May 21, 2024

Theoretical framework for designing trade recovery measures in GHE-affected countries

According to the international trade risk management theory [14, 38], the health event emergency management system includes four stages: early warning, preventing spread, controlling or eliminating the event’s impact, and recovery. The emergency’s containment initiates the recovery phase. Countries and regions have a low proportion of recovery work in the health emergency management system, which must be fully developed for trade recovery from GHEs [14]. During the international trade recovery stage, the affected country must renegotiate trade agreements with its partners, enhance expectations, disseminate information to consumers, and evaluate the implementation effect of the trade recovery measures. Promptly identifying international trade risks and employing risk management measures can prevent and mitigate risks and ensure the smooth progression of trade.

During GHEs, trade policy, market demand, and competition vary; exchange rates between a country and its main trading partners fluctuate; or fixed rates are maintained at a significant cost, leading to objective risks. Although trade subjects cannot eliminate objective risks, they can actively prevent them. GHEs expand the scope of restrictions on the movement of people and goods, with continuously increasing uncertainty within the affected country’s trade environment. The subjective risk of decision-making errors and improper measures increases sharply as governments, organizations, and people face multiple pressures [39] and emergent behaviors.

GHE-initiated international trade risks are multidimensional, featuring a spatiotemporal evolution. Measured in time, an epidemic’s early, middle, and late stages face short- and medium-term risks. The risk extends from the epidemic’s origin to neighboring countries and major trading partners. With aggravating uncertainties and risk factors, the potential impact of GHEs on trade expands beyond short-term scales and localities, further increasing the complexity of trade recovery.

Subject levels, including international, national, industrial, enterprise, and consumer, simultaneously face systematic risks caused by GHEs. The cognitive prediction of events leads to pressure superposition, unbalanced considerations, and decision-making errors, thereby increasing the risk of improper measures. These risks are intertwined throughout GHEs, making it more difficult for affected countries to recover their normal trade levels [14,15,16]. Recovering from health events through only one type of measure is infeasible.

To address the international trade risks triggered by GHEs, the trade recovery countermeasures of affected countries must be strengthened in their spatiotemporal dimensions and include international, national, industrial, enterprise, and consumer groups for different subject levels. Efforts should include tracking the epidemic’s evolutionary stage and identifying its regional characteristics, as shown in [18, 40], which highlighted the effectiveness of region-specific trade policies during the Ebola outbreak. Moreover, it is necessary establish a national trade recovery countermeasure repository featuring adequacy, flexibility, and completeness. These measures are essential to shift from an emergency single-trade recovery measure design to a comprehensive, long-term trade recovery measure design (Fig. 1).

Fig. 1
figure 1

Trend of goods exports in countries with GHEs, 1995–2018 (current price, USD 10 billion). Source: Author’s analysis based on data from the World Bank Database

Comparative case study on trade recovery measures after GHEs

This study comparatively analyzed the trade recovery measures of relevant countries in the aftermath of four GHEs: the H1N1 influenza that developed in Mexico in 2009 and spread to the US, affecting both countries and their major trading partners; the 2011 Fukushima nuclear leak; the 2014 Ebola virus outbreak that spread rapidly in West Africa; and the 2015 MERS outbreak introduced to South Korea by international travelers. Despite their sudden onset, these GHEs triggered various national trade recovery measures because of differences in their nature.

A comparative case study methodology, conducive to exploring the characteristics of national trade recovery measures and the specifics of the events [41], supported by Yin [36] for its effective analysis of complex phenomena within realities, was applied. This method involves a systematic collection, comparison, and analysis of case data to identify patterns, test theories, and derive insights that are not apparent through singular case analyses. In implementing this methodology, this study meticulously documented the sequence of trade policy adjustments, timing (spatiotemporal dimensions), and targeted entities (subject dimensions) for each GHE case. This approach enabled the identification of overarching strategies that successfully mitigated trade disruptions, as well as frequent challenges across varied geopolitical and economic contexts. The analytical process involved detailed case descriptions to highlight similarities and differences in GHE impacts and trade response effectiveness. This structured analysis underscored the necessity of incorporating spatiotemporal and subject-specific considerations in formulating trade policies in response to GHEs. This leads to the argument for a nuanced, multidimensional approach to trade recovery policy-making.

