International trade, trade policy and foreign investment: preliminary considerations on the impact of the COVID-19 crisis

The world is facing a period of great tribulation as a result of the COVID-19 outbreak, and international trade is an obvious target, whether as a result of decreased global demand for goods (and also the likely effects on the price of trade goods, especially commodities) or as a result of supply capacity restrictions in many sectors and countries due to social isolation and lockdown measures. In a globalised world, marked by the significance of global value chains in major industrial sectors, there is considerable interconnection between the productive structures of various countries, whose functioning depends on the free flow of goods (and people) across national borders, which are currently subject to strict control. This Policy Research Brief aims to provide a preliminary assessment of the impacts of the current health crisis on international trade in goods and discuss its effects on trade policy, and on direct foreign investments, including the issue of global value chains. The analysis takes into consideration changes that had already been taking place in trade, commercial policies and investments over the years preceding the COVID-19 outbreak, especially those after the 2008-2009 financial crisis, and to what extent the current crisis could deepen or alter these trends, or even introduce new elements that could alter the behaviour of these variables.