Get Ready for Life Behind Tighter Borders

People and economies are retreating, or being pushed, back behind restricted frontiers.

Australia gets a lot of well-deserved grief for its pandemic police-state policies, but the rest of the world may soon look rather similar in some ways. In particular, that unfortunate country's closed borders may foreshadow a world of reduced travel and trade. Pandemic worries and the fallout from disrupted supply chains and shipping routes threaten to end an era of easy globalized transit as people and economies retreat, or are pushed, back behind restricted frontiers.

"It's been less than a week since the European Union removed the U.S. from its 'safe list' of countries for nonessential travel, and already some of the most-visited of the bloc's 27 member states have reacted by clamping down with additional Covid-19 travel restrictions for Americans," Forbes reported this week.

Most of these countries are admitting visitors from the U.S. (and elsewhere) only if they can show proof of vaccination. Several, including Bulgaria and Sweden, essentially banned entry by many travelers including Americans. While supposedly "temporary" measures implemented until the pandemic passes, whenever that may be, the restrictions evoke earlier warnings that travel may never again be as free as it was before any of us heard of COVID-19.

"We will travel again, but it will not be the same," Andrea Serra of the World Economic Forum and Christine Leong of Accenture warned in May 2020. "New health safety protocols and systems will need to be in place, and these have yet to be defined. As governments and industry plan for recovery in this new context and adapt to changing traveller behaviour, the use of digital identity and biometrics technologies could restore trust while also ensuring a seamless journey."

"Eventually, surveillance technology could assign each passenger a digital identity, with access to anything from geolocation to virus test results or immunity certificates," Annalisa Nash Fernandez, a business and technology strategist, told USA Today last October. Like Serra and Leong, she cautioned that such monitoring will raise disturbing privacy implications.

If you haven't recently been abroad yourself, the new restrictions might delay your experience of the changing world. But Reason's Matt Welch and Liz Wolfe can fill you in on the ordeals that overseas journeys have become. Forget those high-tech predictions for now; governments are predictably implementing existing techniques—badly.

"The net sum of governmental restrictions and requirements on travel adds layer upon layer of time, cost, and anxiety," Welch noted in August after a visit to France.

Surveillance, mandatory health screenings, and tighter rules don't come cheap. That means international travel is likely to be not only bureaucracy-bound, but also more costly, for the foreseeable future. That will likely discourage business travelers who have already grown accustomed to virtual meetings, and divert many others to domestic vacations that don't require the hassle and expense of crossing borders. Tightly monitored, less-mobile populations will, no doubt, suit much of officialdom just fine.

It's not just people that are likely to shy away from borders in the years to come, though. Anybody purchasing a car, shopping for electronics, or buying groceries has first-hand experience in how screwed-up supply chains are right now. Factory shutdowns, port closures, computer chip shortages, along with delayed and expensive international shipping play havoc with the availability of goods and the viability of businesses. That has manufacturers and policymakers rethinking their commitment to a global economy.

"COVID-19 has disrupted global value chains (GVCs)," four economists noted last month for the Center for Economic Policy Research's VoxEU. "Some observers expect firms to respond by abandoning their pursuit of lower production costs in favour of building stronger resilience in production – by reshoring, nearshoring, and/or diversifying sources of production."

The authors, Caroline Freund of the University of California at San Diego, and Aaditya Mattoo, Alen Mulabdic, and Michele Ruta of the World Bank, acknowledged that the economic pressures that encouraged offshoring aren't going anywhere, but they may become secondary to political dictates.

"Governments may not wait for firms to make decisions in response to COVID-19, because of geopolitical concerns as well as a perceived coordination failure – chasing efficiency over resilience may be optimal for one firm in a country but not for all firms if it leads to excessive national dependence on a single source," they added. "The result may be subsidies for reshoring, and tariff hikes to avoid becoming too dependent on any one country."

Basically, globalization has made a wide assortment of goods available at low cost to much of the world, raising the prosperity of billions of people in the process. But it also demonstrated vulnerabilities during a global pandemic accompanied by government-mandated restrictions on economic activity. Those vulnerabilities may be voluntarily addressed by importers and manufacturers who decide they've exposed themselves to excessive risk, but they're also likely to be exploited by nationalists who want to pull economic activities back behind borders.

The data does show increased interest in shifting some production to the United States from overseas because of concerns over pandemic disruptions: "83% of manufacturers are planning to add North American suppliers to their supply chains within a year," finds the 2021 Thomas State of North American Manufacturing Report. But reshoring remains less popular with business than with politicians, including both the Trump and Biden administrations, according to a recent paper. Unfortunately, politicians have the power to compel compliance, and they're not reticent about manipulating economic activity. The result might be greater resilience, but it is also likely to mean less variety and higher costs, given the incentives that encouraged international trade to begin with.

None of this is set in stone, of course. Pandemic-era restrictions could fade away with the virus itself. After a period of hunkering down, perhaps the world will again embrace the travel and trade that enhanced life and drove prosperity in recent decades. But, right now, the signs are pointing to a less-mobile, less-interesting existence. Some people would like us all to stay put and stop wandering around quite so much, and COVID-19 has been a shot in the arm for their efforts.