Four GHEs this century

The 2009 H1N1 influenza pandemic

The H1N1 influenza emerged in March 2009 in Mexico and the US. On June 11, 2009, the WHO declared it a global public health emergency of international concern [42], with the pandemic alert level peaking on this date [43]. The WHO declared the end of the pandemic in August 2010. In 18 months, it caused more than 18,000 deaths and affected more than 200 countries [44].

The 2011 Fukushima nuclear leak

On March 11, 2011, an earthquake struck the Pacific Ocean, causing a tsunami that triggered a nuclear leak [45]. The US announced an import ban on Japanese food from radiation-affected areas. Additionally, South Korea and the European Union issued trade bans, while China, Thailand, and Vietnam required radiation inspection certificates for food produced in Japan.

The 2014 Ebola epidemic

In March 2014, the Ebola epidemic broke out in Guinea, Sierra Leone, and Liberia in West Africa. In August 2014, the WHO declared it a GHE. The official report on October 15 revealed 8,997 cases and 4,493 deaths [46]. The WHO announced the end of the epidemic in Sierra Leone, Guinea, and Liberia in November 2015, December 2015, and January 2016, respectively.

The 2015 MERS epidemic

In May 2015, the first MERS case was diagnosed in South Korea, with the disease spreading in medical institutions. Thirty-six patients died, and 186 were infected [47]. As the disease did not exhibit sustained human-to-human transmission, it was not classified as an international public health emergency. In December 2015, the WHO declared the end of the outbreak.

Comparison of the four GHEs with national trade recovery

Similarities

  1. (1)

    The H1N1 flu occurred in the wake of the 2008 global financial crisis, further slowing the recovery of the affected countries. Owing to travel restrictions and trade embargoes, the tourism industry lost USD 2.8 billion, with the trade deficit in pork and pork products’ reaching USD 27 million. Mexico’s exports fell by 26% in the first quarter of 2009 [48]. The US economy was struggling and reached a nadir after the subprime crisis. The Dow Jones Industrial Average closed at 6763.29 on March 2, 2009, the lowest since April 1997 [49]. The H1N1 outbreak in April 2009 significantly decreased US GDP, retail sales, and exports of pork and pork products.

  2. (2)

    As the Japanese government could not provide on-time tests for all trade partners, Japan’s agricultural products and food exports to these countries stagnated. In the first quarter of 2011, Japan’s economy contracted at an annual rate of 3.7% [50]. In the aftermath of the earthquake, tsunami, and nuclear leakage, the economy continued to shrink over the next 6 months (GDP fell 0.9% from January to March), and private consumption fell by 0.6%. In September 2012, the government announced that the country was entering a recession [50].

  3. (3)

    The Ebola epidemic affected transportation, tourism, agriculture, and mining. Trading countries and airlines issued travel restrictions to affected areas [46]. Agricultural production was affected, with the epidemic limiting the transport of agricultural products to consumer areas, raising product prices. Conakry’s governor banned Eid celebrations on October 2, 2014 [51]. Travel bans implemented by national authorities and airline flight suspensions [46] cut off trade among West African countries and their partners for about 6 months until August 31, 2014. The loss of workers and travel restrictions reduced mining activity. The US government sent USD 2.89 billion in foreign aid to West Africa, focusing its efforts on Liberia [51].

  4. (4)

    The MERS outbreak reduced the number of tourists visiting South Korea by 2.1 million, resulting in a loss of USD 2.6 billion in tourism revenue. Additionally, the accommodation, catering service, and transportation sectors suffered losses of USD 542 million, USD 359 million, and USD 106 million, respectively [52]. This pushed the transportation sector’s service index below the expected levels in June 2015 and the accommodation and catering industries’ service indexes below the expected levels in June and July 2015.

Heterogeneities

Causes

H1N1 flu was a pandemic caused by viral variants. The Fukushima event was a technological disaster triggered by a strong earthquake but mainly caused by industrialization [53]. The Ebola virus was a highly infectious and destructive disease; the widespread nature of the West African outbreak relates to the highly mobile communities and densely populated regions affected in the early stages [51]. South Korean cases of the MERS virus, which originated in Saudi Arabia, were introduced through international travel.

Duration and influence areas

The H1N1 flu lasted approximately 1 year, affecting Mexico and the US. Following the nuclear accident, some countries prohibited agri-food product imports from Japan’s irradiated areas from 2011 to the present (e.g., the US and China).Footnote 5 The Ebola epidemic lasted 2 years, primarily affecting African countries. More than 13,000 confirmed cases were reported globally, with 4,951 deaths and a 36% mortality rate by October 2014. Although the outbreak involved only three countries, there was widespread and intense transmission in the West African region, and four nations (Nigeria, Senegal, Spain, and the US) reported initial cases or localized transmission. The MERS epidemic was challenging for South Korea’s medical system for more than 7 months.

