Should Australia move away from globalisation and make all our medical supplies ourselves?

The word Globalisation emerged in the 1990s as commonly used jargon to describe how technology has created the ability for people, businesses, organisations and governments in different nations across the world to trade goods, services, ideas and influence (Stearns, 2002). Before Covid-19 there had been an abundance of debate between academics about the shortcomings of globalisation and the magnitude of devastation that can occur because of engaging in a practice of intricately adhering countries together with complex deals. (Stearns, 2002). At the beginning of the 2020, Australia and the rest of the world for the first time experienced the damaging repercussions of relying so heavily upon an international trade system. Australia’s eyes were opened to how volatile this system is when we were met with a shortage in the supply of essential facemasks and an array of medical equipment (Edwards, 2020). Not only Australia but many countries across the world were met with this dilemma, as China supplies approximately half of the world's face masks, and halted distribution from the rest of the world for a month in order to ensure that they had ample supplies for their country (Edwards, 2020). This meant that as a nation, Australia was in shortage of arguably vital life-saving equipment to help tackle the COVID-19 pandemic. Post the initial shock of Covid-19 it has truly underpinned the fragility of the process and the devastating ramifications that occur when everything does not run as ‘business as usual’. Although the idea of globalisation is flawed, it is the backbone of the world’s economy and to remove it would be a step backwards.

Looking from an economic standpoint, with a dramatic increase in the global demand for facemasks and no initial increase in the supply of respirators or face masks there was an immediate shortage and an increase in the price of these products. Consequently, it meant that countries were reacting irrationally by countries such as the United States of America stopping cargo ships filled with personal protective equipment (PPE) at Shanghai airport and offering larger sums of money in order to secure them for their country's use (Uren, 2020). To avoid this problem in the future, if countries such as Australia had not previously relied on China for our supply of PPE and manufactured all of our PPE needs onshore then naturally one would assume that we could have moved through the motions of the pandemic in a much more succinct manner, right? According to (McDonagh, 2020) a lecturer in political economy “ensuring supplies can withstand shocks needn’t mean bringing production onshore. It might make it harder”. He reflects on the idea created by Japan of diversifying the countries from which Australia should choose to get their supplies, so when inevitably another global issue occurs, they can increase their orders from different countries and not have to pay extra money for these products or go without (McDough,2020). He further argues that creating a surplus in our country of specific items of PPE is an irresponsible action as it can’t be predicted what will be needed in the future to aid illness, so ensuring that we have different supply channels to rely on will be the key to success in the future. Creating a robust means of trade for Australia will not guarantee this issue from occurring again but reshoring is not the answer to the shortages and uncertainty we are experiencing.

For more national security and a greater sense of state sovereignty for Australia, a shift to reshoring the production of more goods and a conscious effort to distance from globalisation could be the key to the future if conducted properly. The shortages that occurred because of COVID-19 affected more industries then just the personal protective equipment and essential medical equipment sector, it also disrupted supply chains from an array of domestic businesses such as education to the fashion industry and as a result the value of the Australian Dollar against the United States of America’s depreciated to levels not seen since the global financial crisis (PWC, 2020). Therefore, if more import tariffs were created to hinder trade within countries then it would encourage industries, businesses and companies to remodel their supply chain and encourage domestic production (IBISworld, 2020). This ultimately would create jobs for Australian which would counteract the increase in the domestic price for goods and when another global issue arises such as a pandemic or war, we as a nation could become more independent and not feel the crippling effects of a global issue (IBISworld, 2020). Taking this argument into consideration, companies should not just take their business overseas with national security the guiding influence for this choice. They need to assess all costs involved in a multifaceted way such as critically evaluating the risk, labour cost, country relations and many other factors to ensure that they are making the most educated decision for their company as a whole (Gans, 2017).

Reflecting on the relatively new phenomenon of globalisation, the recent history surrounding Covid-19 has truly underpinned the flaws that this system possesses. Looking at different sides of the argument that Australia should take a step back from interacting in global trade, with reference to face masks and essential medical equipment to survive Covid-19 it can be concluded that it isn’t a simple yes or no answer. For some industries, it could be paramount for an increase in national security to begin to re-shore the production of items for future success, but for other industries, it would be an uneducated decision that would negatively affect the economy of Australia, not strengthen it. Every economic system has flaws, but globalisation is still an essential element for future prosperity and keeping our world interconnected it is just important to learn from the mistakes that have arisen and make educated efforts to improve these areas.

References: Edwards, J. 2020, ‘The facts about global trade in face masks, ventilators and test kits’, The Interpreter, The Lowy Institute, 21 April 2020, < https://www.lowyinstitute.org/the-interpreter/facts-about-global-trade- facemasks-ventilators-and-test-kits> accessed 20 July 2020 Laker, B. 2020, ‘3 Severe Implications of Coronavirus on Global Trade’, Forbes, 7 April 2020,<https://www.forbes.com/sites/benjaminlaker/2020/04/07/3-severe-implications-of-coronavirus-on- globaltrade/#597b4e853d11> accessed 20 July 2020 McDonagh, N. 2020, ‘Sure, let’s bring production onshore, but it might not ensure supplies’, The Conversation, 10 July 2020, <https://theconversation.com/sure-lets-bring-production-onshore-but-it-might- not-ensuresupplies-142270> accessed 20 July 2020. OECD 2020, ‘The face mask global value chain in the COVID-19 outbreak: Evidence and policy lessons’, Note, Organisation for Economic Cooperation and Development, 04 May 2020 Uren, D. 2020, ‘How Covid-19 infected global trade’, The Strategist, Australian Strategic Policy Institute, 27 May 2020, <https://www.aspistrategist.org.au/how-covid-19-infected-global-trade/>, accessed 20 July 2020 Economic Principles - Assignment 1 8

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