WTO COVID Trade Negotiations

World trade of medical goods in times of COVID -19 – Global Cooperation or to each his own?

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The world is grappling with the Coronavirus pandemic; the likes of which are being compared to the Spanish Influenza of 1918, the last century pandemic that took place in war times and in a world economy setting where free access markets were non – existent. Countries did not have a supportive outlook as to supply chains and most of the international bodies for cooperation were not in the ecosystem. Yet the question that begs to be answered is, are we any better equipped when it comes to the distribution of goods and supply, even to the worst hit and the poorest?

Apparently not, if recent trade reports and policy briefings are to be believed member nations of the World Trade Organization have reduced tariffs and other barriers when it comes to import of medical goods but have not followed the same relaxation regime for export of such goods, instead choosing to curtail exports. Can we term this as hoarding or follow the corollary that Members are choosing to look out for themselves and this is a survival of the fittest? From past lessons we know that Countries cannot survive on their own and tackling COVID-19 requires a global response and one that includes regulations for trade facilitation, sharing of resources. Ultimately a pandemic of this scale requires keeping supply chains open for better health, preventing outbreaks in import reliant countries, and stop second or third waves from occurring that could affect anyone, anywhere.

Medical goods are classified into four categories: (1) medicines (pharmaceuticals); (2) medical supplies, such as hydrogen peroxide, disinfectants, gauze, surgical gloves, plaques for x-rays, syringes and catheters; (3) medical equipment, including sterilizers, microscopes, x-ray devices and thermometers; and (4) personal protective products, namely, hand soap, hand sanitizers, face masks, protective visors, and other cleaning products. Among all medical equipment, those supporting respiratory functions and providing oxygen therapy are some of the most important for the treatment of COVID-19 patients in intensive care units.

To understand the barriers of trade and their application on pharmaceuticals and non-medicinal goods that come under the health care category, used for fighting COVID – 19 we need to look at the Barriers of trade (TBT) and the various Regional Trade Agreements (RTAs). Starting with the Asia Pacific Economic Cooperation (APEC) member nations[1], their global average of most favored nation (MFN) tariffs imposed on medical goods is 3% lesser than the other WTO members but are imposing the highest tariff rates on personal protective equipment like with strength of 80 percent or above, a common ingredient in hand sanitizers; it is important for hygiene and helps prevent the transmission of COVID-19 as it is effective in killing microorganisms, fungi, and viruses. However, it has the highest average MFN tariff among all medical goods in APEC, at 76.6 percent. Ten APEC economies impose MFN tariff rates equal or higher than 10 percent on ethyl alcohol and on face masks made of textile materials. important medical supplies worn by medical staff such as gloves made of vulcanized rubber, protective spectacles and visors, and clothing made of plastic sheeting appear in the list of products with the highest average MFN tariffs in APEC. Other personal protective products such as plastic face masks, hand soap, and other cleaning products also show high average MFN tariffs.[2]

A snapshot of other regional agreements provides us with a picture that respirators and ventilators do not form a part of the goods on which such agreements are drawn upon but generic drugs do, with India leading the way in supply of abundant drugs such as Hydroxychloroquine, a malarial drug which was said to be a part of COVID 19 treatment programs. The EU-Korea Agreement, for example, contains provisions to facilitate access to high-quality pharmaceutical products and medical devices through increased cooperation and transparency on pricing and reimbursement of such products. Each party will consider requests by the other party to accept conformity assessments of that party when performed in accordance with good laboratory and manufacturing practices based on international practice. In their RTA, the European Union and Singapore agree to enhance cooperation between their respective health authorities, based on international standards and practice. As in the EU-Korea Agreement, they agree on the objective, fair, reasonable, and non-discriminatory criteria, rules and procedures for listing, pricing, or reimbursement of pharmaceutical products. They also agree to be transparent in their measures of general application related to pharmaceutical and medical products, including by making such measures publicly available before they come into force and by giving interested parties an opportunity to comment on the measures. The RTA between Japan and India aims to increase cooperation on generic medicine to build mutual confidence in the regulatory measures of the parties. The India-Singapore Agreement, through an exchange of letters, is more specific and establishes a special scheme for registration of generic medicinal products from India provided that they have been evaluated and approved by anyone of the regulatory authorities in the United States, the United Kingdom, Australia, the European Union, and Canada. In the plurilateral Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which is currently in force for seven parties, there are annexes on pharmaceuticals and medical devices that cover the preparation, adoption, and application of technical regulations, standards, conformity assessment procedures, marketing authorization and notification procedures for trade.[3]

Eighty countries and customs territories have banned or limited the export of face masks, protective gear, gloves, and other goods to mitigate shortages since the coronavirus outbreak began, the World Trade Organization it was reported on 23rd April 2020 with the WTO further in its statement adding that bans were imposed by 72 WTO members and eight non-WTO member countries, but only 13 WTO members had notified the global trade body as required by its regulations.[4]

It will not be out of context here to add that Member nations have also restricted the flow of international trade finances, investments, and food supplies which are as crucial for survival in a pandemic stricken environment. India has posed restrictions on pulses export for example. With a restriction on movement, cargo, and marine transport it is essential that supply chains be kept open.

The last round of free trade access meetings in WTO was on 8th June 2020, where India asked for better access to vaccines and other medical equipment. Member Countries raised their trade concerns and urged nations to facilitate trade. It would be interesting to note what world leaders do next where trade is concerned. Will we truly benefit and stand united from a globalized world economy? Only time will tell.

With WTO and IMF heads urging for lifting of trade restrictions what must be focused on is a collective stand on ancillary medical goods like personal protective equipment and respirators such as the one that covers pharmaceuticals included in Uruguay round of negotiations known as the Trade in Pharmaceuticals Agreement that controlled tariffs on medicines and substances used to produce them. This way we can ensure cheaper and widespread distribution. Any change in trade policies at this point will unintentionally cause confusion in international markets thus multi-lateral trade should not be negated due to domestic demand.


External Links – References.

[1] APEC Policy Support Unit POLICY BRIEF No. 32, Carlos Kuriyama April 2020 – Promoting Trade in Medical Goods To Tackle COVID-19 Challenges

[2] World Trade Organization (WTO). 2020. “Trade in Medical Goods in the Context of Tackling COVID-19”. Information note. https://www.wto.org/english/news_e/news20_e/rese_03apr20_e.pdf

[3] WTO – 27.04.2020. THE TREATMENT OF MEDICAL PRODUCTS IN REGIONAL TRADE AGREEMENTS – INFORMATION NOTE

[4]https://www.weforum.org/agenda/2020/04/wto-report-80-countries-limiting-exports-medical-supplies/

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Srishti Banerjee

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