Vedant Saigal

M.A. (D.L.B.), Jindal School of International affairs, O.P. Jindal Global University


The novel coronavirus pandemic has shaken the world economies to the verge of breaking out. Globalization and the interconnectedness of the countries in almost every aspect, have facilitated the spread of the virus and resulted in the World Health Organization declaring it as a pandemic. There is a decline in the global economic growth due to market failure. It has eroded the gains made towards trade liberalization and has disrupted international trade. This article essentially highlights the impact of Covid-19 on international trade and lays its emphasis on whether the world is witnessing a return to protectionism or a paradigm shift in the post-Covid-19 world order.

A Brief of Covid-19 pandemic

The novel coronavirus pandemic originated in China. Corona Virus Disease 2019 (COVID-19) is a disease caused by the virus called, ‘severe acute respiratory syndrome SARS – 2’, detected in Wuhan, China. The disease is highly transmissible and infects people severely with underlying conditions. It was a matter of few days in which the virus took over the world. It was a Chinese problem at the initial stage, but later was declared as a pandemic by the World Health Organization (WHO). It is justified to blame China for the spread as the virus could have been controlled if it had put itself in isolation. China should have taken the steps to block itself in the containment zone and should not have engaged in any kind of trade, tourism, or connectivity with any other state.

Sadly, the virus found its way out of China due to factors of a natural and political characters. The question is whether globalization is helpful for the functioning of the international system? Well in this case it represents a clear negative signal, as it has simply amplified the fire of the spread of the virus to every corner of the world.

Many countries had announced lockdowns since the onset of the coronavirus. This has led to a decrease in the consumption and production of products in several industries, ultimately disrupting the global supply chains. The employment graph of the world has declined, indicating an upcoming global financial crisis. Undoubtedly, the shutdown of various companies and industries was fueled up by social distancing and restriction in the availability of labor and transport. International trade plays a very important role as they act as a dependable source of GDP generation for all the vulnerable least-developed countries. Financial aid is a reliant source for the survival of their economies. The lack of cooperation between the countries has given birth to geopolitical tensions and countries are left with a choice of building a world with protectionist regimes and on the other hand gathering the international community for collective action. Due to many countries putting export restrictions on specific food products and other different products, there is to be seen a stage of food shortages all over the world (Fernandes, 2020).

Countries are trying to store their medical supplies and save them for future needs, this has led to increase in demand for medical supplies in the global market in general. This indicates that the regimes for protectionism are already gaining traction. We live in a world with sovereign states, which develop their policies and frameworks to implement them in specific situations. The role of international organizations is merely to lay down timely warning mechanisms and technical assistance for different states, for instance, the World Trade Organization’s dispute settlement mechanism. Thus, it becomes important to analyze the post-crisis life and prepare in advance, since the international organizations will not be providing beds, medicines, ventilators, etc. instead the states will have to manage the technicalities by themselves.

Impact on International Trade

International trade plays a role of a protagonist when it comes to the interconnectedness of the countries of the world. It stands as the most vital organ for countries to maintain their bilateral and multilateral relations overall. Today in this world of a health crisis, trade can act as a mode of lifesaver for many.

The outbreak of the virus has indeed disrupted international trade in such a way that many economies are forced to implement measures of closure of non-essential manufacturing facilities. In the first half of the year 2020, it had been witnessed that many economies were limiting their productions since there were a lot of disruptions in their supply chains. On one hand, the world is observing a decline in international tourism and passenger travels and on the other a declining and steeper graph of foreign direct investments (FDI) by around 10% (OECD, 2020).

Upon analyzing the comparison between the global financial crisis of 2008 and the novel coronavirus pandemic of 2019-20, it can be observed that this pandemic will not exactly affect the economy as it did before, but most likely generate most of the outcomes as it did previously. The world saw the global numbers remain on the negative side for a year or so. It must be noted that the industrial damage was not perhaps a consequence of the crisis shock but that of the recession specifically. One must learn from the past and mistakes must not be repeated, to secure the future and its generations. The causes of the Great Trade Collapse provide us with important hints about what may unfold in proceeding further (Baschuk, 2020). 

The question that pops up in the minds of economists is that ‘whether the damage to global trade is irreversible because of the coronavirus pandemic?’, or ‘Whether there will be an end to international trade?’ Covid-19 has shaken the global economy to its tears. Though the wounds remain deep, it is believed that they are curable in the long run. Coming to international trade, it will not end as a result of the pandemic though the patterns may be different from before. According to the WTO report, there was a decline in the global trade to a negative 32% later in 2020. This results in a very different scenario for trade going further. It depends on the debt, the duration, and the capabilities as well (Sevilla, Bloom, & Caderette, 2018).


Protectionism precisely means to shield the domestic economy from foreign competitors and companies. Pursuing protectionist measures simply means that the economy is increasing the import tariffs. Undoubtedly, at this stage of the pandemic it is essential for countries to do so as it acts as a way to contribute to the revival of the economy.

