Posts By Terence P. Stewart

COVID-19 — Efforts to help India during its current surge of cases, hospitalizations and deaths

India has been setting daily records for new infections almost every day for the last week or so and reported more than two million infections in the last week. See European Centre for Disease Prevention and Control, COVID-19 situation update worldwide, as of week 16, updated 29 April 2021, https://www.ecdc.europa.eu/en/geographical-distribution-2019-ncov-cases; European Centre for Disease Prevention and Control, Data on 14-day notification rate of new COVID-19 cases and deaths, https://www.ecdc.europa.eu/en/publications-data/data-national-14-day-notification-rate-covid-19 (week 15, 1,534,202 new cases reported; week 16, 2,056,121 new cases reported). Thus, India is the first country to record more than two million cases in a single week and the second to record more than three million in a two week period (the United States exceeded three million during the two weeks 50 and 51 of 2020). With total cases reported by India of 17,118,040, India has the second largest number of cases after the United States (32,125,099) but has a population more than four times that of the United States. However, press reports suggest that information on COVID-19 cases and deaths in India are substantially underreported, perhaps representing only 10-20% of actual cases and deaths. See, e.g., New York Times, As Covid-19 Devastates India, Deaths Go Undercounted, April 24, 2021, https://www.nytimes.com/2021/04/24/world/asia/india-coronavirus-deaths.html.

What is clear is that India is being overwhelmed at the present time with India’s health care system struggling to handle the huge number of people needing assistance, with many hospitals unable to handle the case load, with acute shortages reported on oxygen, ICU beds and much more. See, e.g., The Financial Times, Editorial Board, The tragedy of India’s second wave, April 26, 2021, https://www.ft.com/content/90281790-fb9e-468c-b3fa-c7549bd3bb39 (“The suffering of the Indian people in the country’s second wave of Covid-19 is a human tragedy on a vast scale. It is also a warning, and a danger, for the world. Many nations have been through dark times in the global pandemic; several with smaller populations still have higher death tolls. But with reports of people dying in the streets outside overwhelmed hospitals running short of oxygen, India today perhaps most closely resembles the worst-case scenarios painted when the virus was identified 16 months ago.”); New York Times, ‘This Is a Catastrophe.’ In India, Illness Is Everywhere, April 27, 2021, https://www.nytimes.com/2021/04/27/world/asia/India-delhi-covid-cases.html. The extent of human suffering from people not able to obtain timely care has been described by the Director-General of the World Health Organization as “beyond heartbreaking”. World Health Organization, Director-General’s opening remarks at the media briefing on COVID-19 – 26 April 2021, 26 April 2021, https://www.who.int/director-general/speeches/detail/director-general-s-opening-remarks-at-the-media-briefing-on-covid-19-26-april-2021.

Many countries, the WHO and business organizations and others are scrambling to provide assistance to India. See, e.g., MENAFN, Euronews, EU, UK and US offer support as COVID-19 ‘swallowing’ people in India, 27 April 2021, https://menafn.com/1101987528/EU-UK-and-US-Offer-Support-as-COVID-19-Swallowing-People-in-India; Politico, Von der Leyen: EU preparing ‘rapid’ assistance to COVID-hit India, April 26, 2021, https://www.politico.eu/article/eu-india-coronavirus-crisis-variant-asia-ursula-von-der-leyen/; U.S. Chamber of Commerce Foundation, India COVID Crisis: How Businesses Can Help, April 27, 2021, https://www.uschamberfoundation.org/event/india-covid-crisis-how-businesses-can-help; Reuters, WHO steps up aid to India to stem COVID surge, 27 April 2021, https://www.reuters.com/world/india/rush-hospitals-big-gatherings-worsen-india-covid-crisis-who-2021-04-27/..

In the United States, the Biden Administration has indicated it is providing assistance and yesterday released a fact sheet on actions being taken. See White House Briefing Room, FACT SHEET: Biden-Harris Administration Delivers Emergency COVID-19 Assistance for India, April 28, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/28/fact-sheet-biden-harris-administration-delivers-emergency-covid-19-assistance-for-india/. The fact sheet is copied below.

“Reflecting the United States’ solidarity with India as it battles a new wave of COVID-19 cases, the United States is delivering supplies worth more than $100 million in the coming days to provide urgent relief to our partners in India.  In addition, U.S. state governments, private companies, non-government organizations, and thousands of Americans from across the country have mobilized to deliver vital oxygen, related equipment, and essential supplies for Indian hospitals to support frontline health care workers and the people of India most affected during the current outbreak.  U.S. Government assistance flights will start arriving in India on Thursday, April 29 and will continue into next week.

“Just as India sent assistance to the United States when our hospitals were strained early in the pandemic, the United States is determined to help India in its time of need.

“Immediate U.S. Emergency COVID-19 Assistance

“The United States is providing: 

“- Oxygen Support:  An initial delivery of 1,100 cylinders will remain in India and can be repeatedly refilled at local supply centers, with more planeloads to come.  The U.S. Centers for Disease Control and Prevention has also locally procured oxygen cylinders and will deliver them to support hospital systems in coordination with the Government of India.

“- Oxygen Concentrators: 1700 oxygen concentrators to obtain oxygen from ambient air, these mobile units provide options for flexible patient treatment.

“- Oxygen Generation Units (PSA Systems): Multiple large-scale units to support up to 20 patients each, and additional mobile units will provide an ability to target specific shortages. A team of U.S. experts will support these units, working hand-in-hand on the ground with Indian medical personnel. 

“- Personal Protective Equipment: 15 million N95 masks to protect both patients and Indian health care personnel. 

“- Vaccine-Manufacturing Supplies:  The U.S. has re-directed its own order of Astra Zeneca manufacturing supplies to India.  This will allow India to make over 20 million doses of COVID-19 vaccine.

“- Rapid Diagnostic Tests (RDTs):  1 million rapid diagnostic tests – the same type used by the White House — to provide reliable results in less than 15 minutes to help identify and prevent community spread.     

“- Therapeutics:  The first tranche of a planned 20,000 treatment courses of the antiviral drug remdesivir to help treat hospitalized patients.

“- Public Health Assistance: U.S. CDC experts will work hand-in- hand with India’s experts in the following areas: laboratory, surveillance and epidemiology, bioinformatics for genomic sequencing and modeling, infection prevention and control, vaccine rollout, and risk communication.

“U.S. Support for India from the Outset of the Pandemic 

“The United States and India have closely worked together to respond to the COVID-19 pandemic.  U.S. COVID-19 assistance has reached more than 9.7 million Indians across more than 20 states and union territories, providing life-saving treatments, disseminating public health messages to local communities; strengthening case-finding and surveillance; and mobilizing innovative financing mechanisms to bolster emergency preparedness: 

“- Partnered with more than 1,000 Indian healthcare facilities to strengthen preparedness, including training of over 14,000 people on infection prevention and control.

“- Helped keep more than 213,000 frontline workers safe — including risk mitigation training for doctors, nurses, midwives, community volunteers, sanitation workers, and others who are actively responding to COVID-19 in India.

“- Launched joint public messaging with UNICEF on COVID prevention that has reached more than 84 million people.

“- Provided 200 state-of-the-art ventilators to 29 healthcare facilities in 15 states to care for critically-ill COVID-19 patients.

U.S.-India Health Partnership: Seven Decades Strong

“- For seventy years, U.S. public health experts from across the government, including USAID, HHS, CDC, FDA, and NIH, have worked in partnership with Indian officials to improve the health of India’s most vulnerable communities and the well-being of its people. 

“- Over the last 20 years, U.S. foreign assistance to India has exceeded $2.8 billion, including more than $1.4 billion for health care. 

“- The United States, India, and other partners have worked together to reduce new HIV infections by 37 percent between 2010 and 2019.

“- Since 1998, the United States and India have worked together to combat tuberculosis (TB) through improved patient-centered diagnosis, treatment and prevention, helping treat 15 million people with the disease.

“- In the last five years, the United States has helped 40 million pregnant women receive vital health information and services.

“- The United States, in partnership with the Government of India and World Health Organization, has supported initiatives at the District, State and National level to build frontline disease detection capacity.

“- The United States and India are working together to advance global health security and fight outbreaks before they become pandemics.”

Conclusion

India is a critical part of the global effort to vaccinate the world both with vaccines developed within India and with vaccines (e.g., AstraZeneca and Novavax) that are licensed for production in India with large commitments to supply COVAX for distribution to low- and middle-income countries and with other vaccines licensed from other countries (China and Russia). The immediate challenges in India has shifted the focus of the Indian government and its vaccine producers to supply almost exclusively for the Indian market while India struggles through the current surge in new cases and hospitalizations. The focus of the world on the need to help India is an interesting departure from the discussion of vaccine distribution based on population that has dominated focus through March.

Many parts of the world have been able to keep the COVID-19 pandemic under control to a large extent and hence have relatively few COVID-19 cases. Other countries — the U.S., India, Brazil, the EU countries and UK — have had far less success in controlling the spread of COVID-19 and have recorded very large numbers of cases, hospitalizations and deaths.

In a prior post, I reviewed that if one looks at percent of vaccinations compared to the percent of COVID-19 cases, there has been better matching for many countries (U.S., EU, UK, India) while a few major vaccine producers have much larger vaccinations as a percent of global vaccinations compared to the share of global COVID-19 cases they have. See April 18, 2021, WTO’s April 14th virtual meeting to review COVID-19 vaccine availability, https://currentthoughtsontrade.com/2021/04/18/wtos-april-14th-virtual-meeting-to-review-covid-19-vaccine-availability/.

Looking at current data, China has achieved the largest number of vaccinations — 235,976,000 vaccinations or 21.82% of global totals til April 28, 2021) — but a very low percent of global COVID-19 cases — 102,384 cases or 0.07% of global cases. The U.S. has the largest number of cases and second largest number of vaccinations (21.79% of cases; 21.69% of vaccinations). India has the second largest number of cases and the third largest number of vaccinations (11.61% of cases; 13.86% of vaccinations). The EU (27 countries) has 20.46% of COVID-19 cases (2nd largest if looking at the 27 countries together) and 12.75% of vaccinations. The United Kingdom has 2.99% of cases and 4.39% of vaccinations. Brazil has 9.75% of cases (3rd highest for an individual country) and 4.17% of vaccinations.

Both China and India are major vaccine producers and have comparable populations. But China has had only 0.6% of the COVID-19 cases that India has had, but has 157.45% of the vaccinations that India has accomplished. Vaccination data is from Bloomberg, More than 1.08 Billion Shots Given: Cover-19 Tracker, updated April 28, 2021, https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution/.

The problems India is facing are daunting and emphasize the need for the global community to respond to emergencies as they arise while global production of vaccines continue to ratchet up in the coming months. That doesn’t mean that efforts to roll out vaccines to all countries is not an important initiative (COVAX has now shipped more than 48 million doses to 120 countries and various countries are shipping vaccines to ow- and middle-income countries outside of COVAX). But pandemics do not wreak havoc uniformly across the world. Fires need to be addressed urgently while capacities are increased to deal with all needs. The last several weeks have shown India to be suffering such a “fire”. Diverting resources from other parts of the world to India makes sense at the moment. Brazil’s fire continues as well and undoubtedly needs more attention.

While vaccines will help get the world out of the pandemic, all countries need to be vigilant on the non-vaccine tools available to minimize the spread of the pandemic within markets until there is sufficient vaccine capacity to address all needs — capacity that should be here by the end of 2021.

WTO and forced labor in cotton — Commentary by Amb. Dennis Shea, former Deputy U.S. Trade Representative

Ambassador Dennis Shea served as U.S. Permanent Representative to the World Trade Organization during the Trump Administration. He is now an Adjunct Fellow (Non-resident), Scholl Chair in International Business at the Center for Strategic & International Studies (CSIS). Today a commentary of Amb. Shea was posted by CSIS. See CSIS Commentary, Dennis Shea,The WTO Can Help Shine a Spotlight on Forced-Labor Practices in Xinjiang’s Cotton Industry, https://www.csis.org/analysis/wto-can-help-shine-spotlight-forced-labor-practices-xinjiangs-cotton-industry.

Amb. Shea notes that there is an upcoming “dedicated discussion” on trade developments on cotton at the WTO on May 28. His commentary states that

“For next month’s dedicated discussion to have credibility, it must examine the trade impact of the use of forced labor to pick cotton in China’s Xinjiang province. In light of what we have learned about forced-labor practices in Xinjiang, it is inconceivable that the WTO would convene a meeting on cotton and trade and not include these practices as a topic worthy of review. Simply put, ignoring what is happening in Xinjiang would be tantamount to the WTO holding a meeting on global public health and trade without mentioning the Covid-19 pandemic.”

I have in prior posts looked at the issue of forced labor and child labor both broadly and with special focus on cotton. See March 24, 2021, When human rights violations create trade distortions — the case of China’s treatment of the Uyghurs in Xinjiang, https://currentthoughtsontrade.com/2021/03/24/when-human-rights-violations-create-trade-distortions-the-case-of-chinas-treatment-of-the-uyghurs-in-xinjiang/; January 25, 2021, Child labor and forced labor in cotton production — is there a current WTO mandate to identify and quantify the distortive effects?, https://currentthoughtsontrade.com/2021/01/25/child-labor-and-forced-labor-in-cotton-production-is-there-a-current-wto-mandate-to-identify-and-quantify-the-distortive-effects/; January 24, 2021, Forced labor and child labor – a continued major distortion in international trade for some products, https://currentthoughtsontrade.com/2021/01/24/forced-labor-and-child-labor-a-continued-major-distortion-in-international-trade-for-some-products/.

As Amb. Shea points out, WTO Members should present information relevant to trade in cotton including potential subsidies (such as government provision of labor at little or no compensation (forced labor)). His commentary urges the U.S. to bring forward any information it may have on the cotton industry in Xinjiang. He notes that

“The United States should bring the issue of forced labor in Xinjiang directly to the WTO by placing it on the agenda of the upcoming dedicated discussion on cotton and trade. Whatever information the U.S. government has developed about forced labor in the cotton fields of Xinjiang and its impact on trade should be shared with other WTO members. Doing so would be consistent with President Biden’s trade agenda, which makes combating forced labor a priority. It is also consistent with the views of U.S. Trade Representative Katherine Tai, who said during her confirmation hearing that forced labor is ‘the crudest example of the race to the bottom in global trade.’”

While the Director-General of the WTO has been quoted as indicating that China does not respond well to being singled out, the cotton initiative at the WTO is looking at all trade practices that affect trade in cotton. Labor subsidies for a region that produces 85% of China’s cotton and 20% of the world’s is obviously fair game. See RT, Stop targeting China if you want it to support global trade reforms, WTO head tells world powers, April 26, 2021, https://www.rt.com/news/522151-wto-chief-stop-targeting-china-cooperation/ (“World Trade Organization (WTO) chief Ngozi Okonjo-Iweala has called on countries to stop targeting China if they want cooperation on global reforms, claiming that putting pressure on Beijing will only get ‘resistance.’ * * * Speaking to a conference held by the European Commission, Okonjo-Iweala suggested targeting China only alienates it further. He urged nations to just ‘put the facts on the table,’ claiming Beijing is ‘willing’ to consider proposals when they are presented without ‘negative spillovers.’”). While China challenges the claim that it uses forced labor for cotton or any other products, it makes sense for WTO Members to marshall the information available so that the matter can be considered as part of the semiannual dedicated session.

Amb. Shea’s commentary is a useful note on seeing to what extent the WTO’s existing process can address significant trade distortions of China or any other cotton producer. Hopefully, a robust process will occur next month in Geneva.

I

The U.S.-China Phase 1 Trade Agreement — Purchases of goods and services by China continue to lag dramatically behind commitments

The U.S. and China are now in the second year of the Phase I Agreement that took effect in mid-February 2020. As reported in prior posts, both China and the U.S. have taken steps to implement parts of the Phase 1 Agreement addressing specific non tariff barriers and intellectual property issues, although the level of actual implementation remains unclear. However, commitments China made to significantly increase imports of goods and services from the United States have generally not been fulfilled as reviewed month by month in prior posts. As China’s economy actually grew in 2020 and is experience very rapid growth in 2021, the failure of the purchase commitments can’t be attributed to any significant extent on China’s economic performance.

Prior posts on the U.S.-China Phase 1 Agreement can be found here: March 20, 2021, The U.S.-China Phase 1 Trade Agreement under the Biden Administration, https://currentthoughtsontrade.com/2021/03/20/the-u-s-china-phase-1-trade-agreement-under-the-biden-administration/; February 6, 2021, U.S.-China Phase I Trade Agreement – data through December 2020; China has increased purchases of agricultural and energy products above 2017 levels but did not reach first year agreed purchases in 2020 and won’t reached the agreed level even if measured from March 2020-February 2021, https://currentthoughtsontrade.com/2021/02/06/u-s-china-phase-1-trade-agreement-data-through-december-2020-china-has-increased-purchases-of-agricultural-and-energy-products-above-2017-levels-but-did-not-reach-first-year-agreed-purchases-in/; January 9, 2021, U.S.-China Phase 1 Trade Agreement — Data through November 2020; China has increased purchases of agricultural and energy products above 2017 levels but will not reach first year agreed purchases in 2020 whether measured on a calendar basis or on a March 2020-February 2021 basis, https://currentthoughtsontrade.com/2021/01/09/u-s-china-phase-1-trade-agreement-data-through-november-2020-china-has-increased-purchases-of-agricultural-and-energy-products-above-2017-levels-but-will-not-reach-first-year-agreed-purchases-in/; December 10, 2020, U.S.-China Phase I Trade Agreement – data through October 2020; while China has increased purchases of agricultural and some other products, China remains far behind on the agreed purchases in 2020 whether measured on a calendar basis or on a March 2020-February 2021 basis, https://currentthoughtsontrade.com/2020/12/10/u-s-china-phase-1-trade-agreement-data-through-october-2020-while-china-has-increased-purchases-of-agricultural-and-some-other-products-china-remains-far-behind-on-the-agreed-purchases-in-2020-w/; November 13, 2020, U.S.-China Phase 1 trade agreement – Data through September 2020; USDA and USTR report on agriculture portion, https://currentthoughtsontrade.com/2020/11/13/u-s-china-phase-1-trade-agreement-data-through-september-2020-usda-and-ustr-report-on-agriculture-portion/; October 10, 2020,  U.S.-China Phase I Trade Agreement – first six months data on U.S. exports (March-August 2020) covered by the purchase commitments show China needing to triple purchases in next five months to meet first year commitments, https://currentthoughtsontrade.com/2020/10/10/u-s-china-phase-1-trade-agreement-first-six-months-data-on-u-s-exports-march-august-2020-covered-by-the-purchase-commitments-show-china-needing-to-triple-purchases-in-next-six-months-to-meet-fi/; September 12, 2020, U.S.-China Phase I Trade Agreement – How is China Doing to Meet Purchase Commitments for the First Year; a Review of U.S. Domestic Exports through July 2020, https://currentthoughtsontrade.com/2020/09/12/u-s-china-phase-1-trade-agreement-how-is-china-doing-to-meet-purchase-commitments-for-the-first-year-a-review-of-u-s-domestic-exports-through-july-2020/; August 8, 2020, U.S.-China Phase 1 trade agreement – review of U.S. domestic exports through June 2020, https://currentthoughtsontrade.com/2020/08/08/u-s-china-phase-1-trade-agreement-review-of-u-s-domestic-exports-through-june-2020/; July 10, 2020, U.S.-China Phase 1 Trade Agreement – limited progress on increased U.S. exports to China (through May), https://currentthoughtsontrade.com/2020/07/10/u-s-china-phase-1-trade-agreement-limited-progress-on-increased-u-s-exports-to-china-through-may/; June 5, 2020, U.S.-China Phase I Deal is Failing Expanded U.S. Exports Even Before Recent Efforts by China to Limit Certain U.S. Agriculture Exports as Retaliation for U.S. Position on Hong Kong, https://currentthoughtsontrade.com/2020/06/05/u-s-china-phase-i-deal-is-failing-expanded-u-s-exports-even-before-recent-efforts-by-china-to-limit-certain-u-s-agriculture-exports-as-retaliation-for-u-s-position-on-hong-kong/; May 12, 2020, U.S.-China Phase I Agreement – some progress on structural changes; far behind on trade in goods and services, https://currentthoughtsontrade.com/2020/05/12/u-s-china-phase-i-agreement-some-progress-on-structural-changes-far-behind-on-trade-in-goods-and-services/; January 19, 2020, U.S.-China Phase 1 Agreement – Details on the Expanding Trade Chapter, https://currentthoughtsontrade.com/2020/01/19/u-s-china-phase-1-agreement-details-on-the-expanding-trade-chapter/; January 15, 2020, U.S.-China Phase 1 Trade Agreement Signed on January 15 – An Impressive Agreement if Enforced, https://currentthoughtsontrade.com/2020/01/15/u-s-china-phase-1-trade-agreement-signed-on-january-15-an-impressive-agreement-if-enforced/.

This post looks at U.S. export data for January-February 2021 and also looks at U.S. exports to China during the twelve months March 2020-February 2021.

Purchase Commitments

Annex 6.1 of the Phase I Agreement contains commitments for “additional U.S. exports to China on Top of 2017 baseline” for two years, 2020 and 2021. Article 6.3 of the Agreement states that “The Parties project that the trajectory of increases in the amounts of manufactured goods, agricultural goods, energy products, and services purchased and imported into China from the United States will continue in calendar years 2022 through 2025.”

The Agreement lists 18 categories of goods grouped in three broad categories (manufactured goods, agriculture and energy) and five services categories. Chinese imports of goods and services from the United States under the Agreement are supposed to increase by $76.7 billion in the first year over levels achieved in 2017 and in the second year by $123.3 billion over 2017 levels. The categories and tariff items included in the goods categories are reviewed in Annex 6.1 of the Agreement and the attachment to Annex 6.1. In the confidential version of the agreement, growth levels are provided for each of the 23 categories of goods and services.

Article 6.2 of the Agreement defines the time period for the purchase commitments as being January 1, 2020 through December 31, 2021. So the first year by agreement was calendar year 2020. Calendar year 2021 is the second year of the agreement. The level of increases in U.S. exports to China for 2021 is as follows: manufactured goods $44.8 billion on top of 2017 base line of $58.4 billion (2021 total of $103.2 billion or an increase of 76.81% over 2017 actual); agriculture (including seafood) $19.5 billion on top of 2017 base line of $20.85 billion (2021 total of $40.35 billion or an increase of 93.51% over 2017 actual); energy $33.9 billion on top of 2017 base line of $7.6 billion (2021 total of $41.5 billion or an increase of 447.95% over 2017 actual); services $25.1 billion on top of 2017 base line for the selected services of $53.033 billion (2021 total of $78.133 billion or an increase of 47.33% over 2017 actual).

Increases from 2017 for the calendar year 2020 agreed levels were lower than for 2021 (increases over 2017 of $32.9 billion, $12.5 billion, $18.5 billion and $12.8 billion respectively for manufactured goods, agriculture, energy and services).

The breakout of services exports is not available for 2020 or the first two months of 2021. However, U.S. exports of all services to China for 2020 were $37.921 billion vs. $54.981 billion in 2017, a decline of 31% for all services, thus, U.S. services exports covered by the Phase I Agreement declined in 2020. See U.S. Census Bureau and the U.S. Bureau of Economic Analysis, MONTHLY U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, February 2021, April 7, 2021, page 28, Exhibit 20b, https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf. While the BEA data don’t show exports of services in January or February by country, January-February 2021 total services exports are down from January-February 2020 (before the pandemic resulted in significant closures) with the largest reductions in travel followed by transport and by maintenance and repair services. Id at Exhibit 3.

In 2017, the selected goods covered by Annex 6.1 were $86.795 billion of total U.S. domestic exports to China of $120.109 billion, meaning non-covered U.S. exports in 2017 were $33.314 billion. On services, the selected services covered by Annex 6.1 were $53.033 billion of total services exports to China of $54.981. So non-covered services were $1.948 billion. For goods, there were sharp declines in 2020 of U.S. exports to China of non-covered products from the levels achieved in 2017 (a decline of $6.6 billion). Non-covered products are also down up in January-February 2021 versus January-February 2017 ($4.378 billion vs. $5.135 billion). While the services break out for 2020 is not yet available by country by type of service, total services exports to China (as reviewed above) were down 31% . The non-covered services are relatively small (just 3.5% of total services exports).

Since the Agreement took effect in mid-February, my analysis in prior posts has focused on the period since the agreement went into effect (for statistics, from March 1, 2020). This is consistent with the position that USTR and USDA took in the Trump Administration in an interim report released on October 23 looking at China’s compliance with its purchase commitments in agriculture. “It is worth noting that the Phase One Agreement did not go into effect until February 14, 2020, and March is the first full month of its effect. That means that we have seen seven months of agreement sales.” U.S. Trade Representative’s Office and U.S. Department of Agriculture, Interim Report on the Economic and Trade Agreement between the United States of America and the People’s Republic of China, AGRICULTURAL TRADE, October 23, 2020, Page 1. Since today’s post covers U.S. exports through February (12 months, if the starting month is March 2020), I include that analysis below. In future posts, I will limit my analysis to calendar 2021 vs. calendar 2017.

March 2020-February 2021 data compared to 2017; January-February 2021 compared to January-February 2017

For purposes of this post, I will look at the March 2020 – February 2021 data compared to calendar year 2017 data, but I will also look at the first two months of 2021 compared to the first two months of 2017. In my post in February, I had reviewed calendar 2020 data compared to 2017 data. Looking at the March 2020-February 2021 period vs. calendar year 2020 results in U.S. domestic exports for Phase I products being $6.4 billion higher, being slightly higher than 2017 (vs. 2020 being slightly lower) but missing the commitment levels of purchases by China by $60.4 billion vs. $66.8 billion for the 2020 calendar year. The data analyzed is limited to goods since the services data is more limited and has been summarized above.

Looking at U.S. domestic exports for the March 2020 – February 2021 period shows China meeting 92.43% of first year agriculture commitments, and U.S. agricultural exports being 47.85% above 2017 actual levels. U.S. domestic exports to China of all Phase 1 products are only 59.91% of first year commitments with manufactured goods at 53.01% and energy at 42.45%. While agriculture products covered by the Phase I commitments exported to China in the March 2020-February 2021 period exceeded 2017 actual by $10 billion and energy exceeded 2017 by $3.5 billion, manufactured goods were $10 billion smaller than 2017 actual. Compared to first year purchase commitments, total U.S. Phase I goods exports were $60.4 billion short of the agreed first year level.

