Rethinking Trade - Season 1 Episode 2: Crisis Capitalism COVID Response: Let’s Do More Rigged Trade Deals, No One’s Watching
Yup, Commerce Was Urging U.S. Firms to Export Ventilators, Masks Etc. to China as Our Imports of Such Goods Were Drying Up

Corporate Power and the Disappearing Face Mask

By Sarah Grace Spurgin

I feel good about the amount of rice and beans I have in the pantry, toilet paper in the closet, and disinfectants in the cabinet. 

But the mask… Sure, I can use a homemade one when I inevitably need a tire changed, fresh vegetables or just some basic human interaction. But how is it possible our nurses, doctors, and other frontline responders are left without the real thing?

My friend works at a clinic for homeless men in Washington, D.C. He spent every hour of every day for the past two weeks searching for the now-fabled N95 masks that protect their wearer from breathing in airborne coronavirus. He gave up, and the clinic’s staff are not protected while treating the city’s most vulnerable. Why can’t anybody find the basic necessities – masks, sanitizer, disinfectants much less the supply of ventilators needed to handle this crisis? 

In answering that, I’m going to try to avoid the phrase “supply chain” as much as possible, because even when spiced up with accurate terms like too-extended, brittle and sole-source, it sounds so dull.

Really, the answer breaks down to a multisyllabic mouthful conundrum:  hyperglobalization.

I like to use the word hyperglobalization, which Harvard economist Dani Rodrick coined, to explain how I understand the modern economy. It perfectly captures our overextended commercial interconnectedness: We rely too heavily on a corporate-rigged form of international trade to provide for many necessities of our everyday lives.

Interconnectedness can be a wonderful thing, but our current production and trade systems are made by and for transnational corporations who couldn’t care less about you or me. They fought for protections in trade pacts that make it cheaper and safer to outsource production to low-wage countries. And as part of that shift, in many sectors firms have exploited weak anti-trust policies to buy up their competitors and shut down “extra” production facilities.

So now worldwide production for many essential goods is concentrated in too few facilities in too few countries with little redundancy and no reserve supplies sitting in warehouses. That is a formula for disaster is any little thing goes wrong, much a very big thing like a global pandemic.

A lot of that production is in China, so when people there were hit with COVID-19 and plants closed, the impact was felt worldwide. And we felt it especially here thanks to the United States having a enormous trade deficit, which means we are extremely reliant on imports.

To put it in perspective, before the COVID crisis, the United States received one million packages shipped by air express every single day from China and only 25% of U.S. imports arrive by air. Much of that is finished products.

The 75% of U.S. imports that arrive by sea and land shipping include a lot of parts made elsewhere. When those parts are not available, it means production here also gets shut down.

When the pandemic hit, and these hyperglobalized supply chains broke, we from China or get the parts that allow us to increase production here.

We are finally being forced to reckon with the precarious position we’ve put ourselves in by turning a blind eye to the corporate-driven model.  

With the ever-expanding internet economy and globalized production, you might think we would have a better safety net, since we theoretically have more options. Instead, we’ve actually cornered ourselves and are facing the grim reality that the benefits of the current system of globalization are outweighed by the costs.

Don’t get me wrong, I love that I can get a new jigsaw puzzle to pass the time in quarantine. And new paint brushes and paints. And anything else my heart could desire. Except what we all really need: masks, hand sanitizers and for our hospitals personal protective equipment and ventilators. Medicine could be next on the MIA list.

The key part of medicines are active pharmaceutical ingredients, or APIs. In 2018, 88% of the manufacturing sites making APIs were located overseas. More and more of our APIs come from China, and any disruption of the manufacturing of these ingredients can (and does) lead to global shortages. For example, in 2017 an explosion at an API factory in China led to a global shortage of the antibiotic piperacillin/tazobactam, used to treat severe infections.

But that experience did not lead to new policies. Trade can be a great thing, and we should keep doing it! But as everyone is now realizing, having only one or a few sources of critical goods is a pretty bad strategy.

The FDA has already reported COVID-19 drug shortages related to API imports from China. The supply chain was disrupted because workers in the manufacturing plants and those transporting products were out and/or facilities closed.

Now, what about those pesky N95 masks? Well, China made half the world’s masks before the outbreak. However, much of the world’s protective-medical equipment is made in Hubai, the Chinese province where the coronavirus was first reported last year. As China shuttered factories to combat the spread of COVID-19, and the need worldwide for N95 masks spiked, the demand far surpassed the global supply.  Even now as China has expanded mask production nearly 12-fold, it is not exporting few of those masks, which are needed in China. While Donald Trump has certainly botched the federal government's response to this pandemic, he is not the only person to blame for these shortages. Decades of neoliberal trade policy are responsible for the mass outsourcing of U.S. manufacturing capacity – with the loss of 60,000 plants and five million U.S. manufacturing jobs since the mid-1990s start of the North American Free Trade Agreement and the World Trade Organization and then China’s 2001 entry into the WTO.

However, the cause of these shortages isn’t about us versus China. This is about us against the corporations that have spent millions to get the trade policies that help them exploit the cheapest labor and lowest standards possible.

Too many policymakers and too many Americans not themselves engaged in manufacturing closed their eyes to the corporate-rigging of our trade policies. As a country, we not only let corporations ship U.S. production lines offshore but enacted trade policies that encouraged it. The companies made huge profits because it was cheaper to pay workers less per day than U.S. workers earn per hour and then ship our masks, medicines and more in from China.

Now we are all paying for this folly. Will we learn the lesson this time?

Will domestic production eventually (hopefully) ramp up and we will have more masks and medicines than we can count? Until then, it is a life-or-death situation for the millions of Americans on the frontlines battling this crisis, and the millions more unaware of how to effectively protect themselves and the ones they love.

International trade, as it turns out, is deeply personal. It’s not just Big Supply Chain Economics or wonky men in stuffy suits making back-room deals (although that is a lot of it). Trade policy affects our everyday life, more so now than ever. This situation was precarious to begin with, and we are now teetering on the edge of redefining global economics.

This redefining will go one of two ways: further entrenching corporate power as Naomi Klein warns, using unconditional bailouts that lead to government budget crises that lead to cuts in Social Security and other basic government service and safeguards, or a major restructuring to finally put people and the planet over profits.

I, for one, hope it’s the latter.

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