Event outcomes

After the H1N1 outbreak, countries restricted travel and banned the imports of pork products, which affected their trade with Mexico, the US, and the rest of the global economy. Unwarranted concerns based on inappropriate designations also led to official and unofficial bans by 17 countries on US pork and pork product imports, with China maintaining its ban until mid-December 2009 [54]. The Fukushima nuclear accident primarily affected Japan’s agricultural product exports because its trade partners were concerned about radioactive contamination [55], while the Ebola epidemic endangered Guinea, Sierra Leone, and Liberia’s economic growth, leading to trade stagnation, foreign investment withdrawal, and a food crisis. MERS negatively affected South Korea’s tourism industry.

Evidence for these event outcomes is as follows.

Impact of GHEs on export volumes

In 2009, Mexico and US export volumes decreased by 21.13% and 17.97%, respectively, over the previous year (Fig. 2). Japan’s commodity export volume increased by 6.94% in 2011 over 2010, with a limited share of the Fukushima agricultural food export in Japan’s total foreign trade. Guinea’s commodity exports increased by 10% in 2014 over 2013 but decreased by 13.79% in 2015 over 2014, indicating the Ebola epidemic’s lagging effect on Guinea’s exports. In 2014, Liberia’s and Sierra Leone’s merchandise exports decreased by 54.7% and 19.04%, respectively, over 2013. South Korea’s merchandise exports decreased by 8.02% in 2015 over 2014.

Fig. 2
figure 2

Trends in international tourism revenue changes in GHEs-affected countries, 1995–2018 (current price, USD 10 billion). Data for Guinea and Liberia are missing from the World Bank Database. Source: Author’s analysis based on data from the World Bank Database

International tourism income changes in countries affected by GHEs

Mexican and US revenues decreased by 14.83% and 11.36%, respectively, in 2009 over 2008, and Japan’s revenues decreased by 18.38% in 2012 over 2011. In Sierra Leone, revenues decreased by 46.97% in 2014 over 2013, and in South Korea, by 16.43% in 2015 over 2014 (Fig. 3). Income from trade and transport fell because of the closure policy adopted during the Ebola outbreak, which also disrupted other business activities [56].

Fig. 3
figure 3

Theoretical framework for the design of trade recovery measures for GHE-affected countries. Source: Author’s analysis

Trade recovery

Developed countries (i.e., the US, Canada, and South Korea) have relatively robust health systems, sound economic foundations, and short trade recovery periods. The H1N1 epidemic lasted a year, after which exports from Mexico and the US returned to pre-pandemic levels. As an emerging economy, Mexico maintained its trade with the US during the outbreak; thus, trade recovered rapidly. In 2010, Mexico and US tourism revenues exceeded the level achieved in the 2009 pandemic year.

The impact of the Fukushima nuclear leakage on Japan’s export trade and tourism industry was limited, especially within Fukushima prefecture. Although Japan’s international tourism revenue declined in early 2011, the number of foreign tourists to Japan returned to 70% of that year by September 2012. By contrast, it took more than a decade to eliminate the consequences of the Fukushima disaster on the agricultural product trade. Agriculture production and trade resumed when decontamination was confirmed, which took a long time. In 2017, trade levels improved, and international tourism numbers recovered, exceeding pre-GHE levels [57].

Even before the Ebola outbreak, West African countries were impoverished and pursuing economic development. Guinea, Sierra Leone, and Liberia recovered their export levels within 2 years of the outbreak, but the economic recovery time was long. Guinea’s export recovery was notable; its export trade increased in 2015 over 2014 before decreasing in 2016, although it remained above the pre-outbreak level. In 2015, Liberia’s export volume decreased by 20.57% and did not return to its pre-epidemic level until 2018. Sierra Leone’s exports declined slowly from 2015 until they increased in 2018; however, these are yet to achieve their pre-epidemic level. International tourism income increased by USD 2 million in 2015 over 2014 before fluctuating upward (Figs. 1 and 2).

Comparison of trade recovery measures in GHE-affected countries

Similarities

The common points of the affected countries’ trade recovery measures include countries that chose active fiscal and monetary policies to achieve trade recovery. Consumers, enterprises, and significantly damaged industries were crucial areas for trade recovery.