If looking at a calendar year 2021, the data for January-February show increases for agriculture (+39.34%) and energy (+51.21%) but a decline for manufactured goods (-3.81%) compared to January-February 2017 but each category trails the level of increase needed to meet 2021 purchase commitments. Manufactured goods have a commitment level that is 76.81% higher than 2017 actual. Similarly, on agricultural products covered by the Phase I commitments, U.S. exports require a 93.51% increase above 2017 actual levels. On energy, U.S. exports to China need to be 477.93% above 2017 actual. For all Phase I goods, U.S. exports in January-February are up 14.73% but the annual increase to meet the Phase I commitment is 113.14%.

Looking at total U.S. domestic exports of goods to China for the period March 2020 – February 2021., U.S. exports were $117.589 billion ($9.799 billion/month) compared to $120.109 billion in 2017 ($10.009 billion/month). These include both products covered by the Annex 6.1 commitments and other products. For January-February 2021, total U.S. domestic exports to China were $19.530 billion compared to $18.360 billion in January-February 2017.

Total 2017 U.S. domestic exports of goods to China were $120.1 billion. The Phase 1 Agreement calls for increases on a subset of goods of $63.9 billion in the first year. Thus, the target for the first year of the U.S.-China Phase 1 Agreement is U.S. exports to China of $184 billion if non-subject goods are exported at 2017 levels.

Other U.S. domestic exports not covered by the 18 categories in Annex 6.1 were $33.314 billion in 2017. For the period March 2020 – February 2021, non-covered products (which face significant tariffs in China based on retaliation for US 301 duties) have declined 18.01%, and total exports to China are down 2.10%. Looking at January-February 2021, other U.S. domestic exports (i.e., not covered by the Phase I Agreement) were down 15.04% from comparable levels in January-February 2017.

Thus, using the March 2020-February 2021 period since the U.S.-China Phase 1 Agreement went into effect, U.S. domestic exports of the Annex 6 goods were $90.274 billion; non-covered products were $27.315 billion, for total U.S. domestic exports to China of $117.589 billion. This figure is below 2017 and dramatically below the target of $184.0 billion (if noncovered products remain are at 2017 levels; $177.421 billion with noncovered products at March 2020 – February 2021 levels) . The U.S. domestic exports to China were, however, higher than the $109.72 billion in 2018 and the depressed figure of $94.100 billion in 2019.

If one looks at January-February 2021, U.S. domestic exports to China of Annex 6 goods were $15.152 billion, other exports were $4.378 billion, for total domestic exports in January 2021 of $19.530 billion, ahead of January-February 2017 but far behind the level of exports needed to meet the second year purchase commitments by China (Phase I products are up 14.73% vs. full year increase needed of 113.14%).

The 18 product categories included in Annex 6.1 of the Phase 1 Agreement show the following for 2017, March 2020 – February 2021 and rate of growth as well as the dollar shortfall by major category compared to 1st year purchase commitments by China.:

Product category2017March 2020 – February 2021% change 12 mos. 2017 vs. 2020/2021$ shortfall from 1st year commitments
manufactured goods
1. industrial machinery $10,949      
$ 12,464

+13.83%
2. electrical equipment and machinery $4,311
$4,788
+11.07%
3. pharmaceutical products $2,089 $3,264
+56.25%
4. aircraft (orders and deliveries) $15,712 $3,922 -75.04%
5. vehicles $10,093
$6,079
-39.77%
6. optical and medical instruments $3,135
$3,575
+14.04%
7. iron and steel
$1,176
$478
-59.31%
8. other manufactured goods $10,904 $13,807 +26.62%
Total for mfg goods
$58,369
$48,378
-17.12%
$42,892
Agriculture
9. oilseeds $12,225 $16,476 +34.77%
10. meat $559 $3,230 +478.32%
11. cereals $1,358 $3,876 +185.51%
12. cotton $973 $2,009 +106.45%
13. other agricultural commodities $4,504
$4,546
+0.93%
14. seafood $1,234 $691 -43.95%
Total for agriculture $20,852 $30,828 +47.85% $2,523
Energy
15. liquefied natural gas $424 $1,635 +285.87%
16. crude oil $4,304 $7,245 +68.34%
17. refined products $2,443
$1,814
-25.73%
18. coal $403 $373 -7.42%
Total for energy $7,574 $11,069 +46.14% $15,005
Total for 1-18 $86,795 $90,274 +4.01% $60,421

Conclusion

As reviewed in prior posts, the U.S.-China Phase 1 Agreement is a potentially important agreement which attempts to address a range of U.S. concerns with the bilateral relationship and obtain somewhat better reciprocity with the world’s largest exporter. The Phase 1 Agreement has left other challenges to a Phase 2 negotiation which has not yet begun. USTR Tai has indicated that the Biden Administration will monitor compliance by China with the terms of the Phase I Agreement.

While there has been some progress on non-trade volume issues that are included in the Phase 1 Agreement and some significant improvements in exports of U.S. agricultural goods, there has been very little forward movement in expanding total U.S. exports of goods to China in fact and a sharp decline in U.S. exports of services to China.

The differences in economic systems between China and the United States made reliance on WTO rules less relevant to the Trump Administration as those rules presume market-based economies and presently don’t address the myriad distortions that flow from the Chinese state capital system. Thus, the Phase I Agreement was an effort to move the needle in trade relations with China to achieve greater reciprocity. It has had some limited success to date. While the Biden Administration is doing a full review of the challenges posed by China’s trade policies, there remains a lot of work to see that the Phase I Agreement is fulfilled.

WTO Fisheries Subsidies Negotiations — a push to complete negotiations by July

Following a series of “informal” Heads of Delegation meetings over the last two weeks on the fisheries subsidies negotiations, the Chair of Negotiating Group on Rules, Amb. Santiago Wills of Colombia, and the WTO’s Director-General Ngozi Okonjo-Iweala are pushing WTO Members to conclude the negotiations by July with an anticipated virtual Ministerial meeting in July to hopefully resolve remaining issues. See WTO press release, Ministerial meeting eyed for July as fisheries subsidies negotiations enter final phase, 21 April 2021, https://www.wto.org/english/news_e/news21_e/fish_21apr21_e.htm; Speeches — DG Ngozi Okonjo-Iweala, Negotiating Group on Rules — fisheries subsidies: Informal open-ended meeting at heads of delegation level, 21 April 2021, https://www.wto.org/english/news_e/spno_e/spno8_e.htm; Negotiations on Fisheries Subsidies, Summary of statement of Ambassador Santiago Wills of Colombia, Negotiating Group on Rules chair, at meeting on fisheries subsidies, 21 April 2021, https://www.wto.org/english/news_e/news21_e/fish_21apr21a_e.htm.

The Fisheries Subsidies negotiations have dragged on for twenty years and typify the breakdown in the WTO’s negotiating function. The Director-General and many commentators have emphasized the critical need to conclude a fisheries subsidies agreement to show the WTO can still perform and address important trade issues. Stopping the overfishing that is threatening the sustainability of fishing around the globe is also an important UN Sustainable Development Goal (14.6).

The challenge for the WTO Members is actually achieving a meaningful agreement. While there is “progress” identified by the Chair’s summary statement on April 21st, his description of open issues in just three areas suggests the talks remain mired in division among those wanting meaningful reform and those seeking to largely escape modification to existing practices. The summary of Amb. WIlls statement is copied below.

“As you know, at the start of last week’s meetings at the level of heads of delegations, Dr Ngozi had called on members to engage intensively with a view to close the fisheries subsidies negotiations by July. I found the week-long meetings, which amounted to nine sessions totalling 27 hours, to be constructive overall. At this high level of discussions, we saw flexibility and genuine attempts to compromise. And as we enter the final phase of the negotiations, we will need members’ political will to make tough calls, first at the heads of delegation level here in Geneva, and then at a Ministerial engagement which we envisage for some point before the summer break, in virtual format.

“Turning first to the meetings that we held last week: I organized the discussions at the level of heads of delegations on three key issues where we seem to have exhausted the technical discussions and needed higher-level attention to make progress on finding convergence. These issues were:

“- A possible exemption for subsidies to subsistence, artisanal, or small-scale fishing;

“- Due process requirements for illegal, unreported and unregulated fishing determinations; and

“- The approach to the overcapacity and overfishing prohibition.

“In many ways, the approach to the overcapacity and overfishing disciplines — the third issue I mentioned — is at the heart of our negotiations. I think last week’s discussions brought us a step closer to reaching convergence on this pillar.

“Let me be more specific. The discussions on overfishing and overcapacity focused on the structure that is now found in the draft consolidated document, what we call the ‘hybrid’ approach. In doing so, views were exchanged on the list of subsidies that would be presumptively prohibited under this pillar.

“In addition, members discussed a paragraph that provides for a sustainability-based flexibility, so a member may grant or maintain subsidies under the overfishing pillar if it demonstrates implementation of measures for the sustainability of fish stocks. Some members suggested notification procedures to deal with this required demonstration. There were additional suggestions to make this article more acceptable such as limiting this provision to a geographical area, for a particular period and/or  designing a technical assistance and capacity building mechanism to help developing members build enough data to apply the sustainability standards proposed in the draft text.

“Delegations’ views on how to advance our textual work on this key element of the disciplines still differ in certain respects. However, some members showed flexibility to consider outcomes they could live with, not necessarily the one they prefer. Most importantly, I am very happy that instead of only pointing to perceived shortfalls in the current text or in the views of other members, some constructive suggestions for bridging the gaps were made.

“As for discussions on a possible exemption for subsidies to subsistence, artisanal, or small-scale fishing: I detected a genuine step forward in the willingness of some members to consider a formulation different to that of their own preference. However, there are still some difficult and interlinked issues under the topic of subsistence, artisanal or small-scale fishing; and all of them have to be weighed carefully as we further explore possibilities for an outcome on this issue that could be agreed by members.

“On due process requirements for illegal, unreported and unregulated fishing determinations: My own take-away from these exchanges was that members seem to have common concerns but with different views on how we approach them, and in fact ultimately there were some new suggestions made in the room that attracted a certain amount of interest. So that was a positive dynamic.

“In addition, an April 8 meeting on the prohibition of subsidies to overfished stocks made it clear that we will all need to reflect more on how to coherently address the issue of overfished stocks in the overall context of the disciplines.

“Turning now to the process going forward: I have briefed Dr Ngozi on the outcome of last week’s cluster and we have been brainstorming on next steps to achieve a conclusion of the fisheries subsidies negotiations by July.

“For one, reaching an outcome this summer means that we will need higher-level, capital-based decision-making soon. In particular, we envisage Ministerial engagement at some point before the summer break, which starts three months from now. Dr Ngozi, in her statement to members this morning, elaborated that this means that we will be asking Ministers to meet virtually in July with a focus on fisheries subsidies and possibly one or two other topics. The aim of that meeting will be for Ministers to review a very advanced, hopefully final, text.

“It will be important, in the near future, to capture in a new, or revised text the progress that we have made since our current text was issued (that we should recall was December last year), and aiming at possible middle-ground points on outstanding issues. I have been hearing this call from many members. This next text will be important, as it will cover five months of our work and as it will form the basis of our work toward the cleaner text for Ministers to consider.

“I also plan to engage with heads of delegations in various configurations and groupings soon and non-stop until the finish line.

“Dr Ngozi told members that final hurdles now need to be dealt with at the political level, including by heads of delegations in Geneva. ‘Our job is to protect the fish and to protect the many millions of fisher men and women who directly depend on the fish,’ she said.

“I could not agree more that time is running out and we must make our work count and make concrete progress.”

During the first twenty-five years of the WTO’s existence, a lesson repeatedly learned is that bringing ministers together prematurely does not advance resolution of negotiations. Amb. Wills statement and the statement of the Director-General understand the need to get to a near final text with a minimum of brackets before the virtual meeting of Ministers. The understood risk is that the snail’s pace of progress in the negotiations will leave ministers with too many issues to resolve. While DG Okonjo-Iweala is doing outreach to ministers and hearing support for concluding the talks, the limited progress in Geneva to date suggests major challenges in the coming months. Should there be a failure to make sufficient progress, it would be better to postpone the virtual meeting. The Director-General’s statement is copied below.

“Thank you, Santiago, and good morning excellencies and colleagues. That was a very informative report and I am glad to hear that there was constructive engagement by all of you Heads of Delegation at last week’s meetings. I had promised last week that you would see me again soon, and now that you have finished your cluster of meetings, I thought it would be a good idea to join you today and share some further reflections on how I see this process unfolding over the next months. For now, I would like to emphasize three key points.

“1. First, when Santiago says “Ministerial engagement” this means that we will be asking Ministers to meet virtually in July with a focus on fisheries subsidies and possibly one or two other topics. The aim of that meeting will be for Ministers to review a very advanced, hopefully final, text.

‘2. This brings me to my second point, the text. We have to present to Ministers a text that is complete and clean enough for them to constructively engage and take decisions. Thus, options and brackets will need to be very few. We must have closure in July.

“That means that our work here in Geneva over the next three months is truly critical. While clusters of meetings have served their purpose at the technical level, now we really need to pick up the pace, and engage in text-based negotiations that get us to compromise landing zones on all of the outstanding issues. To achieve this result, consultations will be convened frequently and in whatever configuration is necessary depending on the topic. I have told Santiago that I’ve rolled up my sleeves and I am ready to work any time whenever he thinks he needs my involvement. So I will be joining some of these meetings and possibly convening some of my own. The aim of such meetings and consultations will be to deepen the clarity on key issues and views, as we continue to work through issues and seek to identify possible landing zones. Please be assured that the principles of transparency and inclusiveness will be respected, and that no decisions will be taken behind closed doors, as Santiago has said, and I want to repeat it again because this is how we’ll build that trust that we need to get us through the finish line. While no delegation would be invited to every meeting, all voices will be consulted and heard, and Santiago will continue to report on all of these activities. My message here is that to succeed, we must all remain flexible, and continue to support the Chair as he guides the work toward an outcome. I also want to use this opportunity to thank Clarisse and the team from the Secretariat for their continued and able support to the Chair. We must also prioritize these negotiations over these few months, including late nights and weekends if needed. As you know, this is what it usually takes in the final stage of negotiations and I’m really strongly appealing that we prepare to roll up our sleeves to get there.

“3. And that brings me to my final point — your engagement as heads of delegations. It’s really time for you to take the reins. Last week showed that you are ready to take the lead in the negotiations. Your delegates have been working hard on these negotiations for many years, and collectively have brought us to this final phase. This is really a major achievement that needs to be recognized and we are very very grateful and thankful to your delegates for the way that they have brought us so far. It is, however, only natural that the final hurdles now need to be dealt with at the political level, and that’s by you. Therefore, all Heads of Delegation — I can’t say it often enough — should be ready to roll up your sleeves to work. If your delegates have not yet fully briefed you on all of the issues, please make sure that they do so. I can tell you that Santiago and I meet constantly to see how we can advance this. And please also maintain contact with your capitals to continually refresh your instructions as we move toward what all Members can live with. So many Ministers that I have talked with, literally two or three ministers practically every week either in person physically with proper social distancing or by Zoom, and all of them are really keen. I noticed a new spirit and I’m really happy they are keen to get this done. Yesterday, I was with the Trade Minister of Spain and we spent a lot of time on fisheries and I think it was a very good conversation. So that’s why I want to say reiterating well-known positions in lengthy statements will not serve. Please just leave your scripts outside the room and come in with open ears to listen to each other and then to exchange concrete ideas about how you could bridge your differences. This is the only way we can have an outcome by July.

“So those are the three specific points I wanted to make. Before I hand the floor back to Santiago, I would like to emphasize one more thing. Wherever I go and whoever I interact with, I recall the preamble to the WTO Agreement, and the mandate of these negotiations. People, jobs, sustainability, livelihoods — these are the words that jump out at me from the preamble every time. To me, our job is to protect the fish and to protect the many millions of fisher men and women who directly depend on the fish. These two are not mutually exclusive — protecting one does not necessarily compete with protecting the other. In fact, fishing sustainably makes socio-economic sense. If there are no more fish in the sea, then the source of food security and livelihood, that was so talked about in the Marrakesh preamble, of those who depend on the fish also will be gone. I say all of this to remind us, as we engage over these next few months, of why we are here, doing this particular work. If we present to Ministers a text that meets that overall objective, then we will have done our job. On the other hand, if the focus over the next few months is to find ways to exclude ourselves from these responsibilities, then we will not be able to deliver on our mandate. And that is not really an option. Ladies and gentlemen, it is not.

“With that, I would like to thank Santiago for inviting me to join you today. I would like to thank you and your delegates for the wonderful work that you are doing and for listening. I remain committed to reaching a meaningful outcome soon and I am sure that if we all put in the hard work needed, we will get there in July. I really want to end on this optimistic note. I believe we can do it. I just see light at the end of this tunnel. So let’s just push a little bit more. Thank you.

“I will leave you now and come back to you, and I wish you continued progress in the coming days. We’ll talk soon.”

Extraordinary lack of transparency for the public in the fisheries negotiations

In prior posts I have reviewed progress in the fisheries negotiations and the extraordinary lack of transparency in terms of proposals from parties and in the draft text and various revisions. See, e.g., December 16, 2020, The fisheries subsidies negotiations – U.S. comments from December 2 meeting add clarity to the inability to achieve an agreement and the lack of “like-mindedness” among Members, https://currentthoughtsontrade.com/2020/12/16/the-fisheries-subsidies-negotiations-u-s-comments-from-december-2-meeting-add-clarity-to-the-inability-to-achieve-an-agreement-and-the-lack-of-like-mindedness-among-members/; December 15, 2020, The fisheries subsidies negotiations – failure by WTO Members to deliver an agreement by the end of 2020, https://currentthoughtsontrade.com/2020/12/15/the-fisheries-subsidies-negotiations-failure-by-wto-members-to-deliver-an-agreement-by-the-end-of-2020/; November 5, 2020, Revision to draft fisheries subsidies text presented by Chair of the Negotiating Group on Rules at November 2 informal open-ended meeting, https://currentthoughtsontrade.com/2020/11/05/revision-to-draft-fisheries-subsidies-text-presented-by-chair-of-the-negotiating-group-on-rules-at-november-2-informal-open-ended-meeting/; June 29, 2020, Update on fisheries subsidies draft consolidated text from June 25, https://currentthoughtsontrade.com/2020/06/29/update-on-fisheries-subsidies-draft-consolidated-text-from-june-25/; June 27, 2020, Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25, https://currentthoughtsontrade.com/2020/06/27/chair-of-rules-negotiating-group-releases-draft-consolidated-fisheries-subsidies-text-at-informal-meeting-on-june-25/. While the draft texts have been circulated as room documents (and hence not released publicly), to date the drafts have been leaked by various sources, so over time one can find the draft texts if one spends the effort. However, my analysis of the retreat from transparency is troubling and is being replicated in many other areas at the WTO. Here is what I wrote in June 2020 in the June 27 post relevant to the lack of transparency:

“However, with the restrictions on travel in many parts of the world and with restrictions on in-person meetings at the WTO beginning in March of this year because of the efforts to limit the spread of COVID-19, there has been a lack of forward movement on the fisheries subsidies negotiations. Specifically, the 12th WTO Ministerial was postponed from June 2020 to an unspecified time in 2021, and WTO Members could not agree to conduct negotiations without face-to-face meetings. While this inability to negotiate affected all areas of WTO work and negotiations, it called into question whether the WTO Members would be able to deliver the one aspect of the UN Sustainable Development Goals that was in the WTO’s area of competence and expertise.

“Now that face-to-face meetings can occur at the WTO and as Members are gaining experience with virtual meetings, the Chair of the Negotiating Group on Rules (fisheries subsidies), Amb. Santiago Wills of Colombia, held an informal meeting of the heads of delegations and presented both a draft consolidated text and provided extensive introductory remarks. While there is a short press release from the WTO on the meeting, the two documents shared with Members are not publicly available as they were labeled as room documents, despite similar statements and draft text having routinely been released publicly both in the fisheries subsidies negotiations previously but also generally in all multilateral negotiations at the WTO over the last 25 years The press release is titled “Fisheries subsidies negotiations chair introduces draft consolidated text to WTO members,” is dated June 25 (date of the meeting) and can be found here, https://www.wto.org/english/news_e/news20_e/fish_25jun20_e.htm. The draft consolidated text is apparently six pages in length and is in a document coded RD/TN/RL126. The lengthy introductory remarks by the Chair are supposedly twelve pages in length and are in a document coded RD/TN/RL/126/Add.1 (Chair’s Introductory Remarks at HoD Meeting on June 25, 2020). The listing of some of the room documents in the Rules negotiating area that include the two documents from June 25, 2020 is embedded below.

RD-TN-RL-docs-part-1

“It is obviously excellent news that a new draft consolidated text has been finally circulated to Members and that the Chair is attempting to see if Members can fulfill the objective of reaching a meaningful agreement on fisheries subsidies by the end of 2020. One meeting is scheduled for July 21 (10 a.m., open-ended Negotiating Group on Rules (Fisheries Subsidies). Presumably other meetings will be scheduled for the remainder of the year. While the WTO is typically in recess during August, Members may decide to have some meetings at least on the topic of selecting a new Director-General and arguably could decide to pursue fisheries subsidies as well in August. If not, I would expect a fairly aggressive program of meetings on fisheries subsidies in the fall and into December to achieve an agreement if possible.

“The lack of public access to the draft text and the introductory remarks obviously limits the ability of many stakeholders to understand the level of ambition and the areas of concern that remain in the text. To show the departure from what I would describe as normal WTO procedures, I embed below three documents. The first two are parts of TN/RL/W/232 (the cover letter entitled “Working Document from the Chairman”) and Annex C dealing with Fisheries Subsidies (the Chair’s draft text, along with comments from Members). The third is JOB/RL/6 from 1 December 2016 (WTO document is dated 6 December) and is entitled “CHAIR’S REPORT TO THE INFORMAL MEETING OF HEADS OF DELEGATIONS ON THE RULES NEGOTIATIONS”. Obviously, the draft consolidated text in RD/TN/RL/126 is not substantively different in type of document than the chair’s draft text in TN/RL/W/232 (Annex C). Similarly, the introductory remarks to the HoD meeting on June 25 contained in RD/TN/RL/126/Add.1 would appear to be the same type of information as was contained in JOB/RL/6. The retreat from transparency is worrisome to members of the public and should be to WTO Members.”

There have been 192 documents submitted as room documents in the fisheries subsidies negotiations (the vast majority since 2019) under the RD/TN/RL/ series that deal with draft text, proposals by Members, background information, etc. There are other series designed to largely hide the workings of the WTO, such as JOB documents. JOB/RL/ has only 12 documents shown of which 10 are not available publicly. By contrast to the large volume of room documents in the fisheries negotiations, there are only 16 documents in the TN/RL series (all are publicly available) since the beginning of 2019 (proposals, minutes, etc.) as the negotiations have largely gone dark to the public.

This is a sharp departure from negotiations during the Doha Development Agenda where draft texts and most proposals were public when distributed to Members (Dispute Settlement was an outlier where the Chairman late in the process started to make text public).

The WTO Members and the Secretariat need a much more uniform approach to transparency, but there is little indication that Members care or that the Secretariat puts any focus on uniformity of approach. The WTO needs to restart releasing proposals and draft texts to the public. The current approach is unacceptable and should be opposed by those with an interest in the operation of the WTO.

Conclusion

While WTO Members profess to understand the critical need to achieve an agreement on fisheries subsidies this year, progress is painfully slow and the level of ambition unclear despite 20 years of effort. The push for a breakthrough by July is in keeping with what Members have suggested is needed and the WTO’s Director-General’s desire for deliverables by the 12th Ministerial Conference being held in late November 2021 in Geneva. The WTO has no track record of achieving breakthroughs in negotiations through virtual meetings (and last year had push back from some Members who did not want to conduct any negotiations that way). Moreover, the WTO has a long history of scheduling Ministerials to close negotiations when there has not been sufficient progress to reduce open issues to a manageable number. Both DG Okonjo-Iweala and Ambassador Wills understand the need to get the text close before the proposed virtual Ministerial. Time will tell whether the Members will come together and produce a meaningful agreement or simply continue to talk past each other.

