Trade
Getting trade policy right is crucial to global COVID-19 vaccination
Author: Ken Heydon, LSE
The death rate in India from COVID-19 has reached alarming levels and that’s intensified attention on trade in the provision of vaccines to help.
Trade is a crucial element in the fight against the pandemic. Some countries, such as China, have sought credit for providing vaccines to others, while cooperation via the COVAX initiative has seen vaccines shipped from India’s Serum Institute to some of the poorest countries in the world.
But trade policy has also been a serious impediment to the free flow of vaccines, vital vaccine inputs and the knowledge behind their production.
At critical times, several countries — including the United States, the European Union and more recently India — have placed embargoes or administrative impediments on the export of vaccines. Perversely, India has also had a 10 per cent customs duty on imported vaccines.
Restrictions have also been placed on the materials needed for vaccine manufacture. In February, the invocation by the United States of the Defense Production Act — which requires US suppliers of materials and equipment for vaccine production to seek approval to export — put global access to 37 critical vaccine inputs at risk.
Adar Poonawalla, the head of India’s Serum Institute, has linked the global shortage of bioreactor bags — critical in the vaccine supply chain — to the US policy of prioritising domestic production. The potential for supply disruption through policy interference is stark: the Pfizer vaccine needs 280 components from 86 suppliers in 19 countries.
Within the ongoing debate about intellectual property rights, the United States has now expressed support for the proposal initiated at the WTO by India and South Africa to temporarily waive them on COVID-19 vaccines, including on the messenger RNA technologies used in the Pfizer–BioNTech and Moderna vaccines and on those used in the adenovirus vaccines produced by Oxford–AstraZeneca. Nevertheless, even if the waiver receives the necessary support of all 164 WTO members, this will not prevent intellectual property right restrictions from stopping developing countries from acquiring knowledge on new techniques to design vaccines and to develop the cell lines needed in vaccine manufacture.
Ensuring the free flow of necessary inputs within the supply chain is vital to fostering global vaccine production. On 14 April 2021, WTO Director-General Ngozi Okonjo-Iweala met with government and industry representatives to discuss ways of strengthening supply chains. A guiding principle in facilitating trade will be the provision in GATT Article XI that any restrictions on export be temporary, noting that even a ‘temporary’ restriction can be highly disruptive within a complex global supply chain.
More ambitiously — with a focus on facilitating cooperation rather than just avoiding restrictions — there may be scope to build on the Trade and Health Initiative proposed by a group of WTO members in late 2020. This would involve the establishment of an internationally coordinated program of fragmented and subsidised production of vaccine components.
The key here would be the need to overcome the reticence of countries that do not have the public health incentive to provide subsidies at the scale required to satisfy global demand. Those countries would only enjoy the ‘externality’ benefit of solving their own public health crisis if they were guaranteed access to other countries’ vaccine output through trade.
Further ahead, the trade regime will need to be better aligned with the pursuit of knowledge to deal with future pandemics, including those arising from variants of SARS-CoV-2, against which current vaccines are likely to be less effective.
Notwithstanding the complexities arising from the paradox of patents — namely, restricting knowledge now to increase it in the future — action is still possible that would go beyond a temporary waiver.
More should be done within the WTO to implement changes to the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement, intended to improve developing countries’ access to medicines. In 2010, India and Brazil initiated WTO dispute settlement actions and argued that repeated seizures on patent infringement grounds of generic drugs — originating in India and transiting through the Netherlands to reach other developing countries — were inconsistent with the TRIPS Agreement. The case has languished but there is still scope via TRIPS Article 31 to clarify the issue of seizure of drugs in transit.
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Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
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