Mexico and the US

In May 2009, Mexico implemented a tax rate reduction and funding aimed at small and midsize enterprises in the tourism and transportation industries. Furthermore, it reduced its interbank interest rate and announced a financing plan to inject funds into the economy through institutions (i.e., the National Financial Development Bank) to support small and medium enterprises. The Mexican government revived its economy by introducing rules/regulations to facilitate mergers and acquisitions that promoted the development of the southeast economy within Mexico.

During the H1N1 outbreak, the US economy faced a slowdown in an unstable policy environment following the 2008 financial crisis. The country passed a law to support economic recovery and encourage reinvestment. The Federal Reserve cut interest rates to save financial institutions and enterprises on the brink of bankruptcy and help families with excessive debt. On July 12, 2009, the U.S. Department of Health announced the allocation of an additional USD 1 billion to fight A H1N1 influenza.Footnote 6 Despite reductions in US–Mexico air routes, trade between the two countries continued.

Japan

In March 2011, Japan launched a post-disaster recovery and reconstruction program, and the Reconstruction Agency was established in 2012. The timeframe included the Intensive Reconstruction Period (2011–2015), with USD 250 billion allocated, and the Reconstruction and Revitalization Period (2016–2020), with USD 65 billion. Japan also established a comprehensive environmental monitoring system.Footnote 7 To accelerate the resumption of normal business operations, the government supported the establishment of temporary stores, increased investment in support funds, and repaired damaged buildings.

Special financial support to reduce enterprises’ burden included establishing a Japanese financial company specialized in recovery and loans intended for reconstruction after the earthquake. The interest rate was slashed, and separate loan limits, extended loans, and repayment terms were established. The interest rate was reduced to almost zero for small and midsize enterprises whose office facilities were destroyed during the earthquake, and the government improved its management and financing. Tourism and other affected industries were supported, and entertainment and consumer destinations, such as Tokyo Disneyland, reopened to revitalize the local economy and restore international confidence after the disaster.

West Africa

Guinea, Liberia, and Sierra Leone introduced short-term response policies to ensure the health systems and economic sectors’ timely recovery. The Guinean government formulated a USD 2-billion post-Ebola recovery plan, with 63% allocated to improving nutrition, health, education, and children’s services and promoting socioeconomic recovery [43]. It emphasized that the disease’s spread was enhanced by poverty and illiteracy, while noting that the epidemic presented an opportunity to strengthen the country’s economic, social, and institutional resilience. Sierra Leone prioritized the implementation of universal health insurance, whereas Liberia focused on improving post-outbreak areas such as health staffing, infrastructure, monitoring, and response.

The outbreak of a large-scale epidemic in Africa attracted attention from the international community. The United Nations, World Bank, IMF, and US launched a series of epidemic prevention and financial support policies to assist the West African countries in combatting the outbreak. These policies included initial funding of USD 200 million from the US National Institutes of Health to foster cooperation between academic institutions in the US, Liberia, and Sierra Leone on virus research, including vaccine development and new testing and treatment methods. The World Bank approved a USD 110 million IDA assistance to help West Africa establish and expand disease surveillance systems [43].

South Korea

In June 2015, the central bank of South Korea cut its interest rate to 1.5% [58], issued special financing support, and promoted structural reforms in public utilities, finance, education, and labor sectors. The Korean government provided special insurance for visitors to Korea, covering all medical and MERS-related expenses. The government concurrently introduced supportive policies to reduce consumption taxes on automobiles and large household appliances, offering discounts and organizing shopping festivals. Commercial enterprises offered discounts on commodities and services to stimulate domestic demand and launched the Black Friday Shopping Festival. To accommodate the peak summer vacation from late July to early August and absorb the demand for popular products flowing overseas during the epidemic, Korean enterprises actively supported tourism recovery and extended the discount season from winter until August to attract consumers.

Heterogeneities

The main measures of trade recovery

After the GHEs, the affected governments implemented internal countermeasures to recover. Korean commercial enterprises also participated in the recovery process through marketing measures. Conversely, although the three West African countries implemented internal trade recovery measures, given their economic development and medical infrastructure level, they required additional support from the international community to recover.