The importance of addressing “overreach” in reforming the WTO Appellate Body

I have written a number of posts in the last eighteen months looking at the problems of the Appellate Body and the inadequacy of reform proposals put forward by WTO Members. Most importantly there can be no acceptable solution for the United States without addressing the concern over the WTO Appellate Body creating rights and obligations that Members have not agreed to. In the U.S., this is often referred to as “overreach”. In my view, addressing “overreach” requires changes both going forward and correction of overreach that has occurred in the past. My suggested approach can be found in my post of July 12, 2020 with a background note on “overreach contained in my post of November 12, 2019. Some of my prior posts on the WTO Dispute Settlement system include the following: March 11, 2021:  “No Quick Fixes for WTO Dispute Settlement Reform” — a skeptical view by the former Deputy USTR of the EU’s willingness to address core U.S. concerns, https://currentthoughtsontrade.com/2021/03/11/no-quick-fixes-for-wto-dispute-settlement-reform-a-skeptical-view-by-the-former-deputy-ustr-of-the-eus-willingness-to-address-core-u-s-concerns/; February 18, 2021:  The European Commission’s 18 February 2021 Trade Policy Review paper and Annex — WTO reform and much more proposed, https://currentthoughtsontrade.com/2021/02/18/the-european-commissions-18-february-2021-trade-policy-review-paper-wto-reform-and-much-more-proposed/; January 29, 2021:  WTO Panel report on UNITED STATES – ANTI-DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS AND THE USE OF FACTS AVAILABLE should be appealed by the United States, https://currentthoughtsontrade.com/2021/01/29/wto-panel-report-on-united-states-anti-dumping-and-countervailing-duties-on-certain-products-and-the-use-of-facts-available-should-be-appealed-by-the-united-states/; October 1, 2020:  Thoughts on the Geneva Trade Week session entitled “WTO Dispute Settlement – Where Do We Stand?”, https://currentthoughtsontrade.com/2020/10/01/thoughts-on-the-geneva-trade-week-session-entitled-wto-dispute-settlement-where-do-we-stand/; August 29, 2020:  WTO Dispute Settlement Body meeting of August 28, 2020 – how disputes are being handled in the absence of reform of the Appellate Body, https://currentthoughtsontrade.com/2020/08/29/wto-dispute-settlement-body-meeting-of-july-28-2020-how-disputes-are-being-handled-in-the-absence-of-reform-of-the-appellate-body/; August 9, 2020:  USTR Lighthizer on WTO dispute settlement – answers to Congressional questions from June 17 hearings, https://currentthoughtsontrade.com/2020/08/09/ustr-lighthizer-on-wto-dispute-settlement-answers-to-congressional-questions-from-june-17-hearings/; July 12, 2020:  WTO Appellate Body reform – revisiting thoughts on how to address U.S. concerns, https://currentthoughtsontrade.com/2020/07/12/wtos-appellate-body-reform-revisiting-thoughts-on-how-to-address-u-s-concerns/; July 2, 2020:  WTO Dispute Settlement – how to handle allegations that an Appellate Body member is affiliated with a government and hence not properly an Appellate Body member, https://currentthoughtsontrade.com/2020/07/02/wto-dispute-settlement-how-to-handle-allegations-that-an-appellate-body-member-is-affiliated-with-a-government-and-hence-not-properly-an-appellate-body-member/; March 28, 2020: March 27, 2020 Agreement on Interim Arbitration Process by EU and 15 other WTO Members to Handle Appeals While Appellate Body is Not Operational, https://currentthoughtsontrade.com/2020/03/28/march-27-2020-agreement-on-interim-arbitration-process-by-eu-and-15-other-wto-members-to-handle-appeals-while-appellate-body-is-not-operational/; March 7, 2020: Impasse on the WTO Appellate Body – Any Progress Likely by the 12th Ministerial?, https://currentthoughtsontrade.com/2020/03/07/impasse-on-the-wto-appellate-body-any-progress-likely-by-the-12th-ministerial/; February 14, 2020: USTR’s Report on the WTO Appellate Body – An Impressive Critique of the Appellate Body’s Deviation from Its Proper Role, https://currentthoughtsontrade.com/2020/02/14/ustrs-report-on-the-wto-appellate-body-an-impressive-critique-of-the-appellate-bodys-deviation-from-its-proper-role/; January 30, 2020: WTO Appellate Body Impasse – How and Why, https://currentthoughtsontrade.com/2020/01/30/wto-appellate-body-impasse-how-and-why/; December 7, 2019: The WTO Dispute Settlement System – Closing Out 2019 and Implications for 2020, https://currentthoughtsontrade.com/2019/12/07/the-wto-dispute-settlement-system-closing-out-2019-and-implications-for-2020/; November 24, 2019: With the WTO Appellate Body Becoming Dysfunctional on December 11, What Happens to Pending Appeals and Other Open Issues?, https://currentthoughtsontrade.com/2019/11/24/with-the-wto-appellate-body-becoming-dysfunctional-on-december-11-what-happens-to-pending-appeals-and-other-open-issues/; November 17, 2019: The WTO budget and the Appellate Body – Potential Fireworks at the end of 2019, https://currentthoughtsontrade.com/2019/11/17/the-wto-budget-and-the-appellate-body-potential-fireworks-at-the-end-of-2019/; November 12, 2019: Background Materials on WTO Appellate Body Reform Challenges – The Critical Issue of “Overreach”, https://currentthoughtsontrade.com/2019/11/12/background-materials-on-wto-appellate-body-reform-challenges-the-critical-issue-of-overreach/; November 4, 2019: WTO’s Appellate Body Reform – The Draft General Council Decision on Functioning of the Appellate Body, https://currentthoughtsontrade.com/2019/11/04/wtos-appellate-body-reform-the-draft-general-council-decision-on-functioning-of-the-appellate-body/; November 1, 2019: The October 28, 2019 WTO Dispute Settlement Body Meeting – Another Systemic Problem Flagged by the United States, https://currentthoughtsontrade.com/2019/11/01/the-october-28-2019-wto-dispute-settlement-body-meeting-another-systemic-problem-flagged-by-the-united-states/; October 9, 2019: The World Trade Organization in Crisis – the Last Two Months of the Appellate Body Absent Reform Is Just One Example, https://currentthoughtsontrade.com/2019/10/09/the-world-trade-organization-in-crisis-the-last-two-months-of-the-appellate-body-absent-reform-is-just-one-example/.

In late 2019 and the first half of 2020, the National Foreign Trade Council released two papers it commissioned that were written by a former USTR attorney with extensive experience in WTO dispute settlement matters, Bruce Hirsch, on Appellate Body reform. See Bruce Hirsch, Resolving the WTO Appellate Body Crisis (Vol. 1), Proposals on Overreach, December 2019, https://www.nftc.org/default/trade/WTO/Resolving%20the%20WTO%20Appellate%20Body%20Crisis_Proposals%20on%20Overreach.pdf; Bruce Hirsch, Resolving the WTO Appellate Body Crisis (Vol. 2), Proposals on Precedent, Appellate Body Secretariat and the Role of Adjudicators, June 2020, https://www.nftc.org/default/Trade%20Policy/WTO_Issues/Resolving%20the%20WTO%20AB%20Crisis%20vol2%2006042020.pdf. The first of the two papers dealt with the topic of overreach though did not address correcting past overreach situations. The NFTC press release summarized the proposals for change on the overreach issue as follows:

“The paper includes six key proposals:

“1. Enforce the 90-day timeframe for appeals;

“2. Prohibit advisory opinions, and further elaborate the circumstances constituting advisory opinions;

“3. Clarify that DSU Article 3.2 does not justify expanding or narrowing the reach of WTO provisions or filling gaps in WTO coverage;

“4. Clarify that customary rules of interpretation of public international law do not justify gap-filling and expanding or narrowing the reach of WTO provisions;

“5. Affirm that Article 17.6(ii) of the Antidumping Agreement must be given meaning, by clarifying that the provision reflects the principle just described, that WTO adjudicators may not expand or narrow the meaning of broad provisions and general terms; and

“6. Direct the Appellate Body to reject party arguments that expand or narrow the reach of agreement provisions or fill gaps in agreements.”

This year, a former USTR General Counsel, Warren Maruyama had an article published in the Journal of World Trade that again stressed the importance of addressing overreach to be able to resolve the Appellate Body impasse. See Maruyama, Warren H., “Can the Appellate Body Be Saved?”, Journal of World Trade 55, no. 2 (2021, 197-230. Mr. Maruyama notes that the problem of overreach for the United States is most pronounced in the trade remedy sphere and that there have been concerns for two decades or more flowing in large part from the Appellate Body’s creation of obligations on “zeroing”. As Mr. Maruyama states, “The concerns rest on the conviction of U.S. trade officials who participated in the Uruguay Round negotiations and later served in the Bush 43, Obama, and Trump Administrations, that there was never a WTO agreement to abolish ‘zeroing’.” Id at 197. Mr. Maruyama reviews the Uruguay Round antidumping negotiations and GATT disputes on similar language in the Tokyo Round Code to that relied upon by the Appellate Body to support his thesis that many countries knew about “zeroing” (treating sales that were not dumped as having a “0” dumping amount) during the Uruguay Round, and that efforts to have language added to the Agreement to address the issue were rejected. Id at 202-210.

Mr. Maruyama then proceeds to look at the challenges to addressing overreach and has a number of useful proposals — clarifying the standard of review for the Appellate Body, not review finding of facts under DSU Art. 11, giving meaning to ADA Article 17.6(ii) in terms of deference to administering authorities in constructions where more than one meaning is possible, examining negotiating history and ending gap filling. Id at 214 – 225. He also proposes reforming the Appellate Body appointment process (moving away from academics to individuals with WTO negotiating experience), making Appellate Body positions full time, providing a mechanism to disapprove an AB decision where a significant number of Members object, and by modifying the structure and operation of the Appellate Body Secretariat to have Secretariat personnel hired by each AB member to help the AB member during his/her time on the Appellate Body. Id at 226-228.

The importance of Mr. Maruyama’s article lies in his focus on the critical importance of solving the overreach problem if the WTO is to regain a two-tier dispute settlement system. His is another voice providing a clear signal that overreach is the most important issue to be solved and that the Walker paper from late 2019 didn’t really address this core U.S. concern.

As I have written before, addressing overreach requires both fixing the operation of the system going forward and rebalancing rights and obligations by correcting for the overreach decisions Members have flagged to the DSB in the past. The addressing of overreach is of importance to both political parties in the United States and has been on the radar of current and past Administration since at least 2002.

Because restoration of a two-tier dispute settlement system is viewed as important by many Members, it is time for WTO Members to in fact recognize the problems of past decisions and work for meaningful solutions both of the system going forward and to ensure a restoration of the balance and rights and obligations agreed to by Members during the Uruguay Round.

WTO Dispute Settlement — scheduled April 28, 2021 Dispute Settlement Body meeting is a go?

In a post in late March, I reviewed the fact the March 26 Dispute Settlement Body meeting had been postponed after the U.S. requested the removal of a request for a panel by Venezuela. Venezuela refused to withdraw its request, and the DSB meeting was postponed pending a resolution. The post also reviewed the background to the dispute and prior actions at the WTO. See March 28, 2021, U.S. blocks inclusion of Venezuelan request for panel on U.S. sanctions at WTO, Dispute Settlement Body meeting of March 26, 2021 postponed, https://currentthoughtsontrade.com/2021/03/28/u-s-blocks-inclusion-of-venezuelan-request-for-panel-on-u-s-sanctions-at-wto-dispute-settlement-body-meeting-of-march-26-2021-postponed/.

My prior post did not include the U.S. statement at the March 26 DSB meeting. That statement is copied below. See Statement by the United States at the Meeting of the WTO Dispute Settlement Body, Geneva, March 26, 2021, https://geneva.usmission.gov/wp-content/uploads/sites/290/Mar26.DSB_.Stmt_.as_.deliv_.fin_.public.pdf.

“Agenda Adoption

“• Pursuant to Rule 6 of the Rules of Procedure for Meetings of the General Council, as agreed by the Dispute Settlement Body (DSB), the United States proposes an amendment to the proposed agenda. The United States proposes to remove item 4, referred to as ‘Request for the Establishment of a Panel by Venezuela.’

“• Chair, item 4 of the proposed agenda contains an item that was submitted by purported representatives of the government of Venezuela. This is not the case.

“• The purported representatives of the Government of Venezuela attempted to place a similar item on the agenda of the DSB meeting in March 2019. At that time, the United States’ position was that the item was not requested by the legitimate government of Venezuela and therefore could not be placed on the agenda.

“• The basis for the United States’ position was straightforward: the United States—along with more than 50 other WTO Members—did not recognize the Maduro regime as legitimate. Instead, the United States recognized Juan Guaidó as the legitimate President of Venezuela.

“• In the two years since the Maduro regime’s last attempt to add its request to the DSB agenda, the United States’ position has not changed. Today, the United States—as well as many other WTO Members—continues to not recognize the legitimacy of the Maduro regime.

“• For that reason, the United States must object to the adoption of a proposed agenda that includes item 4, because that item was requested, not on behalf of the legitimate government of Venezuela, but by individuals acting on behalf of the illegitimate Maduro regime.

“• These representatives do not have the right to place an item on the agenda of a DSB meeting on behalf of the government of Venezuela.

“• The United States instead proposes that the DSB amend the proposed agenda to remove item 4, such that the agenda would contain only those items properly requested to be included by Members of the WTO.

“• The United States invites all Members to join in adopting an amended agenda.”

The next regularly scheduled Dispute Settlement Body meeting is set for April 28, 2021. Based on the postponement of the March 26th meeting, there shouldn’t be a DSB meeting until there has been a resolution of whether the Venezuelan request for a panel will be on the agenda or not. However, there has been no indication on the WTO website that there has been a resolution of the impasse between the United States and Venezuela. Indeed, the WTO did not post a news release on the events at the March 26 DSB meeting nor has it updated the actual events around WT/DS574 including the U.S. refusal to engage in consultations and requests in 2019 and again in 2021 to remove the request for a panel from the agenda of DSB meetings.

On the WTO website, the DSB meeting on April 28, 2021 continues to be listed on the calendar. Moreover, in a review of online documents under documents for meetings, there is document WTO/AIR/DSB/105 described as “Dispute Settlement Body – Meeting of 28 April 2021”. This document is restricted and so its contents are not known publicly. However, the documents for the meeting includes nine other documents including Venezuela’s same request for a panel. UNITED STATES – MEASURES RELATING TO TRADE IN GOODS AND SERVICES, REQUEST FOR THE ESTABLISHMENT OF A PANEL BY VENEZUELA, WT/DS574/2/Rev.1 (16 March 2021). Absent a resolution of the U.S. request to have agenda item 4 removed, it is assumed that the Secretariat staff have just repeated what was on the agenda for the March 26th DSB meeting and included those documents again. Indeed the other documents shown are all from mid-March either indicating that the postponed DSB meeting will be resumed following a resolution of the U.S. opposition that has not been announced or is a marker should there be a resolution.

Conclusion

An important need for the public interested in the operation of the World Trade Organization is transparency in the WTO’s operation and events that occur. I have reviewed in prior posts the concerns about the increased use of designations on documents to remove larger and larger volumes of documents from public view. See, e.g., November 12, 2019, The Continued Problem of Inconsistent Transparency at the World Trade Organization, https://currentthoughtsontrade.com/2019/11/12/the-continued-problem-of-inconsistent-transparency-at-the-world-trade-organization/. There has been little apparent interest within the WTO or by its Members in correcting these deviations from transparency.

Certainly with regard to which meetings are or are not going to happen at the WTO, the public should expect accuracy and disclosure when impasse issues have been resolved. Next week’s planned DSB meeting is an example of unnecessary confusion. Is there a meeting or not?

President Biden nominates two to be Deputy U.S. Trade Representatives in important step to fill some of the important vacancies at USTR

On April 16, 2021, President Biden put forward the names of eight individuals for senior Administration positions, two of which were Sarah Bianchi and Jayme White each for one of the three openings as a Deputy U.S. Trade Representative. See White House Briefing Room, President Biden Announces His Intent to Nominate Eight Key Administration Leaders, April 16, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/16/president-biden-announces-his-intent-to-nominate-eight-key-administration-leaders/.

Jayme White is the Senate Finance Committee Democratic counterpart to Ambassador Katherine Tai (formerly with the House Ways and Means Committee) with a distinguished career as a Senate staffer. Sarah Bianchi has extensive prior Administration experience in both the Obama/Biden and Clinton/Gore administrations.

The profile of each as included in the White House announcement is copied below.

Sarah Bianchi, Deputy United States Trade Representative

“Sarah Bianchi has spent nearly a decade in government roles in economic and domestic policy including in the Office of the Vice President, the White House Domestic Policy Council, the Office of Management and Budget, and the Senate Health, Education, Labor and Pensions Committee.   In 2011, Ms. Bianchi was appointed by then Vice President Biden as his head of economic and domestic policy in the White House, where she ran the economic and domestic policy team in the Office of the Vice President and coordinated policy initiatives ranging from workforce competitiveness to manufacturing to budget negotiations. She also served as Deputy Assistant to the President for Economic Policy.  Bianchi has also served as a senior advisor to the Biden Institute at the University of Delaware, where she worked on a variety of economic policies and served as Chair of the Institute’s Policy Advisory Board.

“Bianchi has served in a number of private sector roles as well. In 2019, she joined Evercore ISI in the macroeconomic research group where she leads the U.S. public policy research.  She graduated magna cum laude from Harvard University in 1995 and has served on the Senior Advisory Committee at the Institute of Politics at Harvard University since 2004.  Bianchi and her husband live in Arlington, Virginia with their twelve-year-old daughter and ten-year-old son.

“Jayme White, Deputy United States Trade Representative

“Jayme White has spent two decades working to ensure American trade policy empowers American workers and promotes a sustainable environment. Mr. White grew up in Seattle, WA, where his family were union workers for Boeing. He went to Washington, DC to work for his hometown member of Congress in the House of Representatives, Representative Jim McDermott, who served on the Committee on Ways and Means, which has jurisdiction over international trade. Since then, he has played a role in nearly every major trade issue and trade legislation, over the last 20 years.

“Mr. White has served in the U.S. Senate since 2009, including as the chief trade advisor for the Senate Committee on Finance since 2014, under the leadership of Chairman Ron Wyden. During this tenure, White led efforts to level the playing field for American workers, through trade negotiations and agreements, and by reforming US trade laws to better respond to unfair foreign trade practices. In his role on the Finance Committee, he has long represented and advanced bipartisan US views to foreign trade leaders, and the outcomes of those efforts are evident in many trade agreements. Key provisions — especially enforceable measures on labor and the environment — found in the United States-Mexico-Canada Agreement (USMCA) are a result of his efforts.”

Both nominees reflect the focus that the Biden Administration has on making trade work for all, especially workers, and be a tool to build back better and help the U.S. address climate change and other environmental issues.

The Chairman of the Senate Finance Committee, Senator Ron Wyden of Oregon, and the USTR, Ambassador Katherine Tai, issued statements on the 16th strongly supporting the nominations of both and, in Amb. Tai’s case, looking forward to both nominees being part of the USTR team to move the Biden agenda forward. Both nominees have strong policy backgrounds and should be confirmed relatively easily. When these nominees are confirmed, the Biden Administration will be an important step closer to filling out its trade team.

There is a third Deputy USTR slot that remains open as well as the position of Chief Agriculture Negotiator. So more nominations should be forthcoming in the coming weeks or months. It is not clear whether either nominee is being considered for the Geneva slot as Permanent Representative to the World Trade Organization.

The press release from Senator Wyden and Ambassador Tai are embedded below.

Chairmans-News-_-Newsroom-_-The-United-States-Senate-Committee-on-Finance

Statement-from-Ambassador-Tai-on-Bianchi-White-nominations-_-United-States-Trade-Representative

WTO’s April 14th virtual meeting to review COVID-19 vaccine availability

WTO’s Director-General Ngozi Okonjo-Iweala had indicated when she took office that she would be gathering industry, multilateral groups, and some governments to look at how vaccine production could be expanded and the role the WTO could play in that effort. At the same time, with the proposal from India and South Africa for waiver from most TRIPS obligations on medical products relevant to addressing the COVID-19 pandemic still under consideration in the TRIPS Council, with opposition from a number of important Members, DG Okonjo-Iweala has been seeking an approach that in fact expands production in developing and least developed countries and greater distribution to low- and middle-income countries. without needing an all or nothing resolution to the proposed waiver.

I have previously reviewed the issue of vaccine availability and prior DG Okonjo-Iweala statements in a number of posts. See, e.g., April 13, 2021, April 15, 2021 — U.S and Gavi co-host event for additional funding for COVAX amid concerns about two workhorse vaccines for COVAX, ttps://currentthoughtsontrade.com/2021/04/13/april-15-2021-u-s-and-gavi-co-host-event-for-additional-funding-for-covax-amid-concerns-about-two-workhorse-vaccines-for-covax/; April 8, 2021, COVAX delivers COVID-19 vaccines to 100th country; India surge in infections likely to reduce product availability for COVAX through May and likely longer, https://currentthoughtsontrade.com/2021/04/08/covax-delivers-covid-19-vaccines-to-100th-country-india-surge-in-infections-likely-to-reduce-product-availability-for-covax-through-may-and-likely-longer/; April 2, 2021, Global vaccinations against COVID-19; developments and challenges in the roll-out for many countries, https://currentthoughtsontrade.com/2021/04/02/global-vaccinations-against-covid-19-developments-and-challenges-in-the-roll-out-for-many-countries/; March 25, 2021, Global vaccinations for COVID-19 — continued supply chain and production issues and a new wave of infections in many countries delay greater ramp up for some until late in the second quarter of 2021, https://currentthoughtsontrade.com/2021/03/25/global-vaccinations-for-covid-19-continued-supply-chain-and-production-issues-and-a-new-wave-of-infections-in-many-countries-delay-greater-ramp-up-for-some-until-late-in-the-second-quarter-of-2021/; March 12, 2021, COVID-19 vaccines – U.S., Japan, India and Australia agree to one billion doses for Indo-Pacific countries, https://currentthoughtsontrade.com/2021/03/12/covid-19-vaccines-u-s-japan-india-and-australia-agree-to-one-billion-doses-for-indo-pacific-countries/; March 12, 2021, The 8-9 March  “Global C19 Vaccine Supply Chain and Manufacturing Summit” – efforts to ramp-up production, https://currentthoughtsontrade.com/2021/03/12/the-8-9-march-global-c19-vaccine-supply-chain-and-manufacturing-summit-efforts-to-ramp-up-production/; March 5, 2021, COVID-19 vaccines — France supports Italy’s blockage of a shipment to Australia; while Australia has asked the EU to permit the shipment, Australia will have its own production of AstraZeneca product by the end of March, https://currentthoughtsontrade.com/2021/03/05/covid-19-vaccines-france-supports-italys-blockage-of-a-shipment-to-australia-while-australia-has-asked-the-eu-to-permit-the-shipment-australia-will-have-its-own-production-of-astrazeneca-produc/; March 4, 2021, Italy blocks exports of COVID-19 vaccines to Australia, first blockage of export authorization by the EU or its member states, https://currentthoughtsontrade.com/2021/03/04/italy-blocks-exports-of-covid-19-vaccines-to-australia-first-blockage-of-export-authorization-by-the-eu-or-its-member-states/; March 4, 2021, The EU’s response to challenges to its actions on COVID-19 vaccine exports, https://currentthoughtsontrade.com/2021/03/04/the-eus-response-to-challenges-to-its-actions-on-covid-19-vaccine-exports/; March 3, 2021, WTO Director-General opinion piece in the Financial Times and recent actions by the U.S., https://currentthoughtsontrade.com/2021/03/03/wto-director-general-opinion-piece-in-the-financial-times-and-recent-actions-by-the-u-s/; March 1, 2021, WTO Director-General Ngozi Okonjo-Iweala’s opening statement at the March 1 General Council meeting, https://currentthoughtsontrade.com/2021/03/01/wto-director-general-ngozi-okonjo-iwealas-opening-statement-at-the-march-1-general-council-meeting/.

“COVID-19 and Vaccine Equity: What Can the WTO Contribute?”

While the virtual meeting convened by DG Okonjo-Iweala was conducted under Chatham House rules, a number of participants made their prepared comments public and there was some press coverage.

DG Okonjo-Iweala provided a wrap-up at the end of the session which was posted on the WTO website. See WTO news, DG Okonjo-Iweala calls for follow-up action after WTO vaccine equity event, April 14, 2021, https://www.wto.org/english/news_e/news21_e/dgno_14apr21_e.htm (“Director-General Ngozi Okonjo-Iweala today (14 April) called on WTO members, vaccine manufacturers and international organizations to act to address trade-related obstacles to the scale-up of COVID-19 vaccine production to save lives, hasten the end of the pandemic and accelerate the global economic recovery.”). DG Okonjo-Iweala’s summary comments are copied below. See WTO speeches, Chair Summary following “COVID-19 and Vaccine Equity: What Can the WTO Contribute?”, April 14, 2021, https://www.wto.org/english/news_e/spno_e/spno7_e.htm.

“One thing that came out of today’s discussions is that it was only through working together across borders that scientists developed safe and effective vaccines in record time. And it is only by working together, across borders, that we’ll be able to solve the problems [of vaccine scarcity and equitable access] discussed today. This is a problem of the global commons, and we have to solve it together.

“Our purpose today was to contribute to efforts to increase vaccine production and broaden access, starting with the immediate term.

“Specifically we had three goals:

“The first was to pinpoint the obstacles, particularly the trade-related obstacles, to ramping up production, and to equitably distributing and administering vaccines — and we looked at how the WTO could contribute to these solutions.

“The second was to bring together people who are able to increase and to scale up manufacturing, people in a position to share technology and knowhow, and people willing to finance additional manufacturing capacity.

“And third, to think about the road ahead, including on the TRIPS waiver and incentives for research and development, so that we get the medical technologies we need, and no country is left at the back of the line waiting. If there is one refrain we heard continuously from everyone today it is that no one is safe until everyone is safe.

“We heard first-hand from governments and vaccine manufacturers from developed, developing, and least developed countries, as well as a wide range of other stakeholders from international organizations, civil society and development finance institutions.

“And we heard good news: that supplies are ramping up and companies are learning by doing, that there have been major gains in productivity, and that there is still capacity. We also heard that there is a willingness to finance investment in vaccine manufacturing both in the short- and long-term, and there are ideas and energy to do things differently.

“However, we heard from many that we need to do more. It hasn’t really been business as usual, so we may need to move on to ‘business unusual’ to solve the problems before us.

“In the discussions today we heard a great deal of agreement. We agree that it’s not acceptable for people and countries to have to wait indefinitely for vaccines. We do not want to repeat experiences of the past.

“We heard a consensus on the urgent need to scale up production and vaccinate everyone, because every day the shortage continues, scope for dangerous new variants will increase, and the number of prevent preventable deaths will grow. The economic impact of these delays can and has been quantified by many institutions, including the IMF, the World Bank, and the WTO.

“It was agreed that production capacity needs to be expanded, particularly in developing and least developed countries and emerging markets. And that vaccine distribution needs to be more effective and more equitable.

“We heard that open cross-border trade in raw materials, and other inputs, was essential for maintaining and scaling up production, and that supply chains in these inputs must be maintained.

“Also widely shared was the view that innovation, research and development will be vital for dealing with COVID-19 variants and in other health crises.

“We had useful exchanges on issues where some perspectives were different, such as on the future shape of vaccine supply chains, on the appropriate role for intellectual property protections, on issues of vaccine contract transparency — which was pointed to by many as an important factor in appropriate pricing and distribution and a critical part of access and equity.

“Concerns expressed by some about cross-border supply chain operations, including export restrictions and shortages of skilled personnel reinforced my view, and hopefully that of members, that the WTO must and can play a central part in the response to this crisis.

“Various perspectives about the TRIPS Agreement, and whether the existing flexibilities are enough to address developing country needs were put on the table. These echoed the discussions on the waiver proposal going on in the TRIPS Council, and I want to reiterate that today is a way of contributing to that discussion.

“I agree with the view that the WTO is a logical forum for finding a way forward on these issues, and I hope that the ideas raised here will contribute to convergence in the TRIPS Council on meaningful results that can contribute to the goals that we have.

“I hope that the discussion today, listening to each other, seeing that we all share a common goal, and that we may not be so far apart, will lead to the willingness to come to the middle,  and work out something that will be acceptable to all.

“Participants were generally of the view that ramping up vaccine manufacturing capacity is a complex process. It requires large, long-term investment and sustainable business models. It relies on open international supply lines for ingredients and equipment. We heard how shortages of even a single piece of equipment, filters, can halt operations at a production facility. Vaccine manufacturing necessitates collaboration, and the movement of skilled labour, to facilitate transfer of technology and knowhow.