It has not only been the Covid-19 that has spread alone, but also such protectionist measures. It has been stated that there have been some cases where it was legitimate for the government to safeguard their economies and health structure by implementing some policy measures. However, a much bigger wave of protectionism is expected in the near future. It is not just about medical supplies, where many countries have imposed restrictions on export supplies, but also concerns about food security as well. Countries are minimizing the imports of food products (Gruszczynski, 2020).

As the economic distress shows an increasing graph, governments ought to assist favored industries and sectors for instant employment. As a response, the governments might pursue protectionism in the short run rather than in the long run. Undoubtedly protectionism deepens the downturn of the economy. Though it does become essential for countries to restrict trade and focus domestically to revive their respective economies. In the long run, there will be a rebound of corporations among different trading partners and international trade will make a comeback to normal. It must be clear for every individual involved either in international trade or business, that the lack of clarity on the rules presented by the World Trade Organization (WTO) on export restrictions is doing no one any favor of any sort. As this world moves from an era of growing protectionism and delves into what is called precaution-ism, this will ultimately result in an area ripe for further discussions.

Paradigm Shift

The world is now divided between the pre-crisis and the post-crisis era, indicating a paradigm shift. There was a wake-up call by the G7 members about the Ebola Virus that had proclaimed a need for a better global cooperation. The Covid-19 pandemic though was a future prediction, but it would have been necessary for the international institutions to be ready in advance. Failing to do so created a global health crisis with much worse consequences. It is essential for the international system to shift global health policymaking from a reactional paradigm to a more systematic and preventive paradigm. Undoubtedly this approach might require intensive reforms of current policies and restructuring of the whole framework, but in the end will be beneficial for every nation that has been targeted (Alessandria, Kaboski, & Mi, 2010).

We can see a paradigm shift today, as the world is shifting to a more digitalized platform. People have started realizing that the shift to communicating online while making several deals on trade, businesses, and other transactions is turning out to be a better alternative to physically exerting oneself. There is undoubtedly a shift in the ideologies that the world could still function properly while sitting at home rather than in offices.

As the current pandemic unfolds, there remains to be seen a multitude of prominent demands by the society as a whole. Access to schools, labs, other workplaces is restricted. Simultaneously, the world came out with the process of virtualization, improving the technology sectors of the economies. The high demands of virtualization have not only accelerated the innovation but also the collaboration of economies altogether (Fauvel, 2020).

It is believed that this catastrophic event will not only make the world advanced in its approach but will also develop a certain attitude of solidarity and altruism among the international society. There will be a sense of greater partnership in the fields of business and trade.


The impact of the novel coronavirus pandemic on trade simply cannot be overstated. The result has been more of a squeeze in the liquidity of supply chains and a spike in the demand for financial support. It must be strictly noted that though integration has helped many of the countries to lift itself from poverty and distress, it is coming to an end. With most of the planes grounded and ships lined up in harbors, the above statement is justified. On the contrary, this pandemic can be counted as the worst of all possible scenarios. Flattening the curve of the virus is has been the priority of every single country. The international response must be focused upon collaboration in a collective manner to flatten the global curve. Perhaps the risk that the virus will re-infect the populations, will also ultimately lead to an increase in the graph again. It is clear that multilateral action has become imperative.  

It becomes quite difficult to assert whether the world will witness a paradigm shift or will it be controlled by the protectionist regimes. It is believed that both situations will prevail. Even imposing protectionist measures can be called a paradigm shift. It is essential to analyze whether the paradigm shift would involve foreign policies towards China, or will it be global? Questions that arise in the minds of policymakers and analysts are, will the world go against China and put barriers on its way ahead to dominate the United States? Will there be less international travel and tourism? Will there be an end to coronavirus? If yes, will the vaccine be accessible to all the countries? The three ‘A’s – Affordability, Accessibility, and Availability do come into existence, in this particular discourse. It is important to not let this crisis go waste; it is essential to learn from the present. There is a need to establish an international organization that would lay its focus on the arising risks of Covid-19. The primary role of that organization would be to alert and update nations about emerging risks and factors that might cause a blow to their structure as well as functioning.


  1. Alessandria, G., Kaboski, J. P., & Mi, V. (2010). The Great Trade Collapse of 2008–09: An Inventory Adjustment? IMF Economic Review, 254-294.
  2. Baschuk, B. (2020, March 26). A Trade Collapse That’s Heading Into the History Books. Retrieved from
  3. Fauvel, V. (2020, May 26). Will COVID-19 Spark a Paradigm Shift for Businesses? Retrieved from
  4. Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. Retrieved December 7, 2020, from file:///C:/Users/vedant/Downloads/SSRN-id3557504.pdf
  5. Gruszczynski, L. (2020). The COVID-19 Pandemic and International Trade: Temporary Turbulence or Paradigm Shift? European Journal of Risk Regulation, 337-342.
  6. OECD. (2020). COVID-19 and international trade: Issues and actions. Retrieved from
  7. Sevilla, J., Bloom, D. E., & Caderette, D. (2018). The Economic Risks and Impacts of Epidemics. International Monetary Fund, F&D Magazine.

The opinions expressed in this article are those of the author (s). They do not purport to reflect the opinions or views of the Jindal Centre for the Global South or its members.

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