Emphasis on trade recovery

Most countries strengthened entry-exit control and ensured strict isolation to prevent an epidemic. International flights were reduced, with some countries isolated. Mexico and the US, however, maintained trade ties during the H1N1 influenza pandemic. After controlling the pandemic, the countries used fiscal and monetary policies to manage the affected tourism and agricultural trade. The Japanese government’s trade recovery was based on environmental monitoring measures. When the affected region’s government officials pushed for and promoted marketing measures, it mitigated the nuclear accident’s adverse psychological effects on foreign consumers, thereby advancing the recovery of agricultural exports. The three West African countries’ trade recovery measures are nested in a broader socioeconomic promotion plan. Countries with adequate trade recovery considered the epidemic would opportunistically promote domestic economic development and improve medical facilities with the international community’s support. South Korean commercial enterprises focused on stimulating local demand.

Trade recovery measures differ between developed and emerging economies

During the MERS outbreak, South Korea implemented an economic stimulus plan to assist domestic enterprises. Developed economies, such as the US and Japan, also developed support measures for small and midsize enterprises. During the Ebola epidemic, however, West African countries could not provide such resources, and international organizations, such as the World Bank, United Nations Children’s Fund, and WHO, came to their rescue (Table 2).

Table 2 Comparison of trade recovery measures of the four GHEs

Comparing the cases with the theoretical framework

This study enhances the theoretical framework using case study evidence. Combining the theoretical framework in “Results” section , trade recovery measures in the time dimension of these countries require further clarification, especially when the event was under control and during the trade recovery stage. In the time dimension (Fig. 3), after the GHE was under control (especially after the warning and outbreak), the countries embarked on the process of trade recovery (including early, middle, and late stages).

Implementing the foundations of trade recovery can enhance governments’ timely responses to GHEs. Robust trade recovery infrastructures significantly improve response times during health crises [13, 37, 50]. Trade recovery measures differ based on cities, regions, and domestic countries, with urban centers often rebounding more rapidly owing to better resource allocation [59, 60]. International cooperation is critical for trade recovery, especially for emerging countries, as exemplified by the joint efforts during the 2014 Ebola crisis that facilitated regional trade resumption [61]. The trade recovery measures of developed countries are more comprehensive than those of emerging countries, helping to shorten their recovery time, with the OECD highlighting the correlation between recovery measures and reduced economic downtime [62]. Countries can classify and enrich trade recovery measures by applying the time–space-subject three-dimensional framework analyzed earlier and establishing a countermeasure repository (see Table 3 in “Comparative case study on trade recovery measures after GHEs” section) to recover from GHEs

Table 3 Countermeasure repository in time, space, and subject dimensions

Each GHE revealed areas for improvement in trade recovery measures. The responses to the nuclear leakage accident and the H1N1 influenza epidemic suffered from a lack of timely action and resource allocation [53, 59]. Management of the MERS and Ebola outbreaks has been criticized for insufficient coordination and resource deployment [34]. The outbreak of GHEs has exposed the weaknesses in global governance, manifesting in uncoordinated public health and economic systems, and the failure to manage these events to achieve a better balance among health, economic, and trade shocks. This lack of synergy exacerbates the severity of health, economic, and trade shocks during these crises. Establishing joint committees of the WHO, WTO, and potentially other international organizations, such as the International Monetary Fund and United Nations, could provide a comprehensive approach to managing these conflicts. The effectiveness of such collaborative efforts has been documented in the joint WHO–WTO response to the SARS and H1N1 outbreak, which enhanced global preparedness and response capabilities [63]. Such joint committees could create a real-time data repository for cross-border information sharing, outline a tiered protocol for trade actions, manage a dedicated emergency fund, and conduct bi-annual stress tests. This would not only inform member nations’ preparedness for future GHEs as recommended by the WHO, WIPO, and WTO but also renew their commitment to supporting integrated solutions for global health challenges [64].

Moreover, implementing trade recovery measures in countries affected by GHEs will generate short-term impacts on trade and investment with a delayed effect. According to the Center on Budget and Policy Priorities [65], recovery measures typically result in initial disruptions that are offset by longer-term gains in efficiency and market access. During GHEs, the successive implementation of trade recovery measures influences current economic activities; however, these measures have a delayed and long-term impact. UNCTAD [66] revealed that the full benefits of the trade recovery measures from the pandemic were not realized until several years post-crisis, underscoring the need for patient capital and sustained policy support. Improving the effects of trade recovery measures requires evaluating the implementation effects of the affected country’s measures in response to GHEs, as demonstrated by the World Bank’s analysis of response strategies during the 2014–2015 Ebola outbreak. This provides crucial insights into the effectiveness of regional trade policies [61].

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