“Safety is a paramount consideration, and quality is the other part of safety. This demands effective regulatory capacity and stringent compliance, down to the factory floor. Indeed we heard this is a big risk companies factor in when making decisions as to where to produce, and how to produce. I hope that they’ve heard sufficient encouragement today, to enable us to move towards leveraging the existing capacities in emerging markets and developing countries mentioned repeatedly today, which could actually help to take care of the shortages talked about.

“Turning capacity around to produce COVID-19 vaccines is not only about the physical space alone. We heard repeatedly that it requires transfer of technology and knowhow, together with investment and support for quality assurance.

“We also learned about how existing licensing arrangements have operated — including an example of how skills transfer was carried out in a few as six months. We also heard calls for support to build human capital, and to help build regulatory cooperation.

“Some participants suggested more active matchmaking to connect companies that have the investment capacity with those that have potential for expanding production capacity, even in the short term.

“We also heard about ongoing efforts to build new manufacturing capacity, and the lessons that can be learned from that.

“We also began to see the aspects of the collaboration we need to make things happen. We had many international organizations show they are willing to work together to bring to fruition things like putting in place technical expertise, helping with capacity building and quality control, and investing directly in production.

“I believe that today’s exchanges have advanced our understanding of the challenges we face for scaling up vaccine production, and that working together is the only way ahead.

“In the coming weeks and months, we expect concrete follow-up action. These issues are not easy, but the political will and engagement from the private sector displayed today, suggests it is possible.

“As we move forward, I expect:

“- From WTO members:

“- Action to further reduce export restrictions and supply chain barriers, and to work with other organizations to facilitate logistics and customs procedures.  We are monitoring this as part of our regular work, and we’ll continue doing so to increase supplies and maintain robust supply chains. Trade has been underlined as a critical factor in production; it is incumbent upon WTO members to act.

‘- Advance negotiations in the TRIPS Council on the waiver proposal and incentives for research and innovation. I hope that the ideas and the open dialogue heard will move us closer to agreement. 

‘- For vaccine manufacturers:

‘- Concrete moves to scale up vaccine manufacturing, both short-term turnaround of existing capacities, milking whatever productivity gains we can from current facilities, and taking steps to invest.

“- Increased technology and knowhow transfer, which many participants stressed would be necessary to make additional production work.

“- We need transparency in contract agreements and product pricing. We hope to continue this dialogue and to help monitoring steps in that direction.

“- For international organisations and financial institutions:

“- We noted your willingness to finance, both existing and new capacity, your willingness to work on capacity building for regulatory issues, not just for vaccines, but also for therapeutics and diagnostics, which are equally important.

“I trust that we have found a good basis to deliver concrete action, and to continue this discussion that we’ve had today.

“This should not be a one-off, we should continue to talk to each other, and make sure that we can deliver.

“I hope that besides concrete action to increase capacity, this discussion has given us elements of a framework on trade and health that we can put together at the WTO, and that can be put before ministers at the 12th Ministerial Conference in mid-December. Such a framework should provide for trade-related preparedness to handle this pandemic, and the next one.”

Press accounts indicate that the United States, European Union, India and South Africa participated. Statements from USTR Katherine Tai and Executive Vice President Dombrovskis are available from government websites. See USTR press release, Ambassador Katherine Tai’s remarks at a WTO virtual conference on Covid-19 vaccine equity, April 14, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/april/ambassador-katherine-tais-remarks-wto-virtual-conference-covid-19-vaccine-equity; European Commission press release, Speech by Executive Vice-President Valdis Dombrovskis at the WTO Webinar “Covid and Vaccine Equity,” 14 April 2021, https://ec.europa.eu/commission/commissioners/2019-2024/dombrovskis/announcements/speech-executive-vice-president-valdis-dombrovskis-wto-webinar-covid-and-vaccine-equity_en.

The Biden Administration has been meeting with various interest groups on the TRIPS wavier proposal (both pro and con) and is receiving pressure from some Members of Congress and prior government officials to agree to a waiver. Ambassador Tai’s statement stresses the need for equity in vaccine availability. “These losses have been disproportionately borne by vulnerable and economically disadvantaged communities within our countries. And the significant inequities we are seeing in access to vaccines between developed and developing countries are completely unacceptable. Extraordinary times require extraordinary leadership, communication, and creativity. Extraordinary crises challenge all of us to break out of our comfortable molds, our in-the-box thinking, our instinctive habits. This is not just a challenge for governments. This challenge applies equally to the industry responsible for developing and manufacturing the vaccines. The desperate needs that our people face in the current pandemic provide these companies with an opportunity to be the heroes they claim to be – and can be. As governments and leaders of international institutions, the highest standards of courage and sacrifice are demanded of us in times of crisis. The same needs to be demanded of industry.”

The EU statement is consistent with their views that equity is necessary and that the EU has been working to contribute to that result through production ramp up and large exports in fact, including to the COVAX facility. The EU summed up what the WTO should be doing. “To sum up, the WTO can support vaccine equity through five sets of actions:
Promoting best practices in terms of trade facilitation and regulatory cooperation to maintain open supply chains; Facilitating cooperation with the private sector, both to ramp up production in the short term, and to enhance manufacturing in global regions with under-capacity, focusing in particular on Africa; Supporting Members’ use of the available TRIPs flexibilities; Continuing to seek joint approaches with the World Health Organisation and the World
Intellectual Property Organisation; and Ensuring transparency and effective monitoring of any temporary export restriction, as proposed by the Ottawa Group.”

I have not found statements from either India or South Africa but at least one publication indicated they stressed the need for a TRIPS waiver for all Members. See Washington Trade Daily, WTO’s Role in Vaccine Equity, April 15, 2021, https://files.constantcontact.com/ef5f8ffe501/63ac7508-8034-44b3-8c3c-045c1bedec43.pdf.

The World Health Organization also participated and the Director-General’s statement is available from the WHO website. See WHO press release, COVID-19 and vaccine equity panel: what can the World Trade Organization contribute?, 14 April 2021, https://www.who.int/director-general/speeches/detail/covid-19-and-vaccine-equity-panel-what-can-the-world-trade-organization-contribute (“COVAX was created, as you know, almost a year ago to avoid the same thing happening again. And although COVAX has distributed almost 40 million doses of vaccine to 110 countries and economies, vaccine nationalism, vaccine diplomacy and severe supply constraints have so far prevented COVAX from realizing its full potential. Global manufacturing capacity and supply chains have not been sufficient to deliver vaccines quickly and equitably where they are needed most.  More funding is needed, but that’s only part of the solution. Money doesn’t help if there are no vaccines to buy. We need to dramatically scale up the number of vaccines being produced. To address this challenge, WHO and our partners have established a COVAX manufacturing task force, to increase supply in the short term, but also to build a platform for sustainable vaccine manufacturing to support regional health security. We need to go beyond the traditional modus operandi to provide sustainable and effective solutions to address this extraordinary crisis. Some manufacturers have begun sharing the know-how and technologies to produce more vaccines, but only under restrictive conditions, on a very limited basis. The current company-controlled production sharing agreements are not coming close to meeting the overwhelming public health and socio-economic needs for effective, affordable and equitable access to vaccines, as well as therapeutics and other critical health technologies.  This is an unprecedented emergency that demands unprecedented measures.”).

One of the private sector participants, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) included its statement on the IFPMA website. See IFPMA, IFPMA statement at WTO event “COVID-19 and Vaccine Equity: What can the WTO Contribute”, 14 April 2021, https://www.ifpma.org/resource-centre/ifpma-statement-at-wto-event-covid-19-and-vaccine-equity-what-can-the-wto-contribute/. The IFPMA statement is embedded below but highlights the extraordinary effort of the private sector in ramping up production which is expected to be 10 billion doses by the end of 2021 with some 272 partnerships entered into and 200 technology transfer agreements.

IFPMA_WTO_Event_COVID-19_and_Vaccine_Equity_Statement_15April2021

Rising Infections; dramatically ramped up production

Last Thursday’s summary from the European Centre for Disease Prevention and Control (ECDC) shows the world going through a massive ramp up of new infections such that week 14 of 2021 is the second highest week during the pandemic of new infections with the vast majority of the cases and increase in Asia, the Americas and Europe. See ECDC, COVID-19 situation update worldwide, as of week 14, updated 15April 2021, https://www.ecdc.europa.eu/en/geographical-distribution-2019-ncov-cases.

Distribution of COVID-19 cases worldwide, as of week 14 2021

Distribution of COVID-19 cases worldwide, as of week 14 2021
“Distribution of cases of COVID-19 by continent (according to the applied case definition and testing strategies in the affected countries)

“Cases reported in accordance with the applied case definition and testing strategies in the affected countries.”

The ECDC data show Africa as accounting for 3.18% of total infections during the pandemic, Asia accounting for 19.50% (India is 9.91%; China is 0.07%), the Americas for 43.18% (United States 22.91% and Brazil 9.90%), Europe 34.08% (the Eu is 20.79%, the UK is 3.20%, Russia is 3.4%), and Oceania 0.05%.

At the same time as new infections are ramping up, vaccinations are also increasing sharply. Bloomberg data through April 17, 2021 shows a global total of 884 million vaccinations having been given globally. See Bloomberg, More Than 884 Million Shots Given: Covid-19 Tracker, updated April 17, 2021, https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution/.

While there are countries who have fewer or more vaccinations as a percent of the global total than their share of infections, considering distribution equity from that vantage point has some surprising results.

Country Percent of infections Percent of vaccinations

United States 22.91% 23.16%

European Union 20.79% 12.36%

United Kingdom 3.20% 4.76%

Japan 0.37% 0.21%

Republic of Korea 0.08% 0.17%

India 9.91% 13.85%

China 0.07% 21.18%

South Africa 1.14% 0.33%

Brazil 9.90% 3.92%

The pharmaceutical industry is projecting that 10 billion doses of COVID-19 vaccine will ship in 2021. That means that in the next eight and a half months, some nine billion doses will ship. If 10 billion doses are shipped in 2021, that is sufficient to fully vaccinate 5-6 billion people in 2021 (depending on number of doses that are for single shot vaccines). That is sufficient doses to vaccinate 63.3-75.9% of the current estimate of the global population (7.9 billion). See Worldometer, Current World Population, https://www.worldometers.info/world-population/#:~:text=The%20current%20world%20population%20is,currently%20living)%20of%20the%20world./ With the continued efforts to expand production and approve additional vaccines, 10 billion doses may be exceeded in fact by the end of the year.

This suggests, just as the COVAX and UNICEF distribution plans indicate, that low- and middle-income countries will see a large increase in supplies in the second half of 2021, just as will be true for the rest of the world.

The U.S.-Gavi event on April 15 talked about increasing funding for COVAX to go from 20% to 30% of populations the COVAX facility is serving. See U.S. Department of State, Video Remarks of Secretary of State Antony Blinken, Launch of GAVI’s COVAX Commitment, April 15, 2021, https://www.state.gov/launch-of-gavis-covax-commitment/. Moreover, the World Bank is committing billions to increases purchases of vaccines for low- and middle-income countries. And many countries are executing their own contracts with vaccine producers.

If there are issues besides assistance in resolving bottlenecks that would appear to be important to speeding up distribution and ensuring access by all, it would be to ensure that all countries with vaccine supplies greater than their internal needs, work to get those vaccines distributed to other countries later this year as their internal needs clarify.

Moreover, there are very exciting developments on the vaccine front with the start up of trials in a number of developing countries of a new vaccine where the potential exists for low costs with a vaccine that can be produced locally by many countries based on technology similar to what is already used for other vaccines. See New York Times, Researchers Are Hatching a Low-Cost Coronavirus Vaccine, A new formulation entering clinical trials in Brazil, Mexico, Thailand and Vietnam could change how the world fights the pandemic, April 5, 2021, updated April 17, 2021, https://www.nytimes.com/2021/04/05/health/hexapro-mclellan-vaccine.html.

All to say, there is considerable reason for optimism with the current efforts and progress. Efforts by governments, multilateral institutions, industry and others are helping identify challenges both to production and distribution but also to the needs for a speedy recovery once the pandemic is brought under control. While everyone needs to continue to focus on resolving bottlenecks, securing cooperation to ensure all are reached, and addressing developments as they arise, 2021 is not a repeat of the HIV situation.

The WTO has an important role in monitoring trade restrictions and looking forward to what actions Members are willing to take to advance trade and health needs and help ensure a next pandemic is handled more quickly than the COVID-19 has been. The effort to obtain a waiver from TRIPS obligations is, in this writer’s view, missing where the challenges are and seeking an outcome that will not advance improved vaccinations in 2021. While it is common for countries to continue to fight yesterday’s problems instead of addressing the current challenges, such an approach will not secure equitable and affordable access to vaccines in 2021-2022.

Japan’s Prime Minister Suga’s visit to the United States — agreements on a range of important topics

Japan’s Prime Minister Suga was the first head of state to visit President Biden and Vice President Harris in Washington. There were a series of meetings on Friday, April 16 with a series of documents released afterwards reviewing the importance of the alliance to peace and stability in the Indo-Pacific region and announcement of expanded future collaboration between Japan and the United States. The lead document is entitled U.S.- Japan Joint Leaders’ Statement: “U.S. – JAPANGLOBAL PARTNERSHIPFOR A NEW ERA” which summarizes the major areas discussed and agreed. See White House Briefing Room, U.S.- Japan Joint Leaders’ Statement: “U.S. – JAPAN GLOBAL PARTNERSHIP FOR A NEW ERA” , April 16, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/16/u-s-japan-joint-leaders-statement-u-s-japan-global-partnership-for-a-new-era/. Regional security, human rights, joint efforts on innovation, response to the COVID-19 pandemic, climate change and the Summer Olympic games in Tokyo in 2021, and people-to-people ties are some of the issues addressed. The Joint Leaders’ Statement is copied below.

“President Joseph R. Biden is honored to welcome Prime Minister Suga Yoshihide for the first foreign-leader visit of his presidency. Today, the United States and Japan renew an Alliance that has become a cornerstone of peace and security in the Indo-Pacific region and around the world. An ocean separates our countries, but commitments to universal values and common principles, including freedom, democracy, human rights, the rule of law, international law, multilateralism, and a free and fair economic order, unite us. Together we pledge to demonstrate that free and democratic nations, working together, are able to address the global threats from COVID-19 and climate change while resisting challenges to the free and open rules-based international order. Through this new era of friendship between the United States and Japan, each of our democracies will grow stronger still.

“Our historic partnership is essential to the safety and prosperity of both our peoples. Forged in the wake of strife, the Alliance has become a bedrock to each of our nations. The world has changed many times over; our ties have pulled tighter. Our democracies have flourished, our economies have thrived, and we have become leaders in innovation. Our cultural and people-to-people ties have grown ever-deeper, and together we have led in multilateral institutions, in expanding global commerce and investment, and in advancing peace, security, and prosperity in the Indo-Pacific region. In celebration of our long-standing and close bonds, President Biden and Prime Minister Suga recommit themselves to an indelible Alliance, to a rules-based approach to regional and global order founded on universal values and common principles, and to cooperation with all those who share in these objectives. The United States and Japan will remake these commitments for a new era.

“THE ALLIANCE: FORGING A FREE AND OPEN INDO-PACIFIC

“The U.S.-Japan Alliance is unwavering, and we are more prepared than ever to address regional challenges. Our Alliance advances a shared vision for a free and open Indo-Pacific based on our commitment to universal values and common principles, and the promotion of inclusive economic prosperity. We respect sovereignty and territorial integrity and are committed to peacefully resolving disputes and to opposing coercion. We promote shared norms in the maritime domain, including freedom of navigation and overflight, as enshrined in the UN Convention on the Law of the Sea.

“President Biden and Prime Minister Suga committed to further strengthening the U.S.-Japan Alliance to expand on this vision, and fully endorsed the March 2021 Joint Statement of the U.S.-Japan Security Consultative Committee. Japan resolved to bolster its own national defense capabilities to further strengthen the Alliance and regional security. The United States restated its unwavering support for Japan’s defense under the U.S.-Japan Treaty of Mutual Cooperation and Security, using its full range of capabilities, including nuclear. It also reaffirmed the fact that Article V of the Treaty applies to the Senkaku Islands. Together, we oppose any unilateral action that seeks to undermine Japan’s administration of the Senkaku Islands. The United States and Japan committed to enhance deterrence and response capabilities in line with the increasingly challenging security environment, to deepen defense cooperation across all domains, including cyber and space, and to bolster extended deterrence. We also highlighted the importance of strengthening bilateral cybersecurity and information security, a foundational component of closer defense cooperation, and of safeguarding our technological advantages. We remain committed to the implementation of the current arrangements on the U.S. forces realignment, including the construction of the Futenma Replacement Facility at Henoko as the only solution that avoids the continued use of Marine Corps Air Station Futenma, the Field Carrier Landing Practice Facility at Mageshima, and the relocation of U.S. Marine Corps units from Okinawa to Guam. We resolved to conclude in a timely manner a meaningful multi-year Host Nation Support agreement to ensure the stable and sustainable stationing of the U.S. forces in Japan.

“President Biden and Prime Minister Suga exchanged views on the impact of China’s actions on peace and prosperity in the Indo-Pacific region and the world, and shared their concerns over Chinese activities that are inconsistent with the international rules-based order, including the use of economic and other forms of coercion. We will continue to work with each other based on universal values and common principles. We also recognize the importance of deterrence to maintain peace and stability in the region. We oppose any unilateral attempts to change the status quo in the East China Sea. We reiterated our objections to China’s unlawful maritime claims and activities in the South China Sea and reaffirmed our strong shared interest in a free and open South China Sea governed by international law, in which freedom of navigation and overflight are guaranteed, consistent with the UN Convention on the Law of the Sea. We underscore the importance of peace and stability across the Taiwan Strait and encourage the peaceful resolution of cross-Strait issues. We share serious concerns regarding the human rights situations in Hong Kong and the Xinjiang Uyghur Autonomous Region. The United States and Japan recognized the importance of candid conversations with China, reiterated their intention to share concerns directly, and acknowledged the need to work with China on areas of common interest.

“The United States and Japan reaffirmed their commitment to the complete denuclearization of North Korea, urging North Korea to abide by its obligations under UN Security Council resolutions, and called for full implementation by the international community. We intend to strengthen deterrence to maintain peace and stability in the region and will work together and with others to address the dangers associated with North Korea’s nuclear and missile program, including the risk of proliferation. President Biden reaffirmed the United States’ commitment to the immediate resolution of the abductions issue.

“Together, we will continue to work with allies and partners, including with Australia and India through the Quad, which has never been stronger, to build the free, open, accessible, diverse, and thriving Indo-Pacific we all seek. We support ASEAN’s unity and centrality in the Indo-Pacific, as well as the ASEAN Outlook on the Indo-Pacific. We also concurred that trilateral cooperation with the Republic of Korea is essential to our shared security and prosperity. We firmly condemn violence committed by the Myanmar military and police against civilians, and commit to continue taking action to press for the immediate cessation of violence, the release of those who are detained, and a swift return to democracy.

AN ALLIANCE FOR A NEW ERA

“Recognizing that our shared security and prosperity requires new forms of 21st century cooperation, President Biden and Prime Minister Suga have launched a new Competitiveness and Resilience (CoRe) Partnership. Our partnership will ensure that we lead a sustainable, inclusive, healthy, green global economic recovery. It will also generate economic growth guided by open and democratic principles, supported by transparent trade rules and regulations and high labor and environmental standards, and aligned with a low-carbon future. To achieve these goals, the partnership will focus on i) competitiveness and innovation, ii) COVID-19 response, global health, and health security, and iii) climate change, clean energy, and green growth and recovery.

“The United States and Japan recognize that digital economy and emerging technologies have the potential to transform societies and bring about tremendous economic opportunities. We will collaborate to enhance our countries’ competitiveness, individually and together, by deepening cooperation in research and technology development in life sciences and biotechnology, artificial intelligence, quantum information sciences, and civil space. President Biden and Prime Minister Suga affirmed their commitment to the security and openness of 5th generation (5G) wireless networks and concurred that it is important to rely on trustworthy vendors. The United States and Japan will engage with others through our enhanced Global Digital Connectivity Partnership to catalyze investments and to provide training and capacity building to promote vibrant digital economies. We will also partner on sensitive supply chains, including on semi-conductors, promoting and protecting the critical technologies that are essential to our security and prosperity.

“The United States and Japan are committed to maintaining and further strengthening our robust bilateral trade relationship while advancing shared interests, including digital trade cooperation, the development of trade policies that support climate change objectives, World Trade Organization (WTO) reform, and promoting inclusive growth in the Indo-Pacific. We will continue to work together bilaterally, as well as within the G7 and the WTO, to address the use of non-market and other unfair trade practices, including violations of intellectual property rights, forced technology transfer, excess capacity issues, and the use of trade distorting industrial subsidies. We reaffirm our commitment to achieving prosperity and maintaining economic order in the Indo-Pacific region while engaging with other like-minded partners.

“Acknowledging that the climate crisis is an existential threat to the world, we realize that our countries must play a critical role in leading the global effort to combat this crisis. The United States and Japan are committed to taking decisive climate action by 2030, both aligned with efforts to limit the global temperature increase to 1.5 degrees Celsius and 2050 greenhouse-gas emissions net-zero goals. In recognition of this responsibility, President Biden and Prime Minister Suga have launched the U.S.-Japan Climate Partnership. This partnership has three pillars: first, Paris Agreement implementation and achievement of the 2030 targets/ nationally determined contributions (NDCs); second, clean energy technology development, deployment, and innovation; and third, efforts to support decarbonization in other countries, especially in the Indo-Pacific.

“COVID-19 has shown our countries and the world that we are not prepared for a biological catastrophe. To that end, the United States and Japan will also strengthen cooperation to advance health security, respond to future public health crises, and build global health. At the first-ever leaders’ summit of the Quad on March 12, 2021, we established the Quad Vaccine Experts Group designed to expand safe and effective COVID-19 vaccine manufacturing, procurement, and delivery for the Indo-Pacific region to supplement multilateral efforts. As we respond to COVID-19, we must also prepare for the next pandemic and strengthen global health security and bilateral public and private cooperation on global health. We will work together to reform the World Health Organization by strengthening its ability to prevent pandemics through early and effective prevention, detection, and response to potential health emergencies, and by increasing its transparency and ensuring it is free from undue influence. We will also support a transparent and independent evaluation and analysis, free from interference and undue influence, of the origins of the COVID-19 outbreak and for investigating outbreaks of unknown origin in the future. We resolved to take decisive action to help the Indo-Pacific build better regional pandemic preparedness, and will work together and multilaterally to build the capacity of all countries to prevent, detect, and respond to infectious disease outbreaks, including through existing initiatives like the Global Health Security Agenda, and a new partnership coordinating on a health security financing mechanism, regional surge capacity, and triggers for rapid response. Furthermore, as we look toward a healthier and more resilient future, we will bolster our support for COVAX. We will also cooperate on global COVID-19 vaccine supply and manufacturing needs toward ending the pandemic.

“These new partnerships will harness our leadership in science, innovation, technology, and health at a time of extraordinary geopolitical change. They will allow us to build back better in the Indo-Pacific, leading the region to a more resilient and vibrant future.

LOOKING FORWARD

“The charges we take up today are considerable, but we face them with resolve and unity. Together, we will ensure that our security relationship is steadfast, despite challenges to our regional vision; that our partnership fuels a sustainable global economic recovery, after a year of global grief and hardship; and that we cooperate with like-minded partners around the world to lead a rules-based international order, despite challenges to its freedom and openness. People-to-people ties form the bedrock of our friendship and it is through initiatives such as the Mansfield Fellowship Program that we will continue to build bridges between our two societies that will sustain our Alliance into the future. President Biden supports Prime Minister Suga’s efforts to hold a safe and secure Olympic and Paralympic Games this summer. Both leaders expressed their pride in the U.S. and Japanese athletes who have trained for these Games and will be competing in the best traditions of the Olympic spirit. Our governments will continue to meet at all levels, including to coordinate and implement our policies toward realizing a free and open Indo-Pacific. Above all, we renew our investment in the very idea of steadfast alliances – knowing that our partnership will make security and prosperity possible for both our peoples for decades to come.”

Other documents released include:

Fact Sheet: U.S.-Japan Competitiveness and Resilience (CoRe) Partnership, April 16, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/16/fact-sheet-u-s-japan-competitiveness-and-resilience-core-partnership/;

U.S.-Japan Climate Partnership on Ambition, Decarbonization, and Clean Energy, April 16, 2021,https://www.whitehouse.gov/wp-content/uploads/2021/04/U.S.-Japan-Climate-Partnership.pdf;

Remarks by President Biden and Prime Minister Suga of Japan at Press Conference, April 16, 2021, https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/04/16/remarks-by-president-biden-and-prime-minister-suga-of-japan-at-press-conference/.

Copied below is the Fact Sheet on the CoRe Partnership which reviews cooperation on innovation including research and development, securing supply chains, reviews efforts needed to solve the current COVID-19 pandemic and improve global responsiveness to future outbreaks, and reviews the joint efforts to address climate change through leadership and helping other countries achieve meaningful progress.

“The United States and Japan pledge to revitalize our Alliance and make practical commitments to fulfill its potential. Together we will advance innovation, end this pandemic and protect the world from future ones, combat the climate crisis, and enhance our people-to-people ties. Through these concrete initiatives, the United States and Japan will deliver results for our people, the Indo-Pacific, and the world. 

Competitiveness and Innovation

“Throughout our individual and shared histories, the United States and Japan have been global leaders in innovation. Our new partnership for competitiveness and innovation carries on that tradition, focusing on scientific and technological advances. Together, we will lead a sustainable, green global economic growth, guided by the principles of openness and democracy. This includes our cooperation on research and technology development across diverse fields: Cancer Moonshot, biotechnology, artificial intelligence, quantum information science and technology, civil space cooperation (including the Artemis program and asteroid exploration), and secure information and communications technology (ICT), among others. With this partnership between two of the world’s leading economies, we will lead the globe in building back better and promoting sustainable growth in the future.

“Together, the United States and Japan will:

“- Advance secure and open 5G networks, including Open Radio Access Networks (“Open-RAN”), by fostering innovation and by promoting trustworthy vendors and diverse markets.

“- Strengthen competitiveness in the digital field by investing in research, development, testing, and deployment of secure networks and advanced ICT including 5G and next-generation mobile networks (“6G” or “Beyond 5G”). The United States has committed $2.5 billion to this effort, and Japan has committed $2 billion. 

“- Build on successful U.S.-Japan cooperation in third-countries and launch a Global Digital Connectivity Partnership to promote secure connectivity and a vibrant digital economy while building the cybersecurity capacity of our partners to address shared threats. 

