Page 12 - London Business Matters May 2020
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  12 International May 2020      International trade and the pandemic Despite the fact that a large proportion of the world is in lock-down, trade continues. This is necessary because countries are not self- sufficient in food production; and medical equipment and supplies need to be moved cross-border too Trade continues but the pro- cedures are slower and vol- umes are down significantly. Like everywhere else, customs posts must observe physical distancing and this adds time to clearance pro- cesses, for both import and export. Dover, the UK’s busiest port vol- ume-wise is reportedly around 90 per cent down in trade terms. And similar figures have been quoted for Heathrow, Britain’s biggest airport, value-wise, for the movement of goods. Passenger travel has seen a 75 per cent reduction at the airport with the consequence that two of its five terminals have been closed, and only one of its two runways current- ly deployed. A vast amount of air cargo is car- ried in the holds of passenger planes so it may not be surprising to note that cargo-only traffic increased in the last week of March by over 400 per cent. A significant amount of that cargo will consist of essential supplies, and indeed 40 per cent of the UK’s pharmaceutical trade goes through Heathrow. A com- pany which produces components for coronavirus testing equipment and has recently needed to import machinery (from both inside and outside the EU) to increase its pro- duction – another good reason for trade to continue. Global supply chains At the beginning of April Axel van Trotsenburg of the World Bank spoke of the food and per- sonal protective equipment crisis in parts of the world, especially Africa, and the need therefore for goods to be shipped. He also spoke of the threat to global sup- ply chains and the potential un- dermining of globalisation. Inte- gration in that context has never A vast amount of air cargo is carried in the holds of passenger planes so it may not be surprising to note that cargo-only traffic increased in the last week of March by over 400 per cent. measures to keep business going. Until recently it appeared to be only India who had bought in pro- grammes specifically for exporting companies, keenly aware like so many countries of the need for for- eign exchange receipts. At the beginning of April howev- er the UK’s Department for Trade bought out guidance for businesses trading internationally. Some infor- mation pointed to existing meas- ures aimed at keeping all businesses afloat but some was specifically for exporting companies. Along- side UKEF’s export working cap- ital scheme and export insurance policies (export credit guarantees) there is also a service for finding al- ternative suppliers, and the removal of import duties (12 per cent) for medical equipment. Contact customer.service@UKex- for information. It is also the case though that many countries have restricted ex- ports of medical supplies, most of these since the crisis began. Trade promotion Lockdown and travel restrictions mean that physical trade visits are on hold for the time being. But that is not to say that they can’t be conducted in other ways. The LCCI is part of a network replacing ten scheduled missions – mainly to Asia and Africa – with virtual ones. Online there will be market briefings, how to do business in in- dividual countries, sector briefings, company experience of the mar- kets, and government projects and priorities – see page 17 for further details. These are presented through webinars, podcasts and briefings culminating in in-market introduc- tions. There is no doubt that phys- ical missions will return when the crisis is over, but this helps to keep trade going and prepare for future deals. This article is based on material from the LCCI London Resilience webinar on international trade which took place in early April. See page 22 for the May programme.  been more advanced – many ex- amples were cited in the Brexit de- bate. In the present circumstanc- es, there have been some striking instances of the human element of global integration. The Econo- mist reported that Apple, which relies on parts and assembly from China, shuttles 50 company ex- ecutives between California and Chinese cities every day in nor- mal circustances – even during the US-China ‘trade war’. Looking to the future, the ex- treme integrity of global supply chains may be questioned as com- panies seek to ensure that they have access to what they need, whatever the future circumstances. Van Trot- senburg has spoken of the potential rise of economic nationalism. And others have pointed out that, shorter term, as the Far East recovers from the pandemic, we can expect an av- alanche of imported goods into the West. Government measures Understandably governments are spending billions in introducing  

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