International trade has always been considered as the backbone of the global economy and of our modern society since when producers in various nations are not restricted from trading within their own borders but expanding exchange and trading of goods with other countries as well. The international trading system needs to be maintained and operated every second because if it stops, it will result in enormous economic losses of many countries. However, it can be seen that, in the context of Covid 19 crisis, the international trading system has also encountered many difficulties. Economic experts believe that the longer this current disease situation is, the pressure on the world economy will become more and more severe.
Currently, many countries are forced to make decision in closing the border as a measure to prevent and tackle the epidemic completely. The border between the US and Canada can be seen as a prominent example in this situation. As COVID-19 cases continued to increase and difficult to control, the governments of the two countries made a decision to close the border for non-essential travel from March 21 until now. All have made the announcement that this situation will be extended through October 21, 2020. So up to the time of the announcement about prolonging the border closing time and a series of social isolation measures, the border between Canada and America have been closed for 7 months. So what happens when the decision to close the border is dragged on for so long?
As one of the sectors that contribute greatly to the economies of both the US and Canada, the tourism industry has been facing the lots of difficulties in this pandemic. Social distancing was imposed by the government over the past several months. “The longer that border remains closed, and the longer we need to socially distance for a time, the more economically devastating this pandemic is going to be,” said Tom Torti, CEO and outgoing president of the Lake Champlain Regional Chamber of Commerce. According to calculated data, each year, Canadian tourists spend about 60 million dollars on lodging, 30 million dollars on restaurants and the same amount on retail stores, 20 million on travel services and about 10 million dollars for other sectors. In an interview with the Lake Champlain Regional Chamber of Commerce President Tom Torti by VTDIGGER newspaper, Tom stated: “a prolonged border closure would have a worrisome impact on ski resorts and bike trails, inns and bed-and-breakfasts. Many small shops in destination communities, like the Montgomery area near Jay Peak Resort, could find it hard to survive the loss of tourist foot traffic ”.
In addition to the tourism and service sectors, transactions between the two countries are also becoming more difficult. The unfavorable disease situation has made the quarantine of import and export goods last longer, not only affecting the quality of goods but also causing scarcity of some commodities. The United States and Canada are two countries with close borders, they live and work together however, due to the epidemic, the border closes, causing the unemployment rate to rise because people cannot go out of the border to search for job opportunities while in the country, the government is also imposing a series of measures to limit people from leaving their homes, making the situation even more difficult.
This phenomenon is just like the Domino effect, when a small chain of the whole economic system stops, there will be a series of unpredictable consequences. The rising unemployment rate puts great pressure on governments of countries because in addition to COVID-19 subsidies, they will have to provide benefits for workers who lost their jobs during this period of time. The economies of both Canada and the US are expected to plummet, and the unemployment rate has risen to a record, but experts believe that inflation will still under controlled.
Similarly, European Union countries have also imposed and used measures such as border closures or social distancing to reduce the number of people infected with COVID-19 and to avoid the virus spreading rapidly in their community. For a long time, people in the countries of the European Union are still free to move around, so the closure of the border brings a lot of trouble for these countries. Like in the US, Canada and many other territories, the percentage of workers unemployed during this period increased. As predicted by the European Commission, the E.U economy will decline by an average 8.3% this year. This area is expected to fall into the deepest recession in its history. At the same time, The European Central Bank's chief economist also warned that 19 countries share the euro currency might not recover from the disaster until 2022, especially with those that are depending much on tourism industry. With its position as one of the world's leading major economies, the slowdown of European's economy will have a significant impact on the global economy, halting large transactions between countries.
Governments of major countries such as the US, Canada, Germany, Spain, France, etc have all moved to introduce a series of bailout packages to partly reduce the pressure on the national economy in particular and the world economy in general. However, with the number of COVID-19 cases per day still so high, border closures, imposing social disruptions are expected to continue to hinder the recovery of major economies around the world.
However, we still have the right to hope for a more positive development of COVID-19 pandemic because many countries have been finding vaccines to cope with the epidemic. The world economic situation has been identified as facing many difficulties and will only have a clear chance of recovery when the epidemic is under control, the number of infections is decreasing and vaccines to prevent disease is ready to be released.
References :
Peter S. Goodman. “Europe’s economic recovery is a summer memory”. The Corona Virus Outbreak. The New York Times. Oct 11, 2020.
Johny Wood. “This is how Europe is helping companies and workers as the coronavirus crisis deepens”. World Economic Forum. March 16, 2020.
Jerry Zremski. “The impact of the border closure? More distance between U.S. and Canada”. The Buffalo News. Jul 19, 2020.
Justin Trombly. “Extended border closure could be an economic ‘killer,’ tourism leaders say”. Business&Economy. VTDIGGER. May 31, 2020.
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