“- Strengthen collaboration and information exchange between U.S. and Japanese ICT experts in global standards development.

“- Cooperate on sensitive supply chains, including semi-conductors, and on the promotion and protection of critical technologies.

“- Advance biotechnology for the global good by focusing on genome sequencing and the principles of openness, transparency, collaboration, and research integrity.

“- Reinforce collaboration and partnerships between research institutions on quantum information science and technology through joint research and exchange of researchers.

COVID-19 Response, Global Health, and Health Security

“The United States and Japan have built a partnership to help the Indo-Pacific region recover from the COVID-19 pandemic, including through the landmark Quad Vaccine Partnership [LINK] with Australia and India, taking shared action necessary to expand safe and effective COVID-19 vaccine manufacturing, and working to strengthen and assist countries in the Indo-Pacific with vaccination. We will also expand our partnership beyond COVID-19, building longer-term global health security to help prevent the next pandemic.

“Together, the United States and Japan will:

“- Enhance our support to the Access to COVID-19 Tools Accelerator, including the COVAX facility, and encourage others to do the same thereby collectively filling the financial needs to ensure equitable access to safe, effective, and affordable vaccines, therapeutics and diagnostics particularly in developing countries.

“- Coordinate closely, through the Quad Vaccine Partnership, to facilitate production, procurement, and delivery of safe, effective, and affordable vaccines in the Indo-Pacific, including by expanding manufacturing capacity of COVID-19 vaccines in India.

“- In a new partnership, coordinate health security financing, regional surge capacity, and triggers for rapid response.

“- Establish regional pandemic response surge capacity, working with partners to promote manufacturing of personal protective equipment and medical countermeasures.

“- Work together and with others toward World Health Organization reform, including through the creation of swift triggers to respond to future biological threats, an independent oversight mechanism, and accountability for pandemic response.

“- Support a transparent and independent evaluation and analysis, free from interference and undue influence, of the origins of the COVID-19 outbreak, and for investigating outbreaks of unknown origin in the future.

“- Support the Global Health Security Agenda, as steering group members, to improve global capacity to prevent, detect, and respond to infectious disease threats.

“- Exchange data and practical knowledge, including simulation data on virus transmission from supercomputers such as Japan’s Fugaku and the United States’ Summit to develop innovative and more effective methods and techniques for infection prevention measures.

“- Reinforce collaboration between research institutions such as the National Institutes of Health and Japan Agency for Medical Research and Development and cooperation for resilient medical supply chains to improve preparedness for future crises.

Climate Change, Clean Energy, and Green Growth and Recovery

“The United States and Japan have launched a new partnership to address climate change and to promote green, sustainable global growth and recovery making full use of our technologies in the clean energy and other relevant sectors.

“The two leaders are committed to taking decisive climate action by 2030, aligned both with efforts to limit the global temperature increase to 1.5 degrees Celsius and with our 2050 greenhouse gas emissions net-zero goals. The United States and Japan will align official international financing with the global achievement of net-zero greenhouse gas emissions no later than 2050 and deep emission reductions in the 2020s, and will work to promote the flow of public and private capital toward climate-aligned investments and away from high-carbon investments.

“Together, the United States and Japan will:

“- Cooperate on Paris Agreement implementation, with a focus on achieving our respective 2030 targets/nationally determined contributions and 2050 greenhouse gas emissions net-zero goals.

“- Collaborate and support innovation, development, and deployment of such clean-energy technologies as renewable energy and energy efficiency technologies, grid modernization, energy storage (including batteries and long-duration storage technologies), smart grid, hydrogen, Carbon Capture, Utilization and Storage/Carbon Recycling, industrial decarbonization and advanced nuclear power.

“- Promote development and use of adaptive climate- and environment-friendly infrastructure related to grid optimization, demand response, smart grids, and renewable energy and energy efficiency.

“- Cooperate on other areas that contribute to climate change mitigation, clean energy and green growth and recovery, including ICT technology (such as smart cities, power saving ICT infrastructure, and digital solutions to infrastructure management), carbon neutral ports as well as sustainable and climate-smart agriculture.

“- Support developing countries, including those in the Indo-Pacific region, to rapidly deploy renewable energy, drive the decarbonization of our their economies, and accelerate diverse, ambitious, and realistic transition paths in the region, toward the realization of net-zero emissions globally no later than 2050, including through the newly established Japan-U.S. Clean Energy Partnership (“JUCEP”) and other country-level climate and clean energy collaborative activities. 

Expanding and Renewing Our Partnership

“The United States and Japan will continue to add new dimensions to our partnership while cooperating in the fields of long-standing areas.

“The United States and Japan will strengthen our people-to-people ties. The next generation of leaders who will continue to strengthen the bonds between the United States and Japan are participating in our extensive international exchange programs, working together on joint projects and research. In this spirit, we are proud to announce the resumption of the Mansfield Fellowship program. Together, we will redouble our energies to build the next generation of American experts on Japan through a renewed two-year fellowship program. We are also expanding opportunities for American students that are historically underrepresented in education abroad – including, but not limited to, first-generation college students, students in STEM fields, ethnic minority students, students with disabilities, students attending minority-serving institutions, and community college students – by offering an additional 20 Gilman Scholarships for study abroad in Japan. Finally, like the United States, Japan recognizes the importance of addressing the root causes of migration from the Northern Triangle countries of Central America, and is committed to addressing those issues together.”

Conclusion

The Indo Pacific region faces a lot of challenges including those flowing from China’s territorial initiatives, human rights issues raised and coercive tactics on neighboring countries as well as the ongoing North Korea nuclear threat. The Biden-Harris Administration have been putting considerable focus on the Indo-Pacific region including by visits by the U.S. Secretary of State and U.S. Secretary of Defense to Japan, Korea and India (Sec. of Defense only), by the Quad Vaccine Partnership (U.S., Japan, India, Australia) for expanded production of COVID-19 vaccines in India for distribution in the Indo Pacific region, with outreach to leaders in the region by the President and others in the Administration and by yesterday’s state visit by Prime Minister Suga.

The commercial issues of interest to the U.S. and Japan – technological leadership, secure supply chains, pursuing a green recovery and getting past the COVID-19 pandemic in an equitable manner for all — are important issues for all major trading partners. President Biden has put a focus on taking actions to show that democratic governments hold the key to the future of the world and not autocratic governments. He has also stressed the importance of alliances.

Yesterday’s meeting between President Biden, VIce President Harris and Prime Minister Suga reflected an effort to make progress on the pressing global issues of the day within a framework of the President’s agenda on climate change, competitiveness, and building back better from the pandemic. It was an important day and provides hopes for progress on many fronts in the months ahead while reinforcing the U.S.-Japan long-term commitment to peace and prosperity in the Indo-Pacific region.

U.S. Department of the Treasury Semi-Annual Report on Trading Partner Currency Practices — a change from the December 2020 Report

Today (April 16, 2021), the U.S. Department of the Treasury released its semi-annual report on trading partner currency practices. See U.S. Department of the Treasury Office of International Affairs, Report to Congress, Macroeconomic and
Foreign Exchange Policies of Major Trading Partners of the United States, April 2021, https://home.treasury.gov/system/files/206/April_2021_FX_Report_FINAL.pdf.

The press release from Treasury found three countries/territories to have problematic currency practices — Switzerland, Vietnam and Taiwan — but didn’t find any them to be currency manipulators. This constituted a change of position on Switzerland and Vietnam which had been found to be currency manipulators in the December 2020 report. All three countries are subject to increased scrutiny and interface with Treasury. A number of other countries remain on the monitoring list for currency practices with Mexico and Ireland being added to that list in this report. China was separately identified for transparency concerns. See U.S. Department of the Treasury Press Release, Treasury Releases Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, April 16, 2021, https://home.treasury.gov/news/press-releases/jy0131. The press release is copied below and the April 2021 Report is embedded after that.

“WASHINGTON – The U.S. Department of the Treasury today delivered to Congress the semiannual Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. In this Report, Treasury reviewed and assessed the policies of 20 major U.S. trading partners during the four quarters through December 2020.

“The Report concluded that both Vietnam and Switzerland continue to meet all three criteria under the Trade Facilitation and Trade Enforcement Act of 2015 (the 2015 Act) during the period under review.  Additionally, the report finds that Taiwan met all three of the 2015 Act criteria for the period under review.  Treasury has conducted enhanced analysis of Vietnam, Switzerland, and Taiwan’s macroeconomic and foreign exchange policies, as reflected in the Report.  Treasury will continue its enhanced engagement with Vietnam and Switzerland, and Treasury will commence enhanced engagement with Taiwan.  This engagement includes urging the development of a plan with specific actions to address the underlying causes of currency undervaluation and external imbalances.

“Under the Omnibus Trade and Competitiveness Act of 1988 (the 1988 Act), Treasury has determined that there is insufficient evidence to make a finding that Vietnam, Switzerland, or Taiwan manipulates its exchange rate for either of the purposes referenced in the 1988 Act.  Nevertheless, consistent with the 1988 Act, Treasury considers that its continued enhanced engagements with Switzerland and Vietnam, as well as a more thorough assessment of developments in the global economy as a result of the COVID-19 pandemic, will enable Treasury to better determine whether either of these economies intervened in currency markets in 2020 to prevent effective balance of payments adjustment or gain an unfair competitive advantage in trade.  For Taiwan, Treasury will initiate enhanced engagement in accordance with the 2015 Act and expects that engagement will help Treasury to make the determination required under the 1988 Act for the period of review. 

“No other major U.S. trading partner met the relevant 1988 or 2015 legislative criteria for currency manipulation or enhanced analysis during the review period.  Treasury urged China to improve transparency regarding its foreign exchange intervention activities, the policy objectives of its exchange rate management regime, the relationship between the central bank and foreign exchange activities of the state-owned banks, and its activities in the offshore RMB market. 

“’Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage,’ Secretary of the Treasury Janet L. Yellen said today.

“Treasury found that eleven economies warrant placement on Treasury’s ‘Monitoring List’ of major trading partners that merit close attention to their currency practices: China, Japan, Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, and Mexico.  All except Ireland and Mexico were included in the December 2020 Report.

“Today’s Report is submitted to Congress pursuant to the Omnibus Trade and Competitiveness Act of 1988, 22 U.S.C. § 5305, and Section 701 of the Trade Facilitation and Trade Enforcement Act of 2015, 19 U.S.C. § 4421.”

April_2021_FX_Report_FINAL

In prior posts, I have reviewed how Vietnam’s currency practices had resulted in a 301 investigation initiated by USTR (one of two, the other dealing with using illegally harvested timber) with a report issued in mid-January 2021, in the Commerce Department preliminarily finding currency practices of Vietnam were countervailable and in the December 2020 Treasury finding that Vietnam was manipulating its currency. See October 12, 2020, U.S. commences two investigations into Vietnam under Sec. 301 of the Trade Act of 1974, as amended – on currency and on use of illegally harvested timber, https://currentthoughtsontrade.com/2020/10/12/u-s-commences-two-investigations-into-vietnam-under-sec-301-of-the-trade-act-of-1974-as-amended-on-currency-and-on-use-of-illegally-harvested-timber/; December 21, 2020, Vietnam and Switzerland found to be “currency manipulators” in latest U.S. Treasury semiannual report, https://currentthoughtsontrade.com/2020/12/21/vietnam-and-switzerland-found-to-be-currency-manipulators-in-latest-u-s-treasury-semiannual-report/; January 15, 2021, USTR releases report from Section 301 investigation on Vietnam’s currency valuation, https://currentthoughtsontrade.com/2021/01/15/ustr-releases-report-from-section-301-investigation-on-vietnams-currency-valuation/.

The current Treasury report (pages 3-4) flags the elements examined and what is different in this report versus the prior one for Switzerland and Vietnam.

“In this Report, Treasury has reviewed 20 major U.S. trading partners with bilateral goods trade with the United States of at least $40 billion annually against the thresholds Treasury has established for the three criteria in the 2015 Act:

“(1) Persistent, one-sided intervention in the foreign exchange market occurs when net purchases of foreign currency are conducted repeatedly, in at least 6 out of 12 months, and these net purchases total at least 2% of an economy’s gross domestic product (GDP) over a 12-month period.2

“(2) A material current account surplus is one that is at least 2% of GDP over a 12-month period.

“(3) A significant bilateral trade surplus with the United States is one that is at least $20 billion over a 12-month period.3

“In accordance with the 1988 Act, Treasury has also evaluated in this Report whether trading partners have manipulated the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.

“Because the standards and criteria in the 1988 Act and the 2015 Act are distinct, a trading partner could be found to meet the standards identified in one of the statutes without necessarily being found to meet the standards identified in the other. Section 2 provides further discussion of the distinctions between the 1988 Act and the 2015 Act.

Treasury Conclusions Related to the 2015 Act

“Vietnam again exceeded the thresholds for all three criteria under the 2015 Act over the four quarters through December 2020. Treasury has updated its enhanced analysis of Vietnam in this Report. In early 2021, Treasury commenced enhanced bilateral engagement with Vietnam and is working with the Vietnamese authorities to develop a plan with specific actions to address the underlying causes of Vietnam’s currency undervaluation.
Switzerland again exceeded the thresholds for all three criteria under the 2015 Act over the four quarters through December 2020. Treasury has updated its enhanced analysis of Switzerland in this report. In early 2021, Treasury commenced enhanced bilateral engagement with Switzerland and is discussing with the Swiss authorities options to address the underlying causes of Switzerland’s external imbalances.

“Taiwan exceeded the thresholds for all three criteria under the 2015 Act over the four quarters through December 2020. Treasury has conducted enhanced analysis of Taiwan in this Report and will also commence enhanced bilateral engagement with Taiwan in accordance with the 2015 Act. The bilateral engagement will include urging the development of a plan with specific actions to address the underlying causes of Taiwan’s currency undervaluation.

“Taiwan has maintained a tightly managed floating exchange rate regime since the late 1970s. Although Taiwan has liberalized capital controls in recent decades, the central bank continues to actively intervene in the foreign exchange market. Over many years, these practices have resulted in a structurally undervalued exchange rate that has failed to adjust in the face of Taiwan’s persistently large current account surpluses. Although the New Taiwan Dollar (TWD) has appreciated modestly in nominal and real effective exchange rate terms over the past decade, the authorities’ foreign exchange purchases and other, less formal exchange rate management practices have slowed the pace and scale of external adjustment, preventing the TWD from fully reflecting macroeconomic fundamentals.

Treasury Conclusions Related to the 1988 Act

“The 1988 Act requires Treasury to consider whether any economy manipulates the rate of exchange between its currency and the U.S. dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade. In the December 2020 Report, Treasury found that Switzerland and Vietnam each met the standards for currency manipulation for the four quarters through June 2020. For the four quarters ending in 2020, based on initial enhanced engagements with Vietnam and Switzerland under the 2015 Act, further analysis, and data, Treasury has determined that there is insufficient evidence to make a finding that either economy (or any other economy covered in the Report) manipulates its exchange rate for either of the purposes referenced in the 1988 Act. Nevertheless, consistent with the 1988 Act, Treasury considers that its continued enhanced engagements with Switzerland and Vietnam, as well as a more thorough assessment of developments in the global economy as a result of the COVID-19 pandemic, will enable Treasury to better determine whether either of these economies intervened in currency markets in 2020 to prevent effective balance of payments adjustment or gain an unfair competitive advantage in trade. For Taiwan, Treasury will initiate enhanced engagement in accordance with the 2015 Act and expects that engagement will help Treasury to make the determination required under the 1988 Act for the period of review. Meaningful actions to address policy distortions and increase data transparency will be critical for making progress under these engagements. Treasury will also continue to consider whether economies that do not trigger enhanced engagement manipulate their currencies for the purposes referenced in the 1988 Act

“2 The Report covers data from the 12-month period ending in December 2020. These quantitative thresholds for the scale and persistence of intervention are considered sufficient on their own to meet this criterion. Other patterns of intervention, with lesser amounts or less frequent interventions, might also meet this criterion depending on the circumstances of the intervention.

“3 Treasury focuses in this Report on trade in goods only, as it has done in past Reports. The United States has a surplus in services trade with many economies in this Report, including China, Japan, Korea, Singapore, and Switzerland, and to a lesser extent, Taiwan and Vietnam. Taking into account services trade would reduce the bilateral trade surplus of these economies with the United States.”

The Trump Administration did not impose tariffs on Vietnam following the release of the Section 301 report in January leaving the decision on what action to take to the Biden Administration. President Biden’s U.S. Trade Representative, Ambassador Katherine Tai, met virtually with Vietnam Minister of Industry and Trade Tran Tuan Anh on April 1, 2021 and reviewed concerns re China’s currency practice as reviewed in the 301 investigation as well as illegal logging and other issues. See USTR Press Release, Readout of Ambassador Katherine Tai’s virtual meeting with Vietnam Minister of Industry and Trade Tran Tuan Anh. April 1, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/april/readout-ambassador-katherine-tais-virtual-meeting-vietnam-minister-industry-and-trade-tran-tuan-anh (“Ambassador Tai highlighted the Biden Administration’s concerns about currency practices covered in the ongoing Section 301 investigation.  The ministers also discussed U.S. concerns on illegal timber practices, digital trade and agriculture.”). Thus, it is likely that the U.S. and Vietnam will work out bilaterally U.S. concerns on Vietnam’s currency versus imposing additional duties following the Section 301 report, at least at this time.

The first Department of Commerce investigation to look at currency as a countervailable subsidy for Vietnam made a preliminary affirmative determination. The final determination is not due until late May. See Department of Commerce, International Trade Administration, C–552–829, Passenger Vehicle and Light Truck Tires From the Socialist Republic of Vietnam: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Determination With Final Antidumping Duty Determination, 85 FR 71,607 (Nov. 10, 2020); Department of Commerce, International Trade Administration, A–552–828, Passenger Vehicle and Light Truck Tires From the Socialist Republic of Vietnam: Preliminary Affirmative Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Extension of Provisional Measures, 86 FR 504 (January 6, 2021)(final due within 135 days of the preliminary Federal Register). It is unclear what, if any, modification will be made to the countervailability of Vietnam’s currency in the context of the ongoing investigation based on the change in view of Vietnam by Treasury.

Conclusion

Currency misalignment whether intentional or not can have significant effects on trade flows. The U.S. has historically been quite concerned about misaligned currencies although Treasury historically preferred to work with other countries than label them currency manipulators. Early signals from the Biden Administration are that Treasury is reverting to a preference to work bilaterally with countries who actively intervene in currency markets and have an undervalued currency and large trade surplus in goods with the U.S. If so, Treasury will, as it did in the current report, find “insufficient evidence” for countries who satisfy the factual criteria under U.S. law to conclude such actions were for the purpose “of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.” While trading partners will undoubtedly prefer the Biden Administration’s apparent approach, the approach will be problematic for many U.S. industries and their workers and remove leverage to get correction of foreign government practices.

USTR speech on trade and the environment

Ambassador Katherine Tai spoke on April 15, 2021 at an event sponsored by the Center for American Progress (“CAP”). Her speech provided a glimpse into the Biden Administration’s expectation for the role trade can play in addressing climate change.

While the speech does not include any reference to a carbon tax or border adjustment mechanism to help address carbon leakage or call for a resumption of the Environmental Goods Agreement negotiations, it nonetheless provides an identification of some of the issues of pressing concern including illegal logging, over fishing (tied in large part to fisheries subsidies), and pollution of oceans (including massive amounts of plastic dumped in the oceans), air and water.

Amb. Tai’s speech also reviews the active engagement by the Biden Administration in pushing for greater ambition among trading partners in reducing emissions, including next weeks Summit on Climate. Special Envoy for Climate John Kerry has been meeting with world leaders ahead of the Summit to seek more aggressive action by major emitters. For the United States, legislation enacted to date and being pursued by the Biden Administration has the ability to make major contributions to reduced emissions by the United States.

Amb. Tai reviews the historic failure to include strong environmental protections in trade agreements and the need to change that going forward as well as reflecting on progress in the United States over the last fifteen years in addressing environmental issues in trade agreements. The world needs to do better. “Going forward, trade has a role to play in discouraging the race to the bottom and incentivizing a race to the top. We must conserve the resources we do have – and work with our trading partners to do the same – to both mitigate and adapt to climate pressures.” See USTR, Remarks from Ambassador Katherine Tai on Trade Policy, the Environment and Climate Change, April 15, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/april/remarks-ambassador-katherine-tai-trade-policy-environment-and-climate-change. Ambassador Tai’s full speech is copied below.

“Thank you, John, for that very kind introduction. You have worked tirelessly to protect the environment and stop climate change throughout your career. 

“Your leadership, and the great work of so many brilliant leaders here at the Center for American Progress, has fundamentally changed how our country, and the world thinks about these issues. 

“We owe you a debt of gratitude, and I know that we can count on your vocal advocacy in the days ahead.

“It’s an honor to join you today and lay out my vision for using trade policy to address one of the biggest challenges we face.  

“The science indicates that, the window of opportunity to prevent a catastrophic environmental chain reaction on our planet is closing fast. And the United States must be a leader in the collective effort to work toward a global solution. 

“From his first days in office, President Biden has taken action to restore American leadership. He and Vice President Harris have made clear that protecting our environment and addressing climate change are core pillars of the Administration’s Build Back Better agenda. 

“The President immediately rejoined the Paris Agreement and signed a sweeping Executive Order to begin tackling the climate crisis. The President made it abundantly clear that we will take a ‘whole-of-government’ approach to address this challenge – and that we’re going to re-engage the world from a position of strength. 

“As we do so, we will be mindful of our commitment to environmental justice in addressing climate change, recognizing that this collective challenge requires a collective solution. What we do here at home must be reflected in what we do abroad. Our domestic efforts cannot lead to the exportation of polluting industries to countries with lower standards.

“The historic investments in the American Rescue Plan are already helping to stabilize the economy and bring the pandemic to an end. The American Jobs Plan is the next step in our effort to reimagine and rebuild a new economy. 

“It will invest in our infrastructure, create good paying jobs, and position the United States to out-compete any other nation.  The President’s plan recognizes the critical nexus between these investments and the climate crisis, and it would support the innovation and technological breakthroughs that will make our country the leader in clean energy technology and jobs.

“These plans are only one part of our strategy. 

“Next week, the President will welcome 40 world leaders to a Summit on Climate to underscore the urgency – and economic benefits – of taking collective action.  The United States will also announce an ambitious 2030 emissions target as our new Nationally Determined Contribution under the Paris Agreement.  

“President Biden has urged leaders to use the Summit as an opportunity to announce even bolder ambitions.  Comprehensive action is the only way forward, and this challenge must be at the center of U.S. foreign policy, national security, and economic policy. 

“USTR sits at the intersection of all three areas, and I am honored to lead this agency and the dedicated public servants who will answer the call.  

“During my confirmation hearing, I made clear that protecting our planet would be a top priority. For too long, we believed that trade liberalization would lead to a gradual improvement in environmental protection as countries grew wealthier from increased trade flows. 

“But the reality is that the system itself creates an incentive to compete by maintaining lower standards. Or worse yet, by lowering those standards even further. 

“Many companies make sourcing decisions based on these artificially low costs, creating pressure on competing countries to ask if they, too, should suppress environmental protection to attract investment. 

“This is what people mean when they say the rules of trade promote a race to the bottom. 

“Fortunately, the investing community is demanding more information about companies’ climate and other environmental risks. CAP knows this issue well, having hosted Acting SEC Chair Allison Herren Lee just last month, as the Commission steps up its work on corporate disclosures around environmental and social governance. 

“Even as investors take a greater interest in companies’ environmental risk exposure, the multilateral trading system has no rules to address the corporate incentive to participate in the race to the bottom. Rather, the environmental protection measures of WTO members are exposed to challenge. 

“While countries can avail themselves of what amounts to an affirmative defense, that defense has proven difficult to invoke successfully. This is part of the reason why, today, the WTO is considered by many as an institution that not only has no solutions to offer on environmental concerns, but is part of the problem. 

“For many decades, efforts to integrate environmental concerns through trade agreements were largely dismissed as wrongheaded, bleeding heart attempts to incorporate “social issues” in the trading system. According to this line of thinking, environmental issues are either irrelevant, or tangentially related, to economics or trade.  

“The view that environmental issues are not an inherent part of trade ignores the reality that the existing rules of globalization incentivize downward pressure on environmental protection. This puts countries with higher environmental standards at a competitive disadvantage. That is not a social issue: it is an economic incentive. 

“It doesn’t have to be this way. 

“For nearly fifteen years, the United States has enjoyed bipartisan support for including basic, enforceable labor and environmental rules in bilateral and regional trade agreements. This bipartisan support exists precisely because these issues are economic, not social. 

“The goal is to ensure that we and our trading partners are engaged in fair competition that does not suppress environmental protection. The United States has been, and remains, the leader in rewriting trade rules so that they move us toward this model of fair competition. 

“USMCA is the most recent example of our own evolution. The updated agreement now includes the most comprehensive environmental standards of any U.S. trade agreement – and, I would argue, any trade agreement. Critical environmental provisions reflected in the USMCA include strong rules to address:

“•    wildlife trafficking, 
“•    illegal logging and fishing, 
“•    fisheries subsidies 
“•    marine litter, and
“•    air and water pollution

“I am all too aware that however laudable the rules, they must actually be enforced. 

“Environmental groups have complained for years that chronic lack of enforcement of these rules fundamentally undermines the effort. They are right. 

“I am committed to enforcing the rules of USMCA and our other agreements to ensure not only that we follow through on our promises to protect the planet, but that we protect workers against this kind of unfair competition. 

“And while I think the United States, Mexico, and Canada should be proud of USMCA’s progress, I know that the agreement does not go nearly far enough in addressing the economic costs of our environmental challenges through trade.  The most glaring omission is the failure to explicitly acknowledge climate change.

“Going forward, trade has a role to play in discouraging the race to the bottom and incentivizing a race to the top. We must conserve the resources we do have – and work with our trading partners to do the same – to both mitigate and adapt to climate pressures. 

“Based on years of experience pushing forward with environment rules in trade, there are two practical issues that immediately come to mind: putting a stop to illegal logging, and addressing overfishing that is destroying the marine ecosystem. 

“We have made some progress on illegal logging and the associated trade in illegally harvested timber products in previous trade agreements and through various regional dialogues. We can do more. 

“The forests are our planet’s lungs, and we should use trade policies and trade enforcement actions to protect them. But we have to be mindful that we will only truly address the global scale of this problem through global rules. 

