of total export restrictions introduced in relation to COVID-19 are in product categories not related to the WCO list of COVID-19 goods (Figure 9). These include a diverse set of products related to agricultural goods or other medicines. It is worth noting that some of these restrictions apply to products which might only be tangentially related to COVID-19 for instance, restrictions on dental or ophthalmic instruments.

Export restrictions may have a range of negative consequences. For instance, failure to be able to deal with health impacts could result in longer-term economic pressures for countries with already limited resources. Moreover, to the extent that such restrictions undermine confidence in international markets, they could encourage self-sufficiency policies which could be costly and ineffective – especially for where the opportunity cost for public resources is high.

No single country produces efficiently all the goods it needs to fight COVID-19. Indeed, trade data show that there are strong trade interdependencies between countries. For example, while the United States and Germany tend to specialise in the production of medical devices, China and Malaysia are most specialised in producing protective garments.

Trade allows production to locate where it is most efficient, allowing production of more goods, in a shorter time frame, at more affordable prices. Open markets are important for cost-effectiveness of health systems, and to enable countries to access the products they themselves need to tackle the crisis.

However, it is the countries that tend to supply COVID-19 goods which have been worst hit by the virus to date, resulting in growing, albeit often temporary shortages, followed by export restrictions. But the export restrictions of one country are restrictions on imports of another; with the high degree of interdependence in trade in COVID-19 products, such measures can have wider impacts, especially in developing and low-income countries which rely on trade to access COVID-19 goods.

Keeping markets open is key to ensuring the supply of essential products and facilitating access to medical supplies. This means avoiding export restrictions, removing tariffs on essential goods, and enabling wider trade facilitation to help the movement of critical goods across borders and renewing commitment to rules-based trade (OECD, 2020).10

← 1. The analysis uses the second revision of the WCOs HS classification reference for Covid-19 medical supplies updated on 9 April 2020, http://www.wcoomd.org/-/media/wco/public/global/pdf/topics/nomenclature/covid_19/hs-classification-reference_en.pdf?la=en.

← 2. For details about the BACI data construction, see Guillaume Gaulier and Soledad Zignago (2010),"BACI: International Trade Database at the Product-Level. The 1994-2007 Version," CEPII Working Paper 2010- 23, CEPII.

← 3. Indeed, subsequent to the release of its first list of COVID-19 goods in March 2020, the WCO released an updated list on 9 April, 2020

← 4. This may reflect the fact that the more costly categories of COVID-19 products could be driving the overall distribution of trade in Figure 1.

← 5. Overlap is identified by way of a Grubel-Lloyd Index. If a country only imports or exports COVID-19 products then the index would be zero, if it exports as much as it imports, the indicator would be one. This means that the higher the overlap, the more two way trade in specific products is taking place. It is calculated ${GL}_{i,k}=1-\left(\frac{\left|{X}_{i,k}-{M}_{j,k}\right|}{{X}_{i,k}+{M}_{j,k}}\right)$ where ${X}_{i,k}$ are exports of country i of good k and ${M}_{j,k}$ are imports from country j of good k. The indicator ranges from zero to one. The closer to one the indicator is the higher the overlap between what it imports and exports.

← 6. Export shares are used to identify key suppliers of COVID-19 goods and import shares to capture key consumers.

← 7. Here OECD refers to all OECD members, G20 to G20 members, including those that are also OECD members. All other economies for which data was available are captured in the rest of the world (RoW) category, comprising other developing and low-income countries.

← 8. For example, at the end of March 2020, Australia, Brunei, Canada, Chile, Myanmar, New Zealand, and Singapore committed to keeping supply and trade links open by removing existing trade restrictive measures on essential goods, especially medical supplies (see https://www.beehive.govt.nz/release/canada-australia-chile-brunei-and-myanmar-join-nz-and-singapore-committing-keeping-supply).

← 9. These restrictions account for 5.5% of exports of COVID-19 products but this figure can mask more severe restrictions across product categories.

← 10. See OECD (2020) “COVID-19 and International Trade: Issues and Actions”, accessed 28 April 2020: https://read.oecd-ilibrary.org/view/?ref=128_128542-3ijg8kfswh&title=COVID-19-and-international-trade-issues-and-actions.

Disclaimer

This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD member countries.

This document is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.