Order Code RS22453
Updated January 3, 2008
Avian Flu Pandemic: Potential Impact of
Trade Disruptions
Danielle Langton
Analyst in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Summary
Concerns about potential disruptions in U.S. trade flows due to a global health or
security crisis are not new. The possibility of an avian flu pandemic with consequences
for global trade is a concern that has received attention recently, although some experts
believe there is little cause for alarm. Experts disagree on the likelihood of an avian flu
pandemic developing at all. This report considers possible trade disruptions, including
possible impacts on trade between the United States and countries and regions that have
reported avian influenza infections. These trade disruptions could include countries
banning imported goods from infected regions at the onset of a pandemic, de facto bans
due to protective health measures, or supply-side constraints caused by health crises in
exporting countries.
Background
This report examines scenarios in which international trade could be heavily
controlled or limited due to an avian flu pandemic.1 Each of the scenarios presented
depicts the possibility that imports of goods into the United States could be curtailed due
to the avian flu. Some experts argue that these scenarios are not likely to occur, because
they believe that the United States would probably not implement a general ban on the
importation of goods from affected regions. It is believed that such a ban would not
prevent transmission of the avian flu to the United States, because there is little evidence
that inanimate objects could transmit the disease. Furthermore, opponents to a general
ban on imports argue that such actions could unnecessarily cause economic and social
hardship. The United States depends on global trade for necessities such as food, energy,
and medical supplies. Also, some observers point out that the nature of the “just-in-time”
global economy is such that the United States does not stockpile these and other
1 For more information on the avian flu, see CRS Report RL33219, U.S. and International
Responses to the Global Spread of Avian Flu: Issues for Congress, by Tiaji Salaam-Blyther; and
CRS Report RL33145, Pandemic Influenza: Domestic Preparedness Efforts, by Sarah A. Lister.

---

CRS-2
necessities. Finally, the World Health Organization does not recommend quarantining
any individual country or closing international borders at any phase of an avian influenza
pandemic.2 If international borders are not closed to human passage, then it follows that
there will probably not be direct trade restrictions.
While some experts believe that a general ban on imports either globally or from
affected regions is highly unlikely, others contend that the strategy cannot be totally ruled
out, particularly since there is already a U.S. ban on imports of poultry products from
certain H5N1 (highly pathogenic strain of avian influenza)-affected countries and
regions.3 Some experts argue that it may be possible to transmit the virus through any
object that has had contact with infected feces, blood, or other bodily fluids. Some policy
analysts predict that if the H5N1 virus were to become a pandemic with human-to-human
transmission, then the United States might control the movement of people across its
borders to slow the virus’ arrival on U.S. soil. This could involve limiting airline
passenger flights into the country, but it could also mean limiting entry of cargo ships due
to a fear of transmission from ship operators or stowaway birds. These types of
restrictions may result in a de facto import ban. Some experts believe these restrictions
are unnecessary and potentially harmful, but they might nevertheless be implemented to
give the appearance of strong preventative actions, in response to public concerns or
political factors. Many believe that if such restrictive measures were adopted, they would
likely be short-lived. Once the pandemic reached the United States, such measures would
appear to serve little further purpose and could be abandoned.
Another possible and perhaps more likely scenario is that a supply-side constraint
in the exporting country would limit U.S. imports. Pandemic-affected countries could
curtail their exports, either voluntarily or involuntarily. Governments may nationalize
assets and stop export operations. An outbreak may also constrain production and key
export infrastructure through excessive worker absences, to the point where exporting
becomes difficult and is involuntarily slowed or halted. Such a slowdown in commerce
could cause price increases or temporary shortages in certain goods within the United
States, depending on the duration and breadth of the slowdown.
Several studies have been undertaken to estimate the effects of a pandemic on the
U.S. and global economy. According to one study, a mild pandemic could reduce global
economic output by $330 billion, or 0.8% of global gross domestic product (GDP). The
same study estimates that a pandemic of the worst case scenario severity could reduce
global economic output by $4.4 trillion, or 12.6% of global GDP.4 The Congressional
Budget Office (CBO) estimates that a severe influenza pandemic might cause a decline
in U.S. GDP of about 4.25%, and that a milder pandemic might cause a decline of about
2 Influenza Pandemic Risk Assessment and Preparedness in Africa, World Health Organization
Regional Office for Africa, Brazzaville. 2005.
3 See CRS Report RL33795, Avian Influenza in Poultry and Wild Birds, by Jim Monke and M.
Lynne Corn.
4 Warwick J. McKibben, cited in John Reichard, “Models Show Pandemic Could Be Devastating,
But Flight Curbs Could Buy Valuable Time,” CQ Healthbeat News, October 19, 2006.