“We have also started to address fisheries and our oceans in our trade agreements, whether through disciplines on the massive subsidies that promote overfishing, or through provisions that address the millions of tons of plastic and other forms of pollution that are destroying the marine environment. But again, we will only truly address the global scale of the problem through global rules. This is why the fisheries negotiations at the WTO are so critical.

“Beyond disciplines that discourage harmful behaviors, we can also create rules that promote positive ones. 

“For climate mitigation, developing innovative environmental technologies, goods, and services and cultivating strategic international supply chains for trade will be key.  From clean energy, to low-emission vehicles, and other technologies, reliable access to these goods and services will be essential for our transition to net zero by 2050. 

“That’s why I was so committed to helping resolve a big trade dispute between SK Innovation and LG Energy Solutions, two South Korean companies who make electric batteries here in the United States. The settlement, reached last weekend after significant engagement with a range of stakeholders, was a big win for American workers, the environment, and our competitive future.

“We need a strong, diversified, and resilient supply chain of electric vehicle batteries in America to meet the growing global demand and to expand U.S. manufacturing of clean energy vehicles. This settlement puts the country in a stronger position to drive innovation and growth of clean energy technology.
 
“As we consider strategically devised supply chains and trade in environmental goods, we must also be mindful that using clean energy throughout the supply chain is an essential, and perhaps underappreciated, element of delivering on our commitment to address the full range of practices that compromise the climate.

“For too long, the traditional trade community has resisted the view that trade policy is a legitimate tool in helping to solve the climate crisis. As we have so often seen with labor issues, there is a certain refuge in arguing that this is all a question of domestic policy, and that we need not tackle the daunting task of building international consensus around new rules. 

“But that dated line of thinking only perpetuates the chasm that exists between the lived experiences – and expectations – of real people on the one hand, and trade experts on the other. My job is to bridge that chasm and push for trade reforms that translate into meaningful change in the lives of farmers, ranchers, factory workers, parents, children – not just in the United States, but around the world.

“Many of these people – and many of our businesses – realize that tackling climate change and our future prosperity are connected. 

“For example, climate-friendly and sustainable agricultural production is essential to meeting our climate and sustainability goals. Our farmers and ranchers can lead the world with innovative carbon conservation practices. Secretary Vilsack has proposed ambitious ideas, including expanding the use of cover crops and making carbon capture a mainstream conservation practice. I am eager to work with him to help make these practices the new global standard. 

“I am also fortunate to be working with a strong Biden-Harris team of visionary leaders charting this course on climate change. Special Envoy Kerry, Gina McCarthy, the President’s National Climate Advisor, EPA Administrator Regan, Energy Secretary Granholm, Commerce Secretary Raimondo – and many more dedicated public servants across the administration are committed to making a difference. 

“CAP research has highlighted many of the ideas these colleagues have brought to national climate policy from innovative state governments– North Carolina, Michigan, Connecticut, and more.

“But as I close my remarks I cannot forget arguably the most important voice in this effort. You. 

“From day one, I made it clear that we are not going to do business as usual.  I’ve challenged my team to be thoughtful and innovative in building trusted relationships with stakeholders who haven’t had an established seat at the table or been at the table at all.

“We want a robust dialogue.  We expect justice and equity to be on everyone’s agenda, and we welcome creative solutions to the massive challenges we face with the environment, with climate change, and trade as a whole.  

“Your voice, your perspectives, your priorities, and your values matter. We need to hear from you. We need to lean on your expertise, and we want your ideas.  

“By engaging new – and all too frequently silenced – voices and encouraging fresh, collaborative thinking, we can forge consensus and find solutions that we never knew existed.  Together, we can foster U.S. innovation and the production of new technology, while promoting resilient renewable energy supply chains.

“This work has the potential to unlock new opportunities for U.S. companies who can help reduce emissions and adapt to climate change.

“Our bold, collective action can create enormous new economic opportunities and good paying jobs for all Americans while building the industries of the future.  And we will not overlook our obligation to take on centuries of discrimination, oppression and bigotry. Racial justice and equity must be central to the conversation. 

“The intersection of environment, climate change, labor, and trade are key to our collective ability to compete, innovate, and create livable wage jobs that will provide hope and opportunity for future generations and underserved communities.  This is why I believe that trade policy is an essential and strategic part of the solution to these huge challenges.  

“I look forward to working with all of you in the days ahead to meet the moment.  I’m ready, and I hope you are too.

“Thank you.”

Conclusion

The Biden Administration is making a major effort to improve the U.S. environmental performance and help lead the global effort to save the planet from global warming. The Administration approaches major issues from a “whole of government” view point. The U.S. Trade Representative yesterday presented a glimpse of how the U.S. will seek to use trade agreements and trade negotiations to support environmental sustainability.

Having watched GATT Contracting Parties and the business community dismiss the need to address labor and environmental aspects of trade during and after the Uruguay Round, I can only say “it is about time for meaningful action”. Trade can and must be examined through an environmental sustainability lens. The world having let climate change spin out of control has a limited time to make the changes needed to ensure a sustainable environment for future generations. It will take a whole-of-the-world focus and engagement to make a difference.

April 15, 2021 — U.S and Gavi co-host event for additional funding for COVAX amid concerns about two workhorse vaccines for COVAX

An important part of global efforts to vaccinate the world has been the work of the World Health Organization, Gavi, CEPI and UNICEF to provide an array of vaccines through early support of research and procurement of large quantities of doses for distribution to countries participating in the program including 92 low- and middle-income economies through COVAX. The COVAX objective for 2021 has been distribution of around two billion doses. While a large amount of money has been raised for vaccine purchases, additional needs in 2021 for COVAX are around $2 billion.

This Thursday, the United States and Gavi will co-host an event seeking additional funding for COVAX. The U.S. State Department press release from April 12 is copied below. See U.S. Department of State, United States to Host Event to Launch the 2021 COVAX Investment Opportunity, April 12, 2021, https://www.state.gov/united-states-to-host-event-to-launch-the-2021-covax-investment-opportunity/.

“On Thursday, April 15, 2021 at 8:00 a.m. EDT the United States will co-host the launch of the Investment Opportunity for the Gavi COVAX Advance Market Commitment (COVAX AMC), a virtual convening to galvanize additional resources and commitments to support global COVID-19 vaccination.

“Secretary of State Antony Blinken, USAID Acting Administrator Gloria Steele, and Gavi Board Chair José Manuel Barroso will bring together world leaders, the private sector, civil society, and technical experts to advance and accelerate global access to COVID-19 vaccines. Secretary Antony Blinken will offer opening remarks.

“Equitable access to safe and effective COVID-19 vaccines across the globe is critical for reducing the tragic loss of life, ending the pandemic, bolstering the U.S. and global economy, and keeping Americans safe at home and abroad. By pooling donor resources, the COVAX AMC provides access to safe and effective COVID-19 vaccines for 92 low-and middle-income economies, supporting the delivery of quality, lifesaving vaccines to those most in need and helping to contain the spread of COVID-19 and emerging variants.

“Thanks to Congress and the generosity of the American people, the U.S. government has already contributed $2 billion to support the COVAX AMC, out of a total planned $4 billion through 2022. The United States is currently the largest donor to COVAX, making up nearly forty percent of the COVAX AMC funding commitments announced to date.

“This event will be live-streamed on Gavi’s website, gavi.org and open to the public.  For more information email OES_PA_DG@State.gov.”

Gavi’s press release of 29 March 2021 announcing the event is copied below and provides the needs that hopefully will be met by Thurday’s event. See Gavi, United States to host launch event for Gavi COVAX AMC 2021 investment opportunity, 29 March 2021, https://www.gavi.org/news/media-room/united-states-host-launch-event-gavi-covax-amc-2021-investment-opportunity.

Geneva, 29 March 2021 – The United States government announced today that it will host the launch of the Investment Opportunity for the Gavi COVAX Advance Market Commitment (AMC). The virtual event, which will take place in April, will be co-hosted by José Manuel Barroso, Chair of the Gavi Board, and the Secretary of State and USAID Administrator on behalf of the United States. It will bring together world leaders, the private sector, civil society and key technical partners to present the case for additional resources for the Gavi COVAX AMC. 

“Country demand for COVID-19 vaccines has increased significantly in light of new COVID-19 variants, and the need for additional financing has become more urgent. In addition to committing US$ 4 billion to support Gavi’s COVID-19 related work, the United States is a long-standing supporter of the Alliance. It was one of Gavi’s original six donors and has contributed more than US$ 2.7 billion to Gavi’s core work since 2000. 

“’We welcome U.S. leadership in hosting the launch of the Gavi COVAX AMC Investment Opportunity,’ said José Manuel Barroso, Gavi Board Chair. ‘The United States has been a key Gavi partner for more than two decades, playing a critical role in helping the Alliance expand access to lifesaving immunisations for the most vulnerable around the world. Its recent contribution of $4 billion for procurement and delivery of COVID-19 vaccines for lower-income countries has made the United States Gavi’s top donor and a leader in the global pandemic response. With U.S. financial and diplomatic support, Gavi is very well positioned to mobilize the funds and the doses we need to end the acute phase of the pandemic.’

“The Gavi COVAX AMC is an innovative mechanism that seeks to provide access to up to 1.8 billion donor-funded doses of COVID-19 vaccines for 92 lower-income economies. In order to achieve that goal and build on the contributions made by donors so far, Gavi will be seeking at least US$ 2 billion in additional funding for the AMC in 2021. The Investment Opportunity will outline how Gavi will use this funding to support equitable access around the world, thus helping end the acute stage of this pandemic. The Investment Opportunity also looks ahead to the future, describing how to address the pandemic as it continues to evolve. 

“’As the United States has made clear through its Gavi partnership and commitments to global health security, no one is safe until everyone is safe,’ said Dr Seth Berkley, CEO of Gavi. ‘Gavi is thrilled to co-host the launch of the Investment Opportunity with the United States. With new donor funding, we will be able to procure up to 1.8 billion COVID-19 vaccine doses for lower-income countries. Strong U.S. support for the AMC is a reminder that COVAX offers the fastest, most comprehensive way out of the acute phase of the global pandemic.’

“’The emergence of new, more transmissible COVID-19 variants makes fair global access to vaccines more important than ever to protect the most vulnerable, reduce the prevalence of disease and slow down viral mutation.’ said Dr Richard Hatchett, Chief Executive Officer of the Coalition for Epidemic Preparedness Innovations (CEPI), which manages COVAX vaccine research and development. ‘Equitable access to COVID-19 vaccines will benefit the entire world, so I’m delighted that the U.S. will help COVAX to secure additional donor funding for lower-income countries.’

“Hon. Kwaku Agyeman-Manu, Minister of Health of Ghana, which took one the first deliveries of COVAX-supported vaccine doses, remarked that ‘this is about fairness, about justice, and about bringing a swift end to the pandemic. COVID-19 has affected all of us, and we must protect at risk populations everywhere if we are ever going to see a return to normal. We will only recover fully if we recover together and with its support for COVAX, the United States is helping set the course for a safer, more resilient world.’

“The Gavi COVAX AMC is a central part of the COVAX Facility, the global pooled procurement mechanism designed and administered by Gavi. Thanks to the support of COVAX AMC donors, coupled with the demand and resources of 191 participating economies, the Facility has already begun to deliver doses – the majority to lower-income countries – as part of the largest and most rapid global vaccine rollout in history.

“COVAX, the vaccines pillar of the Access to COVID-19 Tools (ACT) Accelerator, is co-convened by Gavi, the Coalition for Epidemic Preparedness Innovations (CEPI), and the World Health Organization (WHO) – working in partnership with UNICEF as a key delivery partner, developed and developing country vaccine manufacturers, the World Bank, and others. It is the only global initiative that is working with governments and manufacturers to ensure COVID-19 vaccines are available worldwide to both higher-income and lower-income countries.”

Challenges to COVID vaccines through COVAX from concerns over AstraZeneca and Johnson & Johnson

A large portion of total vaccine doses expected in 2021 through COVAX is from AstraZeneca/Serum Institute of India and from Johnson & Johnson. AstraZeneca has had early production issues and the Serum Institute of India (which licenses the AstraZeneca vaccine for production) has curtailed exports in March and April (and possibly longer) because of the large increases in new COVID-19 infections in India and a redirection of production of vaccine doses for use in India. The AstraZeneca vaccine (from AstraZeneca and from the Serum Institute) constitute the bulk of doses expected in the first half of 2021 by COVAX and the Johnson & Johnson vaccine is expected to be a major supply source in the second half of 2021 as well as Novavax (either produced by Novavax or by license from the Serum Institute. However, both the AstraZeneca vaccine and the Johnson & Johnson vaccine have seen temporary stoppage of use by one or more countries flowing from a number of serious blood cot situations for patients who have taken the vaccine (causation under investigation). The AstraZeneca vaccine, which has been available for longer and under more scrutiny, has been limited in terms of age eligibility in a number of countries at this point. The AstraZeneca vaccine is the lowest priced vaccine (Novavax has an identical price to COVAX of $3.00/dose but is not yet approved). See UNICEF, COVID-19 vaccine market dashboard, https://www.unicef.org/supply/covid-19-vaccine-market-dashboard (prices). COVAX has a $3.00/dose ceiling price, so it is assumed that the Johnson & Johnson vaccine is similarly priced because of the pricing cap used by COVAX. With options, purchase agreements with COVAX have AstraZeneca/Serum Institute supplying some 700 million doses, Johnson & Johnson 500 million doses and Novavax (if approved) 1.1 billion doses. Id (COVID-19 vaccine supply agreements).

The challenge for COVAX and the low- and middle-income countries dependent on supplies from COVAX is the cost and availability of supplies if delays in shipments from the Serum Institute of India are prolonged or if there develops hesitancy in using vaccines which, while approved by many countries, carry some additional risk of serious blood clots. The prices recorded by the UNICEF data base show all other vaccines as significantly higher cost than the three supplying large quantities to COVAX. This suggests much larger financial needs to acquire the doses needed to address the “acute stage” of vaccination — 20% of populations representing health care and those at high risk — if COVAX must change sourcing for the major part of its vaccine doses. It also raises questions about the ability of other vaccines to fill the gap volume-wise in 2021 if major vaccines from AstraZeneca, Johnson & Johnson are not widely accepted or if exports are delayed for months out of India for each of AstraZeneca, Johnson & Johnson and Novavax (if approved).

While the event on Thursday will be focused on raising funds to meet the perceived needs of COVAX at the present time, those needs may be significantly larger in the coming months depending on developments.

Other funding and supply options

While the COVAX effort has been developed to handle the acute phase through contributions, the vaccination needs to get the world fully vaccinated are a multiple of the doses that COVAX is focused on procuring in 2021-2022.

The World Bank has earmarked $12 billion for vaccines and infrastructure for vaccinations for the world’s needy. Many low- and middle-income countries are working with suppliers directly or with Individual countries to obtain doses outside of the volumes expected from COVAX. Suppliers alone or in conjunction with governments have been working to license other producers and to ramp up production so that, depending on approvals of various vaccines, global production by the end of 2021 could be 10-15 billion doses. For example, the Quad countries (United States, Japan, India and Australia) have announced a plan to expand production in India to supply around one billion doses (2021-2022) to countries in the Indo-Pacific region paid for by Quad members and distributed by Australia. The UNICEF vaccine dashboard shows 6.9 billion doses of capacity of all vaccines under development or approved in the first half of 2021 increasing to 14.2 billion doses of capacity in the second half of 2021. See UNICEF, COVID-19 vaccine market dashboard, https://www.unicef.org/supply/covid-19-vaccine-market-dashboard (capacity). Thus, there should be significant additional capacity available later in 2021 for vaccine doses needed for low- and middle-income countries.

Similarly, it is likely that as major countries like the United States, Canada, the European Union, the United Kingdom and others get their populations vaccinated, there will be significant volumes of vaccines that have been bought by these countries that can be distributed to other countries in the last months of 2021 and in 2022.

Some of these efforts may be undertaken in consultation or conjunction with COVAX.

Conclusion

COVAX is an important effort at facilitating vaccinating large parts of the world against the COVID-19 pandemic, including many low- and middle-income countries. Many countries and the EU have led efforts in 2020 to increase funding for the effort. With the Biden Administration rejoining the World Health Organization and reengaging with multilateral organizations, and with the support of the U.S. Congress in funding U.S. contributions to COVAX, this Thursday’s event co-hosted by the United States and Gavi is an important chance to help COVAX receive the additional funding needed for its 2021 objectives.

Because the pandemic continues to be problematic around the world, there are many moving parts to a successful global vaccination effort including availability of vaccines, efficacy of vaccines including against new variants, ability to overcome vaccine hesitancy among portions of the population in many countries and the evolving understanding of human reactions to some of the vaccines available.

Greater cooperation among health administrators and the WHO would seem important to ensure that safe vaccines are not derailed because of discovered risks where the balance of benefits to risks strongly supports continued availability and use of the vaccines (with appropriate warnings). Where restrictions are appropriate, greater cooperation would permit a common approach versus differing restrictions which can only serve to cause confusion to the public and encourage vaccine hesitancy. COVID-19 reported cases globally are presently 137 million with deaths approaching 3 million. Vaccination doses administered globally are 806 million with serious adverse reactions and deaths quite limited (likely in the thousands globally). Serious adverse reactions and deaths if tied to vaccines are obviously a concern that should be addressed appropriately. However, eliminating vaccine availability to large portions of populations where there are not other options available risk far greater damage.

Global agricultural trade — U.S. efforts at the WTO to expand agricultural trade

The United States has a long history of promoting expanded agricultural trade. It has been an issue of importance to many countries, though the level of protection in the agricultural space has been and remains very large. The Uruguay Round was an initial effort to tariffy various distortions restricting trade in agriculture, cap and make an initial reduction in tariffs, ensure minimum market access, cap and reduce subsidies and more. Future agricultural negotiations were built into the Uruguay Round’s Agreement on Agriculture. While elements of liberalization have been agreed since 1995(e.g., elimination of agricultural export subsidies), there has not been success on opening up agricultural markets through tariff liberalization.

For the last seven years, the United States has sought better understanding of the challenges to agricultural trade from tariff implementation issues. See Tariff Implementation Issues, Communication from the United States of America, G/AG/W/132, 4 June 2014.

Starting in the Trump Administration, the United States teed up six areas affecting market access from Members’ implementation of tariffs that need discussion and potential action. See Tariff Implementation Issues – June 2018 Update, Communication from the United States, JOB/AG/141, 25 July 2018.

“The United States of America has identified six areas within the area of market access that further analysis of Members’ current implementation of tariffs should be considered and discussed by Members in order to better understand Members’ current tariff regimes. This includes: (i) bound versus applied tariffs, (ii) complex tariffs, (iii) high tariffs (e.g., tariff peaks), (iv) issues with TRQs, (v) agricultural safeguards (SSGs), and (vi) regional/preferential trade agreements.” (page 2).

While the June 2018 submission from the U.S. looked at all six areas listed, the U.S. has since submitted more detailed papers on the first four topics during the remainder of the Trump Administration, and, on March 31, 2021, the Biden Administration submitted a paper on the fifth topic, agricultural safeguards. See Tariff Implementation Issues — Bound versus Applied Tariffs, Communication from the United States, JOB/AG/147, 9 November 2018; Tariff Implementation Issues — Complex Tariffs, Communication from the United States, JOB/AG/164, 31 July 2019; Tariff Implementation Issues — Tariff Peaks, Communication from the United States, JOB/AG/167, 24 October 2019; Tariff Implementation Issues — Issues with Tariff Rate Quotas, Communication from the United States, JOB/AG/169, 22 November 2019; Tariff Implementation Issues — Issues with Special Agricultural Safeguards, Communication from the United States, JOB/AG/192, 6 April 2021.

The 2014 submission by the United States had flagged the first three of the six issues and introduced the need for analysis. See G/AG/W/132 at 1-3.

“1.1. Market access barriers, and namely tariffs, continue to be an important obstacle to realizing the WTO’s objective of promoting trade. However, no multilateral discussions have been undertaken in this area since 2008.

“1.2. Under the various WTO agreements, tariffs are the only permitted import restriction (other than WTO-consistent non-tariff measures)1, and all agriculture tariffs are now bound. The manner in which tariffs are administered, however, can have significant effects on actual market access. In some cases, market access is facilitated, for example through the application of tariffs at levels below bound rates or through preferential access as a result of reciprocal trade agreements. In other cases, market access may be impeded, for example through the administration of complex tariff regimes or through the utilization of high tariffs and peak tariffs.

“1.3. The need for an updated understanding of the current state of Members’ tariff regimes is urgent if Members expect to have productive discussions on a possible market access result as part of the Post-Bali Work Program. In this regard, and as a start, we request that the Secretariat issue, in one compilation for the Membership, the most recent tariff and trade data available, including on Members’ average bound and applied tariff rates in agriculture, the percentage of agricultural tariffs bound at zero by Members, as well as Members’ global share of agricultural imports and exports. We also urge Members to ensure that all WTO notifications relevant to market access are up to date. This includes Integrated Data Base (IDB) notifications, as well as notifications of regional trade agreements.

“1.4. This paper identifies some of the issues associated with tariffs, supported with examples of tariff application and administration from the United States of America and other Members. The United States of America invites other Members to provide similar reports of their current administrative schemes in upcoming meetings of the Committee on Agriculture (CoA).

“2 BOUND VERSUS APPLIED TARIFF RATES (CORRESPONDING WITH EXHIBIT A)

“2.1. Many WTO Members maintain high bound rates in their WTO market access commitments. However, in practice, these Members oftentimes apply significantly lower tariffs allowing a government to modify its rates in response to domestic and international market conditions. As demonstrated in Figure 1, some Members have bindings substantially greater than applied rates, while others apply tariffs at the bound level. To illustrate this situation, it is useful to consider the situation of a diverse group of Members: Brazil, Chile, India, and Indonesia. These countries on average apply less than one-third of their average bound tariff, while Mexico applies on average less than one-half of its average bound commitment. However, a number of other Members, such as China and the United States of America, have lower bindings and tariffs for all agricultural products with tariffs applied at the bound level.

“2.2. The U.S. simple average bound agricultural tariff rate, according WTO tariff profile data, is 5% and applied tariffs also average 5%. The United States of America applies a tariff less than its bound level for three agricultural tariff lines, all of which are wool products2. Exhibit A illustrates bound and applied rates for several WTO Members to demonstrate the gap between bound and applied tariffs.

3 COMPLEX TARIFFS

“3.1. Another tariff issue concern the use of non-simple (ad valorem or specific) tariffs. These include formulaic measures (e.g. Minimum Import Prices, Price Bands, Variable Levies, Gate Price mechanisms) as well as simple discretionary tariff increases and decreases. These measures are aimed at controlling import competition and limiting competition for domestic producers. Oftentimes, this is accomplished by ensuring imports do not enter the domestic market at prices below domestic market prices. By blocking consumers’ access to price competition, these measures distort trade flows by restricting imports and allowing high-priced domestic products to be competitive. Ultimately, this reduces overall quantities imported.

“3.2. Approximately 30 Members choose to bind some tariffs at non-ad valorem (NAV) terms such as specific (a set value per quantity), compound (e.g. ad valorem and specific in same tariff), or mixed rates (e.g. either ad valorem or applied, whichever is higher). The share of NAV tariffs ranges from as low as 0.2% (Israel and Indonesia) to as high as 77% (Switzerland) of all agricultural lines. Based on the World Tariff Profiles 2013, nine countries including Canada, the
European Union, Iceland, Malaysia, Norway, Russia, Switzerland, Thailand, and the United States of America bound a significant share of their agricultural goods in NAV format.

“3.3. The United States of America applies specific duties for some agricultural products, as well as some compound duties. Specific duties have the virtue of predictability and are eroded over time with price inflation.

4 HIGH TARIFFS (CORRESPONDING WITH EXHIBIT B)

“4.1. An additional tariff issue is the use of high tariffs. High tariffs are a particular problem for trade in agriculture, as some Members that otherwise may have low average tariffs reserve “tariff peaks” for sensitive tariff lines. Tariffs in agriculture can exceed 1,000% and some Members apply tariffs at a very high level across an entire sensitive sector. Examples include: Canadian dairy and poultry tariffs (which exceed 200%); Japanese rice tariffs (which are between 500 and 700%); and most of the India’s agricultural tariff schedule (where tariffs are bound at 300%, 180%, or 100% for nearly all products).

“4.2. As displayed in Figure 2, the average tariff within various categories of agriculture is low. The United States of America has bound approximately 33% of its tariffs on agriculture at zero, approximately 43% at 1-5%, approximately 20% at 6 – 25%. Only a few tariffs exceed these tariff categories, including peanuts and sugar (with maximum rates of over 150%); dairy (140%); and some processed products (at 100%). The highest U.S. tariff is for a tobacco line, which has an ad valorem equivalent of over 400%. See Exhibit B for a summary comparison of average tariff rates by sector compared to the maximum tariff for the sector. Understanding which sectors and which countries have the most protective tariffs in place will help the Committee better understand the application of trade restrictions.

“1 See, e.g. Agreement on Agriculture, Article 4.2.

“2 USHTS 5101.21, 5101.29, and 5101.30. Bound rate of 6.5 cents/kg + 5%, applied tariff of zero.”

The 2018 effort by the United States provided additional rationale for focusing on tariff implementation issues and expanded the list of issues from three to six as noted above. See JOB/AG/141 at 1.

“1.1. In June 2018, the World Trade Organization Agriculture and Commodities Division and the Institute for Training and Technical Cooperation organized the Symposium on the Agriculture Policy Landscape to discuss the relationship between trade and agriculture. All of the various experts from around the world emphasized the need for more trade to improve global welfare, help producers, and address the challenges of sustainably feeding a growing world population. To achieve this, they stressed the importance of market-oriented trade as a means of advancing consumer and farmer welfare in all countries.

“1.2. In the agricultural sector, tariffs remain much higher than for other sectors, but have been reduced by more than one-quarter since 2001.1 Reducing tariffs, as was done through the Uruguay Round, contributes to the welfare gains from trade. However, it is important to have reciprocal reductions in tariffs. Indeed, it was shown that these welfare gains were greatest because of tariff reductions from both developed and developing countries. Reductions by only developed countries or only by developing countries resulted in suboptimal welfare gains.2 Further, locking in tariff reductions by all countries can contribute to substantial gains to global welfare going forward.3

“1.3. In June 2014, the United States of America submitted “Tariff Implementation Issues” (G/AG/W/132) to the Committee on Agriculture. In that communication, the United States of America noted that agricultural tariffs can distort global markets and make it difficult for consumers to have access to producer’s products. However, in some cases, market access is facilitated, for example, through the application of tariffs at levels below bound rates or through
preferential access as a result of reciprocal trade agreements.

