WTO Members Should Use Their Upcoming Ministerial To Improve Our Ability To Respond To A Health Crisis
17.11.21
Governments will face a daunting task at the World Trade Organization’s 12th Ministerial Conference (MC12) later this month. Several of the issues on the agenda have long been contentious, and WTO members have increasingly seen them as zero-sum games in which some countries gain while others lose. The political consensus on the benefits of trade for all, which underpinned the creation of the WTO in 1995, has become an all too rare commodity.
The increase of protectionism during the COVID-19 crisis has been particularly damaging to the world economy and to our efforts to overcome the current pandemic. In addition to the fundamental need to safeguard innovation for any durable pandemic response, enabling the flow of critical goods at all stages has to be a core task. By disrupting global supply chains, trade restrictive measures have however made the task of developing, and then producing, vaccines for COVID-19 even more challenging. The complexity of vaccine manufacturing, and of procuring the ‘ingredients’ needed for them, is such that no country can be certain to be in a position to produce all the vaccines it needs. The solution may seem paradoxical to some governments, yet it is as simple as it is efficient: WTO members should adopt the Trade and Health Initiative (TAHI) put forth by the so-called Ottawa Group – and where possible drive the highest ambition levels. Comprised of Canada, the EU and a growing field of WTO members, the group’s current proposal[1] identifies a number of elements that would allow us to better respond to a health crisis.
Firstly, TAHI calls for measures to contain export restrictions. The surge in demand for healthcare products manifested itself in different ways at different times across countries and regions. Having rules in place to allow goods to go where and when they are needed would be another significant contributor to a successful response to a health emergency. This would also increase supply resilience for all countries, allowing producers to compensate for disruptions across their network, or even for other producers to step in.
Secondly, TAHI outlines the importance of facilitating the trade of essential goods during a health crisis. This could include aligning on regulatory rules and standards for key medical goods, or supporting a shift to digital customs procedures. The proposal also highlights the contribution that trade can make to one of the thorniest issues we have faced, that of an equitable distribution of essential medical goods and COVID-19 vaccines. Concerted efforts to increase manufacturing capacity and investment are inherently challenging. The intended benefits of such efforts will not be achieved unless suppliers and producers know that they can rely on an open and free trading system.
Thirdly, it calls for best endeavours in abolishing tariffs on pharmaceutical and medical goods. Imposing tariffs, which increase the price of needed therapies and vaccines, ultimately leads to higher prices for healthcare systems and patients. In countries where healthcare is provided through government-run insurance schemes, any revenue generated by tariffs then becomes an additional cost for health budget.
Yet, many countries continue to levy tariffs on finished goods and the raw materials and inputs needed for the development and production of biopharmaceuticals. Eliminating all such tariffs would be a critical enabler for increased, and more geographically diverse, manufacturing of biopharmaceuticals. The public and private sectors alike will always need to find a balance between achieving economies of scale and supply resilience. A blind rush into building an expansive network of manufacturing facilities will come at great cost and be counterproductive. Economically viable projects depend on the right framework, which goes beyond tariffs and includes e.g., infrastructure, qualified personnel and regulatory capabilities. It is also the only sustainable way to have new biopharmaceutical production come online.
TAHI also seeks to take concrete steps to increase transparency and review of trade measures. The experience of companies during the pandemic has been that open dialogue helps – be it when trying to get goods across borders in lockdowns, when trying to determine patient supply needs during unprecedented demand surges, or trying to anticipate where government restrictions may be heading.
Finally, the TAHI proposal seeks to strengthen collaboration and resilience in any wider pandemic response, including on expanding production. As our industry has demonstrated, with over 300 manufacturing partnerships to date, collaboration can work wonders when the conditions are in place
The steps above would deliver immediate improvements to the COVID-19 response, and our industry also outlined a series of measures to strengthen the global trade and health agenda in a recent paper[2]. We can’t know what the next health crisis might be, only that its day will come. These steps would also, more importantly, allow us to be better prepared going forward.
It’s become somewhat of a cliché to write that a global crisis requires a global answer. On health, we are convinced that the world has the means to provide such an answer. The biggest challenge may well be, as the EU noted in its concept paper on TAHI, that this answer will require “a great degree of coordination and self-discipline” on the part of WTO members. We encourage governments to seize the opportunity to come out of MC12 with the world better positioned to deal with this crisis and to be better prepared for the next one. Even if an agreement cannot be reached on all the thorny issues on the WTO’s agenda in Geneva, COVID-19 has shown that an initiative such as TAHI would benefit us all.
[1] https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/GC/W823.pdf&Open=True [Accessed 2021-11-09]
[2] https://www.efpia.eu/media/624944/wto-twelfth-ministerial-conference-a-critical-opportunity-to-strengthen-the-global-trade-and-health-agenda.pdf [Accessed 2021-11-09]