---

CRS-3
1%.5 Other studies have found both greater and lesser economic effects, depending on
the methodology and data used. Different studies also disagree on the extent to which
international trade would be disrupted by an avian flu pandemic.
Potential Impact of Trade Disruptions with Avian Flu-
Affected Countries and Regions
This section considers the potential economic and trade effects on the United States
of import disruptions from countries affected by avian flu, either as a result of border
closings in the United States or supply side constraints in the exporting country or region.
Only countries with human avian flu cases confirmed by the World Health Organization
(WHO) from January 2004 to January 2008 are considered, because these countries are
arguably more likely to experience trade disruptions due to avian flu. The relative
likelihood of import disruptions from one country or region over another is not
considered, because it is too difficult to ascertain.
Table 1. U.S. Trade with Avian Flu-Affected Countries
Number of
Share of
2006 U.S.
2006 U.S.
Rank -
Confirmed
total
Imports,
Exports,
Value of
Country
Human Cases,
cases in
millions
millions
2006 U.S.
2003-1/2/2008
2007
U.S. $
U.S. $
Imports
Azerbaijan
8
0%
716.14
231.08
80
Cambodia
7
14%
2,188.79
74.50
63
China
27
19%
287,772.79
55,224.16
2
Egypt
43
58%
2,393.38
4,103.78
60
Indonesia
116
35%
13,403.93
3,078.13
27
Iraq
3
0%
11,570.79
1,493.81
29
Thailand
25
0%
22,471.52
8,152.47
17
Turkey
12
0%
5,363.77
5,729.59
44
Vietnam
101
8%
8,566.33
1,100.21
34
Total
348a
24%
294,151.14
62,323.67
a. Total number of cases does not add up to 348 because countries with their first confirmed human cases
in 2007 are omitted. These countries include Djibouti, Laos, Myanmar, Nigeria, and Pakistan. Each of
these countries had one confirmed human case of H5N1 avian flu in 2007 except Laos, which had two.
S o u r c e : D a t a c o m p i l e d f r o m W o r l d H e a l t h O r g a n i z a t i o n , s e e
[http://www.who.int/csr/disease/avian_influenza/country/cases_table_2008_01_02/en/index.html], and
World Trade Atlas. All trade data in this report is from the World Trade Atlas unless otherwise noted.
5 “A Potential Influenza Pandemic: An Update on Possible Macroeconomic Effects and Policy
Issues,” Congressional Budget Office. Revised July 27, 2006.

---

CRS-4
China. As seen in Table 1, the United States imports far more from China than any
other country that has thus far reported confirmed human cases of the avian flu. In fact,
China is the second-largest source of U.S. imports overall, accounting for over 15% of
total U.S. imports in 2006.6 Therefore, if imports from China were disrupted on a large
scale over a long time period, it could have a significant effect on the U.S. economy.
However, a short-lived disruption in imports from China may not cause an immediate
crisis. Forty-four percent of U.S. imports from China are in the category of machinery or
electronic machinery, and include items such as computers, televisions, and parts. A
disruption in imports of these items could have implications for the domestic electronics
market, but it may have a less severe effect on the U.S. economy as a whole.
One import category of special concern is medical supplies; the United States
imported over $4 billion in optical and medical instruments from China in 2006,
representing 9.5% of such U.S. imports. Many, but not all, products in this category are
considered essential medical equipment. For example, China was the second-largest
supplier (after Mexico) of respirator equipment to the United States, supplying over 12%
of U.S. respirator equipment. China has also been an important supplier of bandages
(32% of U.S. imports in 2005), boxed first aid kits (20%), clinical thermometers (9%),
orthopedic appliances (10%), and syringes (13%).7 Some analysts contend that U.S.
hospitals must begin to adjust their inventory procedures to take a possible avian flu
pandemic into account, especially considering that medical supplies are sourced from
potential avian flu hot spots. Many of these essential medical supplies are reportedly not
manufactured in the United States.8
Almost 12% (about $1 billion) of fish and seafood imports into the United States are
from China, second only to Canada ($1.8 billion). China exported nearly $1 billion in oil
to the United States in 2005, but it was ranked 31st and supplied less than 1% of total U.S.
oil imports. It is not clear whether a trade disruption with China alone would have a great
impact on the U.S. food supply, since the United States also imports food from other
countries and regions, in addition to having domestic production. The loss of oil imports
from China would probably have little or no significant effect.
Although the United States imports a great deal from China, many of these products
originate elsewhere, and only their final stage of production takes place in China. For
some items, production could possibly be shifted to another location if a long-term trade
disruption were to occur. However, shifting production in the global supply chain may
have great costs or not be feasible for other reasons.
Thailand, Indonesia, and Vietnam. Thailand, Indonesia, and Vietnam have
similar patterns of exports to the United States, although in different volumes. Among
countries with confirmed human avian flu cases, Thailand is the second largest supplier
of U.S. imports. However, Thailand’s total 2006 exports to the United States were just
6 World Trade Atlas.
7 Ibid.
8 VHA Inc. Survey on Avian Flu Shows Some Hospitals Would Exhaust Supplies in Two Weeks,
VHA Press Release, March 16, 2006. [https://www.vha.com/portal/server.pt/gateway/
PTARGS_0_2_2043_271_0_43/http%3B/remote.vha.com/public/news/releases/060316.asp]