“1.4. In order for Members to have productive discussions to address the challenges facing agricultural trade today, an understanding of the current state of Members’ tariff regimes, amongst other policy types, is needed. In 2014, the United States of America requested that the Secretariat issue, in one compilation for the Membership, the most recent tariff and trade data available, including on Members’ average bound and applied tariff rates in agriculture, the percentage of agricultural tariffs bound at zero by Members, as well as Members’ global share of agricultural imports and exports. While the United States of America is resubmitting this request to the Secretariat, the United States of America also urges Members to ensure that all WTO notifications relevant to market access are up to date. This includes Integrated Data Base (IDB) notifications, as well as notifications of regional trade agreements.

“1 Bureau, Guimbard and Jean, Agricultural Trade Liberalization, 2018, page 20, https://onlinelibrary.wiley.com/doi/abs/10.1111/1477-9552.12281.

“2 Caliendo, et. al., Tariff Reductions, Entry, and Welfare: Theory and Evidence for the Last Two Decades, April 2017, http://www.nber.org/papers/w21768.pdf.

“3 Bureau et. al. (2018).”

In the five papers looking at individual tariff implementation issues, the U.S. provides a conclusion based on its analysis.

For “bound versus applied tariffs, the relevant conclusions are:

“1.13. Water is prevalent in all major agricultural product groups. In addition, although differences between bound and applied rates occur for both developed and developing Members and large and small trading economies, the level of water is larger for developing Members and smaller trading economies than it is for most developed Members and large trading economies.

“1.14. The United States also notes the issues of transparency specified in the beginning of the paper. The United States once again, requests the Secretariat to compile information and that Members ensure that all WTO notifications relevant to market access are up to date. The United States further urges Members to consider what other data could improve Members’ knowledge.” JOB/AG/147 at 8.

On the issue of complex tariffs, the relevant conclusions are:

“1.22. This paper constitutes the United States’ attempt to provide a deeper understanding of the tariff treatment faced by Members. In its analysis, the United States has found that complex tariffs are prevalent in all major agricultural product groups (with an exception of cotton). In addition, complex tariffs can be found in both developed and developing Members, large and small trading economies. However, complex tariffs are more prevalent in developed Members and large trading economies than most developing Members and smaller trading economies.

“1.23. Improving access to customers contributes to the likelihood that farmers get better prices for their products and in turn the more production they can undertake. Similarly, expanding access to more producers benefits consumers who have more choice and competition when seeking supplies. More open and transparent markets contribute to greater productive efficiencies, particularly for value chains, and foster competition that spurs investment and technological innovation.

“1.24. The United States again notes the issues of transparency. It requests that the Secretariat continue to compile information and that Members ensure that all WTO notifications relevant to market access are up to date and consider what other data could improve Members’ knowledge.” JOB/AG/164 at 9.

On the issue of high tariffs (tariff peaks), the U.S. conclusions are:

“1.16. In its attempt to provide a deeper understanding of the tariff treatment faced by Members, the United States of America has found that tariff peaks are prevalent in all major agricultural product groups (with an exception of cotton). In addition, tariff peaks can be found in both developed and developing Members, large and small trading economies. The tariff range is larger for developed Members and large trading economies than most developing Members and small trading economies. The same can be said in regards to the frequency of tariffs above 50%. When considering the WTO definition of “tariff peaks” however, developing Members and large agricultural trading economies have higher frequency of tariff peaks than developed Members and small trading economies.

“1.17. Improving access to customers contributes to the likelihood that farmers get better prices for their products and in turn the more production they can undertake. Similarly, expanding access to more producers benefits consumers who have more choice and competition when seeking supplies. More open markets contribute to greater productive efficiencies, particularly for value chains, and foster competition that spurs investment and technological innovation.

“1.18. The United States of America again notes the issues of transparency as specified in the beginning of the paper. It requests the Secretariat to continue compiling information noted in this submission and Members to ensure that all WTO notifications relevant to market access are up to date and consider what other data could improve Members’ knowledge.” JOB/AG/167 at 7-8.

On the question of issues with TRQs (tariff rate quotas), the U.S. conclusions are:

“1.37. The United States aims to deepen Members’ understanding of the prevalence and different methods of administration of tariff rate quotas. In its analysis, the United States has found that TRQs are used by 40 Members, both developing and developed Members alike. TRQs are prevalent in all major agricultural product groups, with dairy, sugar and animal products having a larger share of TRQs than other product groups. However, it is worth mentioning that nearly half of scheduled quotas are administered as applied tariffs.

“1.38. Although TRQs were designed as a tool of access, very high over quota and in-quota tariffs, low fill rates, and confusing operation and administration of TRQs are still prevalent today that can make TRQs a tool of protection rather than liberalization.

“1.39. The United States requests that the Secretariat continue to compile and publish information on TRQ administration, with a focus on deeper analysis of the issues identified in this submission. Likewise, the United States requests that Members ensure that all WTO notifications relevant to TRQs are up to date and incorporate data that could improve other Members’ knowledge.” JOB/AG/169 at 15.

On special agricultural safeguards, the U.S. conclusions are:

“1.27. The United States aims to share this analysis to deepen Members’ understanding of SSG utilization and notification. In its analysis, the United States has found that 33 Members have recourse to the SSG, both developing and developed Members alike, covering on average, 16% of their respective bound tariff schedules. However, less than one-third of the Members have actually taken recourse of SSGs in the last 10 years, applying the safeguard to, on average, 40% of the scheduled SSG lines. Those lines are largely made up of “animal products”, “dairy products” and “cereals and preparations”. Over the last 10 years, developing Members have utilized SSGs to a greater degree than developed Members.

“1.28. In its assessment of Member notifications, the United States has also encountered issues with Members either failing to notify SSG use or non-use, or not notifying within the timeframe specified in G/AG/2. In addition, Members that notify SSG usage lack consistency in reporting the information. These issues may cause confusion for importers and exporters of concerned products and reduces transparency for the WTO Members in reviewing utilization of the SSG in the context of the AoA. Therefore the United States encourages Members to examine these issues and discuss approaches to strengthen compliance with requirements and improve notification practices related to the SSG.

“1.29. The United States also requests that the Secretariat continue to compile and publish information on SSGs, akin to the note from January 2017 (TN/AG/S/29/Rev.1), with a focus on deeper analysis of the issues identified in this submission. Likewise, the United States requests that Members ensure that all WTO notifications relevant to SSGs are up-to-date and notified.” JOB/192 at 12.

Conclusion

There is an effort as part of preparation for the 12th Ministerial Conference to pursue a number of agriculture issues that have been pressed by various Members for a number of years. A number of the issues being pursued are looking at providing greater protections to developing countries. Of interest to many developed and developing countries are market opening measures, although it is unclear if anything will happen in this area with regard to tariffs.

For the United States, agricultural market access is a critical issue to most sectors and has broad Congressional support in both parties. The effort to develop a greater understanding of how tariffs are working in fact started in the Obama Administration following the impasse in the Doha Development Agenda in 2008 including on agricultural market access, was pursued in the Trump Administration and is being continued in the Biden Administration. The U.S. focus is useful to help flag just how distorted agricultural trade remains, the lack of transparency on many issues and the fact that greater market access for all necessarily must involve reduction in tariffs and countries handling all aspects of tariffs (including TRQs and SSGs) in a manner consistent with the obligations undertaken. The U.S. submissions are neutral in coverage and include U.S. actions as well as major agricultural exporters and importers.

What was described by the U.S. in its June 2018 on tariff implementation issues, continues to be true as the world tries to move through the COVID-19 pandemic. As was previously quoted from the U.S. communication, “All of the various
experts from around the world emphasized the need for more trade to improve global welfare, help producers, and address the challenges of sustainably feeding a growing world population. To achieve this, they stressed the importance of market-oriented trade as a means of advancing consumer and farmer welfare in all countries.”

The question for the WTO membership and the new WTO Director-General is whether in agriculture the WTO can in fact expand market access for agricultural goods as part of the 12th Ministerial Conference or whether meaningful agricultural liberalization will continue to evade the WTO.

Because of the wealth of analysis contained in the U.S. submissions, the documents referenced in this note are embedded below.

W132

JobsAG141

JobsAG147

JobsAG164

JobsAG167

JobsAG169

JobsAG192

COVAX delivers COVID-19 vaccines to 100th country; India surge in infections likely to reduce product availability for COVAX through May and likely longer

Apress release from the WHO, Gavi, CEPI and UNICEF on the COVAX facility’s success in getting vaccines to 100 countries by April 8 is impressive news for the efforts of the WHO, GAVI, CEPI, UNICEF and their supporters to get vaccines to low- and middle-income countries as part of the effort to have vaccine distribution done equitably and affordably. See Press Relase from WHO, Gavi, CEPI, UNICEF, COVAX reaches over 100 economies, 42 days after first international delivery, April 8, 2021, https://www.gavi.org/news/media-room/covax-reaches-over-100-economies-42-days-after-first-international-delivery#:~:text=The%20milestone%20comes%2042%20days,Ghana%20on%20February%2024th.&text=Of%20the%20over%20100%20economies,Advance%20Market%20Commitment%20(AMC). The press release is embedded below.

PDF Embedder requires a url attribute COVAX-reaches-over-100-economies-42-days-after-first-international-delivery-_-Gavi-the-Vaccine-Alliance

While the release indicates that there will be delays in deliveries of vaccines in March and April because of increased COVID-19 cases in India, developments in India could mean an even greater delay in supplies than announced in March. For example, the major supplier of vaccines to COVAX in the first half of 2021 is the Serum Institute of India (“SII”) which is licensed by AstraZeneca to produce that vaccine in India for distribution in large part to COVAX. Yesterday, the president of SII indicated that export shipments could resume in June depending on cases levels in India. See Financial Times, India to restart Covid vaccine exports in June if local cases fall, April 7, 2021, https://www.ft.com/content/fcdffb8f-f86e-4bd9-adec-20256aeb0a07. It doesn’t appear that SII has notified COVAX of a further delay past April, but a June resumption, if it occurs, suggests that delays will continue through May at a minimum.

The situation for SII is complicated by a need for expanded capacity. It has sought $400 million from the Indian government to ramp up production from 71 million to 100 million doses per month by May. See Fierce Pharma, ‘Very stressed’ Serum Institute asks government for $400M vaccine production boost, April 8, 2021, https://www.fiercepharma.com/manufacturing/very-stressed-serum-institute-india-asks-government-for-vaccine-production-boost.

Moreover, the refusal of SII to export doses to the United Kingdom, to COFAX and others has become the basis for a legal notice from AstraZeneca. See Times of India, Covid-19: AstraZeneca sends legal notice to SII over delays in vaccine supply, April 8, 2021, https://timesofindia.indiatimes.com/india/astrazeneca-sends-legal-notice-to-sii-over-delays-in-vaccine-supply/articleshow/81960902.cms. SII is also finding itself refunding moneys paid by countries who are not getting supplies. See Reuters, Serum Institute refunds S. Africa for undelivered AstraZeneca doses, April 8, 2021, https://www.reuters.com/article/us-health-coronavirus-safrica/serum-institute-refunds-south-africa-for-undelivered-astrazeneca-doses-idUSKBN2BV1TI.

While COVAX is looking to expand sources of vaccines, SII is the major source through June. Professor Simon Evenett has put out a one page analysis of the implications for supply to COVAX from SII if the resumption of exports is premised on India fully vaccinating all those willing to be vaccinated for whom the government of India has opened up vaccinations. While SII has not stated that resumption of exports is tied to full vaccination of Indians who are 45 years or older, Prof. Evenett’s paper is an interesting analysis of how long a delay could occur in terms of SII becoming a major exporter again. His paper entitled “Vaccine Maths 2: Will India start exporting COVID-19 vaccines again in June 2021?” is embedded below.

Vaccine_Maths_2.pd_

Conclusion

With the spread of the new variants of COVID-19 that have higher rates of transmission and higher rates of serious infection, many countries find themselves facing increased numbers of cases and increased hospitalizations and deaths even as vaccine supplies are increasing and vaccination roll outs starting in many countries. There is a lot of attention within multilateral organizations such as the World Bank, IMF and WTO and by a number of countries on the needs for increased production and distribution to all countries. See, e.g., April 6, 2021, IMF April World Economic Outlook, IMF and World Bank Spring Meetings and U.S. efforts on global access to vaccines, https://currentthoughtsontrade.com/2021/04/06/imf-april-world-economic-outlook-imf-and-world-bank-spring-meetings-and-u-s-efforts-on-global-access-to-vaccines/. COVAX is an important part of the solution but it will need more funding and greater diversity of suppliers to meets its role in the equitable and affordable access to vaccines in 2021 and 2022.

USTR 2021 National Trade Estimate Report on Foreign Trade Barriers — areas of concern with a focus on China

Every year for the last 36 years, USTR releases a National Trade Estimate Report on Foreign Trade Barriers. This year’s forward provides a little background on the report. See USTR, 2021 National Trade Estimate Report on Foreign Trade Barriers, page 1, https://ustr.gov/sites/default/files/files/reports/2021/2021NTE.pdf.

“The 2021 National Trade Estimate Report on Foreign Trade Barriers (NTE) is the 36th in an annual series that highlights significant foreign barriers to U.S. exports, U.S. foreign direct investment, and U.S. electronic commerce. This document is a companion piece to the President’s 2021 Trade Policy Agenda and 2020 Annual Report, published by the Office of the United States Trade Representative (USTR) in March.

“In accordance with section 181 of the Trade Act of 1974, as amended by section 303 of the Trade and Tariff Act of 1984 and amended by section 1304 of the Omnibus Trade and Competitiveness Act of 1988, section 311 of the Uruguay Round Trade Agreements Act, and section 1202 of the Internet Tax Freedom Act, USTR is required to submit to the President, the Senate Finance Committee, and appropriate committees in the House of Representatives, an annual report on significant foreign trade barriers. The statute requires an inventory of the most important foreign barriers affecting U.S. exports of goods and services, including agricultural commodities and U.S. intellectual property; foreign direct investment by U.S. persons, especially if such investment has implications for trade in goods or services; and U.S. electronic commerce. Such an inventory enhances awareness of these trade restrictions, facilitates U.S. negotiations aimed at reducing or eliminating these barriers, and is a valuable tool in enforcing U.S. trade laws and strengthening the rules-based system.”

This year’s report covers 65 countries or country groups, so not all trading partners are covered by the annual report. China has the largest section of the report for an individual country (36 pages) while the European Union (covering 27 countries) has the largest section overall (52 pages). Other important trading partners with significant sections in the report include India (24 pages), Russian Federation (20 pages), Japan (18 pages), Indonesia (16 pages), Republic of Korea (14 pages), Brazil (14 pages), Vietnam (14 pages). the USMCA partners had smaller sections — Canada (8 pages) and Mexico (12 pages). the countries covered account for nearly 100 percent of U.S. trade in goods and nearly 90% of U.S. services trade.

The USTR press release from March 31, 2021 (majority of release copied below) provides an outline of some of the major areas of concern. See USTR, Ambassador Tai releases 2021 National Trade Estimate Report, March 31, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/march/ambassador-tai-releases-2021-national-trade-estimate-report.

Significant Barriers to U.S. Exports in 65 Trading Partners Detailed

“WASHINGTON – United States Trade Representative Katherine Tai today released the 2021 National Trade Estimate (NTE) Report, providing a detailed inventory of significant foreign barriers to U.S. exports of goods and services, investment, and electronic commerce.

“’The President’s Trade Agenda released earlier this month outlined a clear vision for supporting America’s working families by promoting a fair international trading system that boosts inclusive economic growth,’” said Ambassador Tai. ‘The 2021 NTE Report identifies a range of important challenges and priorities to guide the Biden Administration’s effort to craft trade policy that reflects America’s values and builds back better.’

“Published annually since 1985, the NTE Report is a comprehensive review of significant foreign trade barriers affecting U.S. exports of goods and services. The 570-page report examines 65 trading partners and country groups, including the U.S.’ largest trading partners, all 20 U.S. FTA partners, and other economies and country groupings of interest such as the Arab League, the United Kingdom (included as a separate entity for the first time in this report), and the European Union. Together, these economies account for 99 percent of U.S. goods trade and 87 percent of U.S. services trade. 

“The NTE Report covers significant trade barriers in 11 areas, including (1) import policies such as tariffs, import licensing and customs barriers; (2) technical barriers to trade; (3) sanitary and phytosanitary measures; (4) subsidies; (5) government procurement; (6) intellectual property protection; (7) services barriers; (8) barriers to digital trade and electronic commerce; (9) investment barriers; (10) competition; and (11) other barriers. 

“Taken as a whole, the NTE Report highlights significant barriers that present major policy challenges with implications for future U.S. growth opportunities, and the fairness of the global economy. Examples of these significant obstacles include: 

Agricultural Trade Barriers:  The NTE Report details an array of tariff and nontariff barriers to U.S. agricultural exports across trading partners and regions, ranging from non-science-based regulatory measures, opaque approval processes for products of agricultural biotechnology, burdensome import licensing and certification requirements, and restrictions on the ability of U.S. producers to use the common names of the products that they produce and export. USTR will continue to engage foreign governments on barriers that hamper the ability of U.S. farmers, ranchers and food processors to access markets worldwide. 

Digital Trade:  The 2021 NTE Report details restrictive data policies in India, China, Korea, Vietnam, and Turkey, among other countries; local software pre-installation requirements in Russia, Indonesian tariffs on digital products, and existing or proposed local content requirements for online streaming services in Australia, Brazil, Canada, China, EU, Mexico, Ukraine, and Vietnam; and discriminatory tax measures in Austria, India, Italy, Spain, Turkey, and the UK. USTR will continue to engage foreign governments on digital policies that threaten the regulatory landscape for U.S. exporters of digital products and services and undermine U.S. manufacturers’ and service suppliers’ ability to move data across borders. 

Excess Capacity:  China’s state-led approach to the economy and trade makes it the world’s leading offender in creating non-economic capacity, as evidenced by the severe and persistent excess capacity situations in several industries, including steel, aluminum, and solar, among others. China also is well on its way to creating severe excess capacity in other industries through its pursuit of industrial plans such as Made in China 2025, pursuant to which the Chinese government is doling out hundreds of billions of dollars to support Chinese companies and requiring them to achieve preset targets for domestic market share–at the expense of imports–and global market share in several advanced manufacturing industries. USTR will continue its bilateral and multilateral efforts to address these harmful trade practices.

Technical Barriers to Trade:   Technical regulations or conformity assessment procedures that unnecessarily restrict trade or curb the movement of innovative products risk lost opportunities to capitalize on America’s leadership in science and high-tech manufacturing, services, and agriculture. The NTE Report’s many examples of this challenge range from non-transparent European Union chemical regulations to Chinese Information Technology cybersecurity and encryption standards, to Indian and Brazilian testing and certification rules for telecommunications equipment, to technology. 

“The United States is taking steps to address these issues, and encourage flexible regulatory approaches and transparent, open processes, with these and many other partners. Within APEC, for example, the United States is engaged in projects on cybersecurity and blockchain to identify key public policy issues, and has projects in development on aerial drones and 3D printing. Another key example is USTR’s bilateral and multilateral work on standards and regulations related to electric cars, to ensure that vehicles from different manufacturers can all be charged reliably.

“The NTE Report details thousands of individual barriers to specific manufactured goods, farm products, and services. Each can reduce U.S. opportunities to export, invent, support jobs, and raise wages and incomes. These range from Argentina’s imposition of quota limits on imported books in September 2020 to India’s 38.8 percent average tariff on agricultural goods; the anomalous technical standards Saudi Arabia applies to shoes and electronic equipment; Ecuador’s mandatory and cumbersome process for allocating import licenses for agriculture products such as meats and dairy products; Indonesian local content requirements across a broad range of sectors; and Russian bans on imported food.”

What the NTE has to say about China 

The United States has for many years raised multiple concerns with China’s practices which the U.S. views as distorting trade flows and impeding market access to China. While the U.S. and China have engaged bilaterally extensively since China’s WTO accession and the U.S. has pursued several dozen disputes against Chinese practices that were clearly contrary to WTO obligations of China, little overall progress has been made in resolving the wide array of Chinese government distortions created and maintained over the years. These distortions contribute to the extraordinary trade deficit the United States has with China. See, e.g., U.S. Department of Commerce, Bureau of Economic Analysis, MONTHLY U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES, FEBRUARY 2021, April 7, 2021, https://www.bea.gov/news/2021/us-international-trade-goods-and-services-february-2021 (U.S. trade deficit in 2020 in goods with China was $310.2 billion; U.S. trade surplus in services was $22.1 billion; U.S. deficit in goods with China increased to $50.9 billion in the January – February 2021 period versus $42.1 billion in the first two months of 2020).

The Trump Administration pursued a 301 investigation on a number of intellectual property concerns with China, conducted Section 232 national security investigations on steel and aluminum — two sectors where Chinese actions have created massive global excess capacity — and negotiated with China the U.S.-China Phase I Agreement which took effect in mid-February 2020. The Agreement both addressed a number of problems in agriculture, intellectual property and services and committed China to expanded purchases of goods and services from the United States in 2021-2022 (and going forward). The NTE reviews where Chinese commitments under the Phase I Agreement apply and what progress is being seen. On the purchase commitments, China has not come close to meeting the commitments in 2021 though there were increased imports from the U.S. of agricultural products and energy products. See, e.g., March 20, 2021, The U.S.-China Phase 1 Trade Agreement under the Biden Administration, https://currentthoughtsontrade.com/2021/03/20/the-u-s-china-phase-1-trade-agreement-under-the-biden-administration/. The U.S. has a long history of China promising reforms that are either not carried out or are undermined by additional restrictions. The list of areas of concern making it into the annual NTE is not exhaustive but illustrative of the challenges to obtaining conditions of fair trade with the world’s most populous nation and second largest economy.

Areas of concern for the United States with China shown in the 2021 NTE include:

Tariffs (there are some high agricultural tariffs, and the large tariffs imposed in retaliation to U.S. Section 232 actions on steel and aluminum and U.S. Section 301 actions for Chinese practices reviewed in the investigation).

Non-tariff barriers include

  • Industrial Policies (such as “Made in China 2025” and described generally as follows, “China continues to pursue a wide array of industrial policies that seek to limit market access for imported goods, foreign manufacturers, and foreign services suppliers, while offering substantial government guidance, resources, and regulatory support to Chinese industries. The beneficiaries of these constantly evolving policies are not only state-owned enterprises (SOEs) but also other domestic companies attempting to move up the economic value chain.),
  • State-Owned Enterprises (a number of concerns are raised including “China has also previously indicated that it would consider adopting the principle of ‘competitive neutrality’ for SOEs. However, China has continued to pursue policies that further enshrine the dominant role of the state and its industrial plans when it comes to the operation of state-owned and state-invested enterprises.”),
  • Industrial Subsidies (massive subsidies to industries creating excess capacity and causing harm to U.S. producers globally; U.S. is working with the EU and Japan on possible amendments to Subsidies Agreement to address certain aspects not effectively handled under existing rules)
  • Fisheries Subsidies (size of subsidies by China to its industry),
  • Excess Capacity (problem created in many sectors including steel, aluminum, solar panels and others through state programs, subsidies, etc.),
  • Indigenous Innovation (including preferences for IP developed in China),
  • Technology Transfer (301 investigation looked at “(1) the use of a variety of tools to require or pressure the transfer of technologies and IP to Chinese companies; (2) depriving U.S. companies of the ability to set market based terms in technology licensing negotiations with Chinese companies; (3) intervention in markets by directing or unfairly facilitating the acquisition of U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and IP; and, (4) conducting or supporting cyber-enabled theft and unauthorized intrusions into U.S. commercial computer networks for commercial gains.”)
  • Investment Restrictions (different systems for domestic and foreign investment; discriminatory treatment),
  • Administrative Licensing (problems continue to be experienced in a wide array of licensing situations)
  • Standards (ability of foreign companies to participate in establishing; development of Chinese standards regardless of international standards),
  • Secure and Controllable ICT Policies (cybersecurity law used to discriminate against foreign ICT prducts),
  • Encryption (“Onerous requirements on the use of encryption, including intrusive approval processes and, in many cases, mandatory use of indigenous encryption algorithms (e.g., for WiFi and 4G cellular products), continue to be cited by stakeholders as a significant trade barrier.”),
  • Competition Policy (“Many U.S. companies have cited selective enforcement of the Anti-monopoly Law against foreign companies seeking to do business in China as a major concern, and they have highlighted the limited enforcement of this law against SOEs.” “Instead, these remedies seem to be designed to further industrial policy goals. Another concern relates to the procedural fairness of Anti-monopoly Law investigations of foreign companies. U.S. industry has expressed concern about insufficient predictability, fairness, and transparency in Antimonopoly Law investigative processes.”),
  • Pharmaceuticals (some long standing issues addressed in U.S.-China Phase I Agreement; others to be addressed in the future),
  • Medical devices (China’s “pricing and tendering procedures for medical devices and its discriminatory treatment of imported medical devices”),
  • Cosmetics (“concerns with China’s regulation of cosmetics.” “Despite years of United States engagement with China via the JCCT, the International Cooperation on Cosmetics Regulation, and other fora to share views and expertise regarding the regulation of cosmetics, as of March 2021 China has not yet addressed key U.S. trade concerns, including basic concerns such as the need to use international standards to facilitate cosmetics conformity assessment, nor has it provided assurances that U.S. intellectual property will be protected.”),
  • Export restraints (need to bring multiple cases at WTO on inputs where violate Protocol of Accession),
  • Value-added Tax Rebates and Related Policies (modifications of rates to change trade flows),
  • Import Ban on Remanufactured Products
  • Import Ban on Recyclable Materials
  • Trade Remedies (problems in transparency and procedural fairness; problems also in apparent use of trade remedies to go after trading partners who use WTO rights against Chinese products),
  • Government Procurement (failure to join the WTO GPA yet),
  • Corporate Social Credit System (“Foreign companies are concerned that the corporate social credit system will also be used by the Chinese Government to pressure them to act in accordance with relevant Chinese industrial policies or otherwise to make investments or conduct their business operations in ways that run counter to market principles or their own business strategies. Foreign companies are also concerned about the opaque nature of the corporate social credit system.”),
  • Other Non-Tariff Measures (“Key areas include China’s labor laws, laws governing land use in China, commercial dispute resolution and the treatment of non-governmental organizations. Corruption among Chinese Government officials, enabled in part by China’s incomplete adoption of the rule of law, is also a key concern.”).

Intellectual Property Protection (many issues were included in the U.S.-China Phase I Agreement, some progress on issues raised).

