Trade laws and global pandemic

Balancing rights 

International trade and global public health are intricately linked with each other. Studies have shown that free and fair trade if coupled with sound public health policies can better achieve global public health goals. The wake of the COVID-19 pandemic demands this sound collaboration where the world stands affront challenging circumstances, as such, implausible to have foreseen or prepared for. Today’s world among the other issues is currently most concerned about the solution which is effective vaccine. World Trade Organization lays down the due process for the development and delivery of COVID-19 vaccines around the world. 

Process:

  1. The first step towards it is vaccine development: universities, private sector, government and NGOs develop vaccines and are met with intellectual property rights where they are to obtain IP status such as patents, trademarks, industrial designs, copyrights and are required to share trade secrets and test data I the due process to obtain a license. 
  2. The second step is to obtain domestic approval: the small-scale studies are checked for their pharmaceutical qualities. It then goes to moves forth to non-clinical; in vitro and in vivo checks to reach to clinical three trial phases. Being done all that the vaccines reaches the evaluation and decision stage where the vaccine is judged under the parameters of safety and efficiency. The approval is granted by WHO and/or Regulator as either emergency use authorisation or standard approval. 
  3. When it reaches the third stage of vaccine manufacture post approval, it is restricted via COVID-19 trade controls for export and import procedures. 
  4. Once approved by the exporter (domestic authority), the international distribution commences where the custom and IP border measures are to be dealt with. 
  5. Boarder clearance is granted post tariffs, other duties and charges, and internal taxes via customs and other border agency approvals.

Cross-border collaborations hold a high degree of significance in today’s world, such as Gavi the alliance is using a market-shaping approach to secure sufficient and uninterrupted vaccine supply, minimise vaccine costs, and ensure appropriate and quality products. Multiple measures have been taken and mentioned by different nations out of which Advance Market Commitments are commonly used measures where the buying party contracts with the selling party to purchase a specific number of doses (conditions- negotiated price, vaccine developed and licensed and proceeds to manufacture). 

Though the WTO website and reports demonstrate how protocols and plans are formulated for damage control of the ‘humanitarian crisis caused by COVID-19 on global scale’; OECD Interim Economic Outlook concludes that the global GDP of first half of 2020 had seen 13% decline necessitating less restrictive trade flow, however on the contrary, nations are restricting trade flow due to the fear of export restrictions, quality concerns and most of health risk.  By 26th April 2020, at least 75 governments had banned or restricted exports of medical supplies and medicines. The COVID 19 restrictions imposed can fall under the broad scope of ‘other measure’ as countries have invoked only quantitative export restrictions and not export duties. Measures made by several countries as a form of commitment are as follows; 

  1. “Emergency measures designed to tackle COVID-19, if deemed necessary, must be targeted, proportionate, transparent, and temporary, and that they do not create unnecessary barriers to trade or disruption to global supply chains, and are consistent with WTO rules”.
  2. “New Zealand and Singapore initiated and agreed to the Declaration on Trade in Essential Goods for Combating the COVID-19 Pandemic. This Declaration is open for signature by other countries and commits participants, inter alia, (i) to “eliminate all custom duties” and (ii) not to apply “export prohibitions or restrictions, within the meaning of Article XI:1 of the GATT 1994” with respect to all products listed in Annex I to the Declaration. Participants will also “endeavor to not apply export prohibitions or restrictions with respect to the products listed in Annex II, unless they fall within exceptions set out in GATT 1994”
  3. 26 WTO member which account to 63% of global exports and 55% of global imports (excluding China and India) decided to “refrained from imposing export restrictions on agriculture”. Additionally, they agreed that the emergency measures designed to tackle COVID 19 related to agriculture and food must target transparency and limited time frame.   

Contrary to the aforementioned, halt in the shipment of vaccines from India’s largest vaccine manufacturer Serum Institute of India (SII), under the WHO’s Covax scheme has affected 190 countries as WHO aimed the scheme for fair distribution of vaccine in nations. India took the claim of sudden rise in COVID cases in the nation therefore the vaccines are rather made available for the citizens. India also banned the exportation of ventilators and sanitisers. India is invoking Article XX (b), which in today’s situation might seems rather evil.  

Profs. Evenett and Winters who presented a note on “bargain” between medicinal products and medicine imports and export, it can be proposed that;

  1. Importers would eliminate import tariffs 
  2. Guaranteed drop in the export restrictions by exporters 
  3. Time and product coverage limitation.

