COVID-19 has alerted economies to self-sufficiency and sustainability
Dr. James J. Nedumpara, Professor and Head of the Centre for International Trade and Investment Law, IIFT, opines that while China is one of the dominant economies at the moment, the COVID-19 pandemic has alerted the urgency for many countries to gain self-sufficiency and domestic capacity in the production of certain essential goods and services. Also, all economies are interconnected, so global economic growth will be dependent on spurring global demand.
IBT: After having a difficult 2020 which left the world reeling from the impact of the pandemic, how do you see the global growth trending in 2021? What will be the key drivers for this growth?
Dr. James J. Nedumpara: Many businesses have been badly affected and in some cases were shut down in 2020 on account of COVID-19. There is a spirit of optimism across the globe this year, especially in view of the COVID-19 vaccination roll out. However, complete global economic recovery can happen only over time. The International Monetary Fund (IMF) believes that this might happen in 2022. But in order to stimulate growth, most governments will have to provide some kind of stimulus package, although this could lead to spiraling government debt across the globe.
IBT: What impact can the emergence of the new strain of COVID-19 virus have on global GDP? What other factors could meddle with the global growth prospects?
Dr. James J. Nedumpara: Vaccines have been developed to mitigate even the new strain of COVID-19 virus. But many countries like the US and the UK are undergoing the worst Corona infection and also loss of lives at this moment. In Europe, many nations are witnessing a resurgence of COVID-19 and some of these countries are resorting to new lockdowns and night curfews. Consequently, arrangements like the work-from-home might persist. International tourism, travel and dependent sectors will continue take a beating for some more time. Consumption is unlikely to be that of the pre-COVID-19 levels until the end of 2021 or even 2022.
IBT: Global trade is expected to have dropped by 7% in 2020, according to UNCTAD. How can economies across the world collaborate in the aftermath of COVID to revive trade growth prospects?
Dr. James J. Nedumpara: The G-20 is a good platform for fostering international cooperation. International cooperation is needed to make the vaccine available to a large number of people across continents. International aid and financial aid are also badly needed at this time. But when it comes to international bodies like the World Trade Organization, the cooperation has somewhat broken down at present. This became apparent after Roberto Azevêdo chose to step down as the Director-General of WTO and the trade body was looking to elect its new head. But, if the American leadership returns in the wake of the new Administration, perhaps we can actually find much more coordinated efforts in addressing some of the global challenges.
IBT: The US has blocked the appointment of judges to the WTO appellate committee. Do you see the US approach change markedly under Biden towards WTO, US-China trade war and trade negotiations with other countries including India? Why or why not?
Dr. James J. Nedumpara: The Appellate Body of the WTO is non-functional since December 10 2019. And even the last judge of the Appellate Body has demitted office in November 2020. So, all the vacancies will have to be filled up very soon. But as far as US President Joe Biden’s approach to these matters is concerned, it is too early to make any predictions. President Biden has not revealed his position in express words. Having said that, it is certain that China will continue to remain a focal point of the United States’ trade policy. It is quite probable that the China-centric policy may not find an immediate reversal. Also, the United States would like see some kind of reforms to the Appellate Body and other organs.
IBT: What is your opinion on the Chinese economy’s estimated growth by 7.9% in 2021 – factors driving it and challenges? Which are the other markets that are expected to show promise in growth terms and why?
Dr. James J. Nedumpara: China is one of the dominant economies at the moment, but the COVID-19 pandemic has alerted the urgency for many countries to gain self-sufficiency and domestic capacity in the production of certain essential goods and services. China has already seen certain economic recovery, but all economies are interconnected. Therefore, global economic growth will be dependent on spurring global demand. This will depend on the world returning to normal life. In other words, global consumption needs to be back on track.
India is one such economy, which has shown signs of a revival in recent times and can be a bright spot in the global economy. By mid-2021, life and businesses are expected to return to pre-pandemic levels. However, the shocks of the pandemic could continue to remain for a few more years.
IBT: COVID-19 has highlighted the importance of sustainable economic growth. Do you expect substantial progress on this front, or do you see the world returning to a ‘growth at all costs’ approach? Please elaborate.
Dr. James J. Nedumpara: COVID-19 has taught the world the importance of sustainability. In many countries, people have actually stopped buying non-essential goods. There is a significant focus on turning to sustainable goods and services. All these developments are in line with a sustainability development goals enshrined by the United Nations.
Let’s look at an example. There has been a significant depletion of fisheries stocks in many countries. There is an ongoing negotiation at the WTO to find a solution to harmful categories of fisheries subsidies. The climate crisis is another area where concrete actions are likely to take place in the near future.
IBT: What should be the fiscal stance of governments going forward considering high levels of public debt, chances of ballooning NPAs being juxtaposed with the need to fast track growth?
Dr. James J. Nedumpara: This is a national issue because government revenues have been hit all over the world. The amount of public debt has actually grown manifold in recent times. The only way to reduce public debt is by creating more revenue and economic opportunities.
Targeted government spending is an option. In certain sectors, governments will have to lend a helping hand. Fiscal austerity can be damaging in these times.
James J. Nedumpara is Professor and Head of the Centre for International Trade and Investment Law (CTIL) at the Indian Institute of Foreign Trade (IIFT). In this capacity he advises the Government of India on various aspects relating to international trade and investment law. He was among the founding faculty at Jindal Global Law School.
James has several years of experience in the field of international trade and economic law and has worked with leading law firms, corporate firms and also UNCTAD’s India programme before joining academia. He was also a part of the Indian delegation that appeared in the recent proceedings on India- Agricultural Products (Avian Influenza dispute) before the WTO Appellate Body. James has also taught courses in international trade law as a visiting faculty at FGV Law School, São Paolo,Brazil, NLSIU, Bangalore and the CWS-WTI Joint Summer Academy. He has also served visiting fellowships in several law schools and has published several books and journal articles in the field of trade law.
The views are personal.