As 2020 drew to a close, the World Trade Organization (WTO) reported that the number of new trade restrictions being introduced by governments across the world had actually fallen in 2020 compared to 2019. This was partly because the US-China trade deal agreed in January 2020 had helped to ease US-China trade tensions, thereby bringing to an end the tit-for-tat series of trade measures each side had been imposing on the other in 2017 and 2018. In addition, the pandemic-induced collapse of world trade had anyway meant that there was less trade to restrict as governments focused on containing the pandemic and not on trade policy.
But we should not rush to celebrate this apparent easing of protectionist tendencies. Even while falling compared to 2019, 2020 still saw a pace of new restrictions that was substantially higher than in 2017. And as the global recession caused by the pandemic eases, and world trade recovers, we fear another swing towards aggressive trade measures. We need to think about what is driving this, how Southeast Asia will fare and what the region can do to insulate itself from this malign trend.
Global trade will face more headwinds in coming years