We know that the backbone of trade governed by WTO are the three principles;

  1. Article I of GATT governing trades and goods.
  2. Article II of GATT i.e., the Most Favoured Nation (MFN) treatment. 
  3. Article IV of GATT which governs the agreements on trade related aspects of intellectual property rights. 

GATT also provides under Article XX (b) rights to take measures restricting imports and exports, when necessary, fundamentally for health of humans, animals and plants. This demonstrates the autonomy WTO provides the member nations with, for the protection of health. TRIPS however do not contain any such exception for health purposes, nonetheless Article 8 of TRIPS allows measures necessary to protect public health and nutrition whilst they are consistent with TRIPS.  

Along with vaccine shipment, manufacturing IPR is a highly debated policy in the wake of novel virus. Whilst balancing IPR rights and access to medicines is not new to WTO, as same was a topic of debate for HIV/AIDS drugs, India and South Africa revisited the debate and proposed policy change leading to more flexibility in IPR laws under TRIPS in lieu of today’s situation. Though the proposal always stands opposed via pharmaceutical companies for obvious profiting reasons and business approach, compulsory licensing of the vaccines should be revisited to increase the movement of vaccines, also suggesting “unhindered movement of vaccines across custom checkpoints and free shipment of medical products”. There is a proposal to increase the transparency of vaccine manufacture i.e., to obtain license the manufacturing cost has to be released. Several countries even want IP laws to be completely waive-red off in case of vaccines however, as defined by Article 7 of TRIPS, intellectual property rights serve as incentives for innovation which has governed the drive of long-term economic growth and enhanced quality of human life. 

Article 8 of TRIPS speaks on the Trade-Related aspects of Intellectual property rights that, “may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health … provided that such measures are consistent with the provisions of this Agreement”. However, the concerns if manufacturing companies on unpenalised copying of vaccine formula are genuine as it can lead to development of new viruses and would undermine the innovation. The reasoning behind lifting the veil of IPR form vaccine manufacturer is because of the incapacity of countries like South Africa to undergo institutional and legal difficulties hence slowing down the ability of production for compulsory licensing.

While concerning compulsory licensing, it is license that provides other nations to manufacture patented products without the consent of the patent owner. Article 31 of TRIPS provides for “other use without authorisation of right holder” which covers the practice of compulsory licensing. Article 31(h) of TRIPS states that even when compulsory licensing is issued, adequate renumeration must be paid to the patent holder which makes it an add on price over manufacturing costs, which poor countries are unable to afford, more so in the world of declining GDP. Even WTO hold the view that access to medicines and vaccines depends upon the critical elements of affordable prices, rational selection and use, sustainable financing and reliable supply system. Several measures exist for making drug prices more accessible for poor or low-income countries, import duties are decreasing for drugs, vaccines, medical supply as global, regional and bilateral agreements to reduce tariffs come into effect.  

A midway between the “rights and the wrongs” is not another prolonged multilateral impasse inside WTO rather the actions of internal institutions, international endeavours outside WTO. Focusing and analysing the source of such proposed waivers of policies in today’s post pandemic world, the developed nations should put more efforts in ensuring that there are least obstacles in access to affordable medicines for everyone whilst carrying the soul of the provisions along. If all said above is pondered over and the link between international trade and global public health is strengthened with strategies to regulate tariffs and accessibility of medicines, vaccine and medical supplies judiciously because fair trade if coupled with sound public health policies can better achieve global public health goals.

References

  1. World Trade Organization, Developing and Delivering COVID-19 vaccines around the world; https://www.wto.org/english/tratop_e/covid19_e/vaccine_report_e.pdf
  2. COVID-19 and international trade: Issues and actions, updated on 12 June 2020; https://www.oecd.org/coronavirus/policy-responses/covid-19-and-international-trade-issues-and-actions-494da2fa/ 
  3. Joost Pauwelyn, EXPORT RESTRICTIONS IN TIMES OF PANDEMIC: OPTIONS AND LIMITS UNDER INTERNATIONAL TRADE AGREEMENTS
  4. G20 Trade and Investment, Ministerial Statement, 30 March 2020
  5. Declaration on Trade in Essential for Combating the COVID-19 pandemic, 15 April 2020
  6. BBC News, Coronavirus: India temporarily halts Oxford-AstraZeneca vaccine exports; https://www.bbc.com/news/world-asia-india-56513371
  7. Simon Evenett and Alan Winters, Preparing for a Second Wave of COVID-19: A Trade Bargain to Secure Supply of Medical Goods, Global Trade Alert, 26 April 2020.

Aishwarya Says:

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