---

CRS-5
over $22 million, and it ranked 17th out of all exporters to the United States, with 1.2%
of the U.S. import market. Indonesia and Vietnam were ranked 27th and 34th, respectively,
with $13 million and $8.5 million in 2006 U.S. imports. Like China, Thailand’s main
exports to the United States are electrical machinery and machinery, comprising about
44% of Thailand’s exports to the United States. Thailand, Indonesia, and Vietnam all
export large quantities of fish to the United States. Thailand is the largest exporter of
prepared crustaceans and mollusks (the second largest is China), and the second largest
exporter of fresh crustaceans to the United States (after Canada). Indonesia and Vietnam
are the fourth and fifth largest suppliers of prepared crustaceans, and the third and fourth
largest suppliers of fresh crustaceans to the United States. Thailand and Indonesia also
export optical and medical instruments to the United States, ranking 22nd and 25th,
respectively, in 2006 U.S. imports. The United States imports medical supplies such as
dialysis instruments, diagnostic instruments, syringes, needles, and ultrasound devices
from Thailand and Indonesia.
In analyzing the trade data, it appears that if trade were disrupted between the United
States and any one of Thailand, Indonesia, or Vietnam, the effects would probably be
minimal. However, if U.S. trade was disrupted with all three countries and China, the
U.S. supply of seafood and medical supplies could be impaired. Reduced seafood imports
could increase not only the price of seafood, but it could cause increased demand and
possible price increases in substitute goods. The impact of reduced medical supply
imports could be more severe, possibly resulting in a shortage of certain medical supplies,
since substitutes are generally not readily available.
Iraq. Oil comprised 96.5% ($11.2 billion) of U.S. imports from Iraq in 2006,
representing 3% of U.S. oil imports. Iraq is the eighth-largest oil exporter to the United
States. If oil imports from Iraq were to stop, the reduced supply of oil could cause
domestic energy prices to increase. However, there are many factors determining
domestic energy prices, and other events could overshadow, exacerbate, or offset any
disruption of trade with Iraq due to an avian flu pandemic.
Other Avian Flu-Affected Countries. Egypt, Turkey, and Azerbaijan all
primarily export oil to the United States, though not in significant amounts relative to total
U.S. oil imports. In 2006, Egypt, Azerbaijan, and Turkey ranked 34th, 39th, and 50th,
respectively, in exports of oil to the United States. Turkey’s main export to the United
States was iron and steel in 2006, with 3% of the U.S. import market for iron and steel.
Cambodia’s and Azerbaijan’s overall exports to the United States are relatively small and
would likely have little impact on the U.S. economy if they were to be disrupted.
Poultry Trade. The United States is the largest global producer and exporter of
poultry, and the second-largest global producer and exporter of eggs. In 2003, U.S. farm
sales of poultry were $23.3 billion, while U.S. imports of poultry were only $42 million.
In 2006 the U.S. exported $2.24 billion in poultry, down from $2.49 billion in 2005.
Poultry exports to China have increased exponentially, from $15.7 million in 2004 to
$309.3 million in 2006. China is the 3rd largest importer of U.S. poultry, after Russia and
Mexico. The majority of U.S. poultry and egg imports are from Canada, which has not

---

CRS-6
been affected by the highly pathenogenic avian influenza, H5N1.9 Some observers argue
that as long as the United States remains unaffected by avian influenza the U.S. poultry
industry may be positively affected by outbreaks of avian influenza elsewhere, as it may
increase demand for U.S. poultry exports. On the other hand, news about avian influenza
cases in other countries could reduce consumer demand for all poultry, even if it is
considered influenza-free.
Potential Impact of Global Trade Restrictions
If the United States were to shut its borders to trade completely, the impact could
range from moderate to severe, depending on how long the restrictions were in place. A
very short-term trade shutdown of just a few days may not have significant long term
effects. As an example, in the days following September 11th, 2001, shipments to the
United States were slowed dramatically (though not stopped entirely) because of tightened
security at the borders. Once the borders were effectively reopened business resumed
with little if any economic impact from the slowdown in trade. A longer trade shutdown
could have greater implications, both domestically and globally. Much would also
depend on how Wall Street reacted. A sharp fall in financial markets would be likely, but
the question is how resilient the U.S. economy would be. Many countries rely on the
United States as an export market. The loss of that market even temporarily could cause
economic hardships around the world and contribute to the beginning of a possible global
economic slowdown.
The United States is a large economy and does not rely on trade to the same extent
as smaller economies, but it is not self-sufficient. There could possibly be an oil shortage,
and energy prices could increase. Oil might not be available to all who need it. This
would have implications for the rest of the economy, as transportation costs increase and
cause price increases for goods across the economy. Also, many U.S. businesses rely on
imports, both for intermediate goods and consumer products. It is difficult to determine
which individual products could be in short supply, because many consumer goods that
are generally not considered imported products depend on imports at some stage of their
production. Also, some consumer goods that are imported have substitutes that may be
produced in the United States.
9 For more information on potential effects on the U.S. agricultural economy, see CRS Report
RL33795, Avian Influenza in Poultry and Wild Birds, by Jim Monke and M. Lynne Corn.

---