  • Trade Secrets (major area of concern and theft, some believed from government-supported entities; some improvements from U.S.-China Phase I Agreement),
  • Bad Faith Trademark Registration (a continuing major concern; some progress in U.S.-China Phase I Agreement),
  • Online Infringement (“Online piracy continues on a large scale in China, affecting a wide range of industries, including those involved in distributing legitimate music, motion pictures, books and journals, software, and video games.” Some progress made in the U.S.-China Phase I Agreement),
  • Counterfeit Goods (a major problem. “The Phase One Agreement requires China to take effective enforcement action against counterfeit pharmaceuticals and related products, including active pharmaceutical ingredients, and to significantly increase actions to stop the manufacture and distribution of counterfeits with significant health or safety risks. The Phase One Agreement also requires China to provide that its judicial authorities shall order the forfeiture and destruction of pirated and counterfeit goods, along with the materials and implements predominantly used in their manufacture. In addition, the Agreement requires China to significantly increase the number of enforcement actions at physical markets in China and against goods that are exported or in transit. It further requires China to ensure, through third party audits, that government agencies and SOEs only use licensed software.”).

Agriculture (“China remains a difficult and unpredictable market for U.S. agricultural exporters, largely because of
inconsistent enforcement of regulations and selective intervention in the market by China’s regulatory authorities. The failure of China’s regulators to routinely follow science-based, international standards, and guidelines further complicates and impedes agricultural trade. The Phase One Agreement addresses structural barriers to trade and aims to support a dramatic expansion of U.S. food, agriculture, and seafood product exports, which will increase U.S. farm and fishery income, generate more rural economic activity, and promote job growth. The Phase One Agreement addresses a multitude of non-tariff barriers to U.S. agriculture and seafood products, including for meat and meat
products, poultry, seafood, rice, dairy, infant formula, horticultural products, animal feed and feed additives, pet food, and products of agricultural biotechnology. The Agreement also includes enforceable commitments requiring China to purchase and import on average at least $40 billion of U.S. agricultural and seafood products per year in 2021 and 2022, representing an average annual increase of at least $16 billion over 2017 levels. China also agreed that it will strive to purchase and import an additional $5 billion of U.S. agricultural and seafood products each year.”).

  • Agricultural Domestic Support (China exceeds the limits allowed it; WTO dispute confirms China in violation of WTO obligations; U.S. seeking authorization to retaliate),
  • Tariff-rate Quota Administration (U.S. challenged China’s administration of TRQs on various products and won WTO dispute; U.S.-China Phase I Agreement requires China to comply on the products of concern),
  • Agricultural Biotechnology Approvals (China’s system has been a major problem for U.S. producers. U.S>-China Phase I Agreement includes commitments by China to address the major concerns of the U.S. in this area),
  • Food Safety Law (China’s actions have been quite burdensome and have failed to provide notices to the WTO in many cases. U.S>-China Phase I Agreement addresses the main concerns),
  • Poultry (China restricted U.S. exports after avian influenza in the U.S. and maintained restrictions despite actions by the U.S. that complied with World Organization for Animal Health (OIE) guidelines. U.S.-China Phase I Agreement has China committing to follow OIE guidelines and limiting restrictions to the region where there is a problem in future outbreaks),
  • Beef (“In the Phase One Agreement, China agreed to expand the scope of U.S. beef products allowed to be imported, to eliminate age restrictions on cattle slaughtered for export to China, and to recognize the U.S. beef and beef products’ traceability system. China also agreed to establish MRLs for three synthetic hormones legally used for decades in the United States consistent with Codex standards and guidelines. Where Codex standards and guidelines do not yet exist, China agreed to use MRLs established by other countries that have performed science-based risk assessments.”),
  • Pork (“China bans the use of certain veterinary drugs and growth promotants instead of accepting the MRLs set by Codex.” Some progress on opening the China market to U.S. pork products was made in the U.S.-China Phase I Agreement),
  • Horticultural Products (market access barriers for many U.S. products. U.S.-China Phase I Agreement obtains access for a number of products — fresh potatoes for processing, blueberries, nectarines and avocados from California, and barley, timothy hay and some other products.),
  • Value-added Tax Rebates and Related Policies (practice of varying rates on agricultural commodities).

Services (“In 2020, numerous challenges persisted in a number of services sectors. As in past years, Chinese regulators
continued to use discriminatory regulatory processes, informal bans on entry and expansion, case-by-case approvals in some services sectors, overly burdensome licensing and operating requirements, and other means to frustrate the efforts of U.S. suppliers of services to achieve their full market potential in China. These policies and practices affect U.S. service suppliers across a wide range of sectors, including express delivery, cloud computing, telecommunications, film production and distribution, online video and entertainment software, and legal services. In addition, China’s Cybersecurity Law and related draft and final implementing measures include mandates to purchase domestic ICT products and services, restrictions on cross-border data flows, and requirements to store and process data locally. China’s draft Personal Information Protection Law also includes restrictions on cross-border data flows and requirements to store and process data locally. These types of data restrictions undermine U.S. services suppliers’ ability to take advantage of market access opportunities in China. China also had failed to fully address U.S. concerns in
areas that have been the subject of WTO dispute settlement, including electronic payment services and theatrical film importation and distribution. The Phase One Agreement addresses a number of longstanding trade and investment barriers to U.S. providers of a wide range of financial services, including banking, insurance, securities, asset management, credit rating, and electronic payment services, among others. The barriers addressed in that Agreement
include joint venture requirements, foreign equity limitations, and various discriminatory regulatory requirements. Removal of these barriers should allow U.S. financial service providers to compete on a more level playing field and expand their services export offerings in the China market.”)

  • Banking Services (U.S.-China Phase I Agreement addresses some concerns re access including bank branches and supplying securities investment fund custody services),
  • Securities, Asset Management, and Futures Services (U.S.-China Phase I Agreement resulted in China eliminating limits on equity ownership and commits to nondiscrimination for U.S. suppliers of these services),
  • Insurance Services (despite commitments by China as part of the U.S.-China Phase I Agreement, U.S. participation in China’s insurance market remains very limited),
  • Electronic Payment Services (China has restricted access to foreign electronic payment services providers. U.S. won a WTO dispute and included provisions in U.S.-China Phase I Agreement. So far just one foreign electronic payment services provider has been licensed in China),
  • Internet-enabled Payment Services (major problems for foreign companies to obtain license to provide such services),
  • Telecommunications Services (range of barriers have limited foreign suppliers access to both basic telecom services and to value added services),
  • Internet Regulatory Regime (“China’s Internet regulatory regime is restrictive and non-transparent, affecting a broad range of commercial services activities conducted via the Internet, and is overseen by multiple agencies without clear lines of jurisdiction. China’s Internet economy had boomed over the past decade and is second in size only to that of the United States. Growth in China has been marked in service sectors similar to those found in the United States, including retail websites, search engines, online education, travel, advertising, audio-visual and computer gaming services, electronic mail and text, online job searches, Internet consulting, mapping services, applications, web domain registration, and electronic trading. However, in the Chinese market, Chinese companies dominate due in large part to restrictions imposed on foreign companies by the Chinese Government. At the same time, foreign companies continue to encounter major difficulties in attempting to offer these and other Internet-based services on a cross-border basis. China continues to engage in extensive blocking of legitimate websites and apps, imposing significant costs on both suppliers and users of web-based services and products. According to the latest data, China currently blocks a significant portion of the largest global sites. U.S. industry research has calculated that more than 10,000 foreign sites are blocked, affecting billions of dollars in business, including communications, networking, app stores, news, and other sites. Even when sites are not permanently blocked, the often arbitrary implementation of blocking, and the performance-degrading effect of filtering all traffic into and outside of China, significantly impair the supply of many cross-border services, often to the point of making them unviable.”),
  • Voice-over-Internet Protocol Services (“China’s regulatory authorities have restricted the ability to offer VOIP services interconnected to the public switched telecommunications network (i.e., to call a traditional phone number) to basic telecommunications service licensees.”),
  • Cloud Computing Services (foreign service providers can only operate in China by using a Chinese company and turning over brand, IP and other aspects; serious concern for U.S.),
  • Audio-visual and Related Services (“China prohibits retransmission of foreign TV channels, prohibits foreign investment in TV production, prohibits foreign investment in TV stations and channels in China, and imposes quotas on the amount of foreign programming that can be shown on a Chinese TV channel each day.”),
  • Theatrical Films (despite a WTO dispute and a resulting MOU where China agreed to expand number of U.S. films, China has not fulfilled its commitments)
  • Online Video and Entertainment Software Services (foreign suppliers are severely restricted),
  • Legal Services (very limited ability for foreign firms or foreign lawyers to practice in China)
  • Express Delivery Services (foreign service providers are banned from document delivery and face discriminatory and burdensome actions on package participation),
  • Data Restrictions (activities in China are likely to result in local storage requirements and limits on cross-border transfer; major concern to U.S. and many other countries).

Transparency (much work needed by China to meet obligations)

  • Publication of Trade-related Measures (WTO obligation to publish in one journal; spotty performance and many types of measures not published in the journal),
  • Notice-and-comment Procedures (little progress at sub-central government level; some progress at central government; U.S.-China Phase I Agreement commits China to provide 45 days notice and comment period for matters relating to the Agreement),
  • Translations (WTO commitment to provide translations in one of the three official WTO languages. “China does not publish translations of trade-related laws and administrative regulations in a timely manner (i.e., before implementation), nor does it publish any translations of trade-related measures issued by sub-central governments at all.”).

Conclusion

While the U.S. was the first country to produce a national trade estimate, a number of countries do so today. All trading partners have some practices which concern other trading partners, including the United States.

The length of the entry in the NTE for a give country is a reasonable indication both of the importance of the trade relationship and of the breadth of issues of concern. For the United States, the National Trade Estimate is a useful compilation of many of the major concerns raised by industries about problems in access to markets abroad or distortions created by practices of trading partners. Typically items found in the NTE will be part of USTR’s focus during the year in interactions with particular trading partners.

China is the country with the longest entry in the NTE and has been for many years. Considering the array of distortions and other problems identified in this year’s NTE, the focus on China is not surprising.

Some of the problems identified in this year’s NTE with China could be addressed through WTO reform, though China has indicated opposition to such an approach. On some of the issues, the U.S. has received repeated promises from China to address but without meaningful results to date.

What is clear is that U.S. trade relations with China are not balanced and haven’t been for the entire time of WTO membership for China. The challenge for the U.S. and the world is how to restore balance and save the global trading system. There are no obvious answers.

IMF April World Economic Outlook, IMF and World Bank Spring Meetings and U.S. efforts on global access to vaccines

The IMF released today its April 2021 World Economic Outlook, increasing projected global growth in 2021 and 2022 from its earlier projections. See IMF, World Economic Outlook, Managing Divergent Recoveries, April 2021, https://www.imf.org/en/Publications/WEO/Issues/2021/03/23/world-economic-outlook-april-2021. Global contraction was less severe than previously thought in 2020 and the rebound is larger though there remains significant uncertainty.

“Global prospects remain highly uncertain one year into the pandemic. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support. The outlook depends not just on the outcome of the battle between the virus and vaccines—it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis.

“Global growth is projected at 6 percent in 2021, moderating to 4.4 percent in 2022. The projections for 2021 and 2022 are stronger than in the October 2020 WEO. The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.”

The following tables from the IMF webpage taken from the new report show first the global, advanced economies and developing economy outlook for 2020, 2021, 2022 and then for various major countries and regions for the same periods.

Much has been written about the need for debt relief and greater access to vaccines for many low-income countries to help them get through the pandemic and back on track for economic expansion. The IMFBlog from April 5, 2021 provides an overview of the serious challenges faced by low income countries and the potential sources of financial support available through the IMF if supported by member countries. See IMFBlog, Funding the Recovery of Low-income Countries After COVID, April 5, 2021, https://blogs.imf.org/2021/04/05/funding-the-recovery-of-low-income-countries-after-covid/.

“Several factors hamper the economic recovery of low-income countries. First, they face uneven access to vaccines. Most of these countries rely almost entirely on the multilateral COVAX facility—a global initiative aimed at equitable access to vaccines led by a consortium of international organizations. COVAX is currently set to procure vaccines for just 20 percent of the population in low-income countries. Second, low-income countries have had limited policy space to respond to the crisis—in particular, they have lacked the means for extra spending * * *.

“Third, pre-existing vulnerabilities, including high levels of public debt in many low-income countries, and weak, sometimes negative, total factor productivity performance in some low-income countries continue to act as a drag on growth.”

The blog post reviews estimated financial needs over the next five years. The estimated needs are $200 billion to respond to the COVID-19 pandemic (including adequate vaccinations), an additional $250 billion to speed convergence with advanced economies, and an additional $100 billion if various risks materialized. Potentially $550 billion — obviously a huge number.

The blog identifies various potential sources of funds to address these needs that can be available through the IMF.

“- Expanding access to concessional resources under the Poverty Reduction and Growth Trust, including extending access to emergency financing. From March 2020 to March 2021, about $13 billion has been approved to more than 50 low-income countries. The IMF is also currently reviewing its lending framework to low-income countries, beyond the temporary increase in access limits.

“- Proposal for a new allocation of Special Drawing Rights . Support is building among the IMF’s membership for a possible SDR allocation of $650 billion. This would help address the long-term global need for reserve assets, and would provide a substantial liquidity boost to all members.

“- Debt service relief through the Catastrophe Containment and Relief Trust to 29 eligible countries. The recently-approved third tranche covering the period April-October 2021 brings total debt service relief up to $740 million since April 2020. Such relief provides space for poor countries to scale up spending on priority areas during the pandemic.

“- Supporting a further extension of the G-20 Debt Service Suspension Initiative (DSSI) until end-December 2021. The DSSI delivered US$5.7 billion in debt service relief for 43 countries in 2020 and is expected to deliver up to US$7.3 billion of additional debt service suspension through June 2021 for 45 countries.

“The needs of the poorest countries over the next five years are acute. But they are not out of reach. A strong, coordinated, comprehensive package is needed. This will secure a rapid recovery and transition to a green, digital, and inclusive growth that will accelerate convergence of low-income countries to their advanced economy counterparts.”

The IMF Spring meeting this week is taking up various issues designed to ensure assistance to the world’s low income countries. See, e.g., IMF, PRESS RELEASE NO. 21/99, IMF Executive Board Extends Debt Service Relief for 28 Eligible Low-Income Countries through October 15, 2021, April 5, 2021, https://www.imf.org/en/News/Articles/2021/04/05/pr2199-imf-executive-board-extends-debt-service-relief-28-eligible-lics-october-15-2021.

The Rockefeller Foundation released a paper recently arguing that funding from the Special Drawing Rights could be used to help procure vaccines for low- and middle-income countries to enable 70% vaccination rates by the end of 2022. See PR Newswire, The Rockefeller Foundation Releases New Financing Roadmap to End Pandemic by End of 2022, April 6, 2021, https://www.prnewswire.com/news-releases/the-rockefeller-foundation-releases-new-financing-roadmap-to-end-pandemic-by-end-of-2022-301262501.html; Rockefeller Foundation, One for All: An Action Plan for Financing Global Vaccination and Sustainable Growth, https://www.rockefellerfoundation.org/wp-content/uploads/2021/04/One-for-All-An-Action-Plan-for-Financing-Global-Vaccination-and-Sustainable-Growth-Final.pdf.

Other multilateral organizations such as the World Bank have been actively involved helping developing countries including using billions for vaccine procurement. See World Bank Group, WBG Vaccine Announcement – Key Facts, March 30, 2021, https://www.worldbank.org/en/news/factsheet/2020/10/15/world-bank-group-vaccine-announcement—key-facts

“COVID-19 vaccines, alongside widespread testing, improved treatment and strong health systems are critical to save lives and strengthen the global economic recovery. To provide relief for vulnerable populations, low- and middle-income countries need fair, broad, and fast access to effective and safe vaccines.

“That’s why the World Bank (WB) is building on its initial COVID-19 response with $12 billion to help poor countries purchase and distribute vaccines, tests, and treatments. The first WB-financed operation to support vaccine rollout was approved in January 2021

“By March 31, 2021, the WB had already committed $1.6 billion in vaccine financing in 10 countries including Afghanistan, Cabo Verde, Bangladesh, Lebanon, Mongolia, Nepal, Philippines, Tajikistan, and Tunisia. More than 40 additional projects are in the pipeline and will be approved in the coming weeks and months.”

The World Banks’s Spring meeting is also occurring this week and addressing the COVID-19 pandemic remains a critical part of the World Bank’s agenda.

U.S. announced larger role in global vaccine rollout

President Biden has had as his first priority to tackle the COVID-19 pandemic in the United States while committing to greater involvement in multilateral organizations. He has rejoined the World Health Organization, contributed $2 billion to the COVAX facility to obtain vaccines for low- and middle-income countries, with an additional $2 billion to be contributed as other countries fulfill their pledges, agreed to a fund raising event for COVAX later in April, loaned four million vaccine doses to Canada (1.5 million) and Mexico (2.5 million) and agreed with Japan, India and Australia to produce one billion doses of a vaccine (2021-2022) in India with funding from the US and Japan and distribution by Australia to countries in the Indo-Pacific region.

On April 5, 2021, U.S. Secretary of State Antony Blinken announced the Biden Administration’s intention to be more actively involved internationally as it gets the U.S. population vaccinated. See U.S. Department of State, Secretary Antony J. Blinken Remarks to the Press on the COVID Response, April 5, 2021, https://www.state.gov/secretary-antony-j-blinken-remarks-to-the-press-on-the-covid-response/. The portion of Secretary Blinken’s remarks dealing with greater international engagement and the appointment of the U.S. coordinator for global COVID response and health security is copied below.

“There’s another major element to stopping COVID, and that’s what we’re here to talk about today.

“This pandemic won’t end at home until it ends worldwide.

“And I want to spend a minute on this, because it’s critical to understand.  Even if we vaccinate all 332 million people in the United States tomorrow, we would still not be fully safe from the virus, not while it’s still replicating around the world and turning into new variants that could easily come here and spread across our communities again.  And not if we want to fully reopen our economy or start traveling again.  Plus, if other countries’ economies aren’t rebounding because they’re still afflicted with COVID, that’ll hurt our recovery too.

“The world has to come together to bring the COVID pandemic to an end everywhere.  And for that to happen, the United States must act and we must lead.

“There is no country on Earth that can do what we can do, both in terms of developing breakthrough vaccines and bringing governments, businesses, and international institutions together to organize the massive, sustained public health effort it’ll take to fully end the pandemic.  This will be an unprecedented global operation, involving logistics, financing, supply chain management, manufacturing, and coordinating with community health workers who handle the vital last mile of health care delivery.  All of that will take intensive diplomacy.

“The world has never done anything quite like this before.  This is a moment that calls for American leadership.

“Now, the Biden-Harris administration’s main focus to date has been to vaccinate Americans – to slow and ultimately stop COVID here at home.  We at the State Department have been focused on vaccinating our workforce in the United States and in embassies and consulates around the world.  That’s been the right call.  We serve the American people first and foremost.  Plus, we can’t forget that the United States has had the highest number of COVID cases of any country in the world by a significant margin.  So stopping the spread here has been urgently needed for our people and for the world.  We have a duty to other countries to get the virus under control here in the United States.

“But soon, the United States will need to step up our work and rise to the occasion worldwide, because again, only by stopping COVID globally will Americans be safe for the long term.

“Moreover, we want to rise to the occasion for the world.  By helping bring to a close one of the deadliest pandemics in human history, we can show the world once again what American leadership and American ingenuity can do.  Let’s make that the story of the end of COVID-19.

“We’ve already taken some important steps.

“On day one of the administration, we rejoined the World Health Organization.  By being at the table, we can push for reforms so that we can prevent, detect, and rapidly respond to the next biological threat.

“Congress recently provided more than $11 billion for America’s global COVID response, which we’ll use in several ways, including to save lives by supporting broad and equitable vaccine access; providing aid to mitigate secondary impacts of COVID, like hunger; and helping countries boost their pandemic preparedness.

“I’d note that this builds on a long tradition of American leadership.  The United States is the world’s largest donor to global health by far, including through international efforts like the Global Fund and the World Health Organization – and through our own outstanding global health programs, like PEPFAR, which has helped bring the world to the cusp of the first AIDS-free generation.

“We’ve also made a $2 billion donation to the COVAX program, which will supply COVID vaccines to low-income and middle-income countries.  We’ve pledged another $2 billion that we’ll provide as other countries fulfill their own pledges.

“We’ve already loaned vaccines to our closest neighbors, Mexico and Canada.

“And we’ll work with global partners on manufacturing and supplies to ensure there will be enough vaccine for everyone, everywhere.

“As we get more confident in our vaccine supply here at home, we are exploring options to share more with other countries going forward.

“We believe that we’ll be in a position to do much more on this front.

“I know that many countries are asking for the United States to do more, some with growing desperation because of the scope and scale of their COVID emergencies.  We hear you.  And I promise, we’re moving as fast as possible.

“We’ll be guided every step by core values.

“We won’t trade shots in arms for political favors.  This is about saving lives.

“We’ll treat our partner countries with respect; we won’t overpromise and underdeliver.

“We’ll maintain high standards for the vaccines that we help to bring to others, only distributing those proven to be safe and effective.

“We’ll insist on an approach built on equity.  COVID has already come down hard on vulnerable and marginalized people.  We cannot allow our COVID response to end up making racial and gender inequality worse.

“We’ll embrace partnership, sharing the burden and combining strengths.  The collaboration we formed a few weeks ago with the Quad countries – India, Japan, Australia – is a good example.  Together, we’re increasing the world’s manufacturing capacity so we can get more shots out the door and into people’s arms as fast as possible.

“And by the way, one of the reasons we work through multilateral collaborations where possible is because they often share and defend these same values.  For example, the COVAX initiative is designed explicitly to ensure that low- and middle-income countries can also get vaccines, because it’s only through broad and equitable vaccination that we’ll end the pandemic.

“Finally, we’ll address the current emergency while also taking the long view.  We can’t just end this pandemic.  We must also leave our country and the world better prepared for the next one.

“To do that, we’ll work with partners to reform and strengthen the institutions and systems that safeguard global health security.  That will require countries to commit to transparency, information sharing, access for international experts in real time.  We’ll need a sustainable approach to financing, surge capacity, and accountability, so all countries can act quickly to stem the next outbreak.  And we’ll keep pushing for a complete and transparent investigation into the origins of this epidemic, to learn what happened – so it doesn’t happen again.

“All told, this work is a key piece of President Biden’s ‘Build Back Better’ agenda.  We’ve got to make sure that we can better detect, prevent, prepare for, and respond to future pandemics and other biological threats.  Otherwise, we’ll be badly letting ourselves and future generations down.

“This is a pivotal moment – a time for us to think big and act boldly.  And the United States will rise to the challenge.

“I’m here today with a remarkable leader who will help us do just that.

“Gayle Smith was the administrator of USAID for President Obama, and served on the National Security Council for both President Obama and President Clinton, where we first got to know each other and worked together.  She has deep experience in responding to public health threats, having helped lead the U.S. response to the Ebola crisis in 2014, having worked for years on the global fights against malaria, tuberculosis, HIV/AIDS.  She is joining us from her most recent role as president and CEO of the ONE Campaign, which fights extreme poverty and preventable disease, primarily in Africa.

“She’s tested.  She’s highly respected.  She will hit the ground running.  And I can say from having worked with Gayle and admired her for years that no one will work harder, faster, or more effectively to get us to the finish line.

I”’m grateful she’s agreed to serve as the coordinator for global COVID response and health security.  Gayle Smith, the floor is yours.  Thank you for doing this.

MS SMITH:  Thank you, Mr. Secretary.  It’s a pleasure to be able to work with you again, and to call you Mr. Secretary.

“I’d also like to thank my friends at the ONE Campaign for making this possible.  And I look forward to working with the men and women of the department and across the federal government, including because I know what you can do.

“I want to thank in particular some really smart scientists, President Biden, and the staff and volunteers at Howard University, where tomorrow I will get my second dose of the COVID vaccine.

“That vaccine is good for the body, but it’s also good for the mind and the soul, because it inspires hope in the future.  And our job is to shape that future.

“I fought some viruses in the past, and I’ve learned two lessons.  The first is that if the virus is moving faster than we are, it’s winning.  The second is that with unity of purpose, science, vigilance, and leadership, we can outpace any virus.

“America’s done it before.  Eighteen years ago, a Republican president launched a bold initiative to take on the HIV/AIDS epidemic.  A Democratic president went on to expand that mission in scope.  In 2014, the Obama-Biden administration, with the strong and generous support of Congress, defeated the world’s first Ebola epidemic.

“Our challenges now are two: first, to shorten the lifespan of a borderless pandemic that is destroying lives and livelihoods all over the world, and the second is to ensure that we can prevent, detect, and respond to those future global health threats we know are coming.

“American leadership is desperately needed, and I’m extremely confident we can rise to the occasion.  I’m honored to be here, and thank you very, very much.”

Conclusion

This is an important week with both the IMF and World Bank Spring meetings and important agenda items on the continued global response to the pandemic and helping countries build back better. The IMF April World Economic Outlook has good news about the direction of global activity although the pace of recoveries will vary significantly among countries and regions. While global production and distribution of COVID-19 vaccines has ramped up enormously in the few months that vaccines have been approved and while there are many additional potential vaccines under development or in trials, the early months have seen some production challenges and distribution skewed to a handful of countries. Many of those countries with the most vaccine doses (U.S., UK, EU, India) have been countries or regions with many of the largest number of infections and deaths. Even so, the effort at equitable and affordable access to all needs additional work.

An article in the New York Times reviews an exciting potential development of a low-cost, easy to produce vaccine that could dramatically expand the ability of developing countries to produce their own vaccines. See New York Times, Researchers Are Hatching a Low-Cost Coronavirus Vaccine , April 5, 2021, https://www.nytimes.com/2021/04/05/health/hexapro-mclellan-vaccine.html (“A new vaccine for Covid-19 that is entering clinical trials in Brazil, Mexico, Thailand and Vietnam could change how the world fights the pandemic. The vaccine, called NVD-HXP-S, is the first in clinical trials to use a new molecular design that is widely expected to create more potent antibodies than the current generation of vaccines. And the new vaccine could be far easier to make.
Existing vaccines from companies like Pfizer and Johnson & Johnson must be produced in specialized factories using hard-to-acquire ingredients. In contrast, the new vaccine can be mass-produced in chicken eggs — the same eggs that produce billions of influenza vaccines every year in factories around the world.”).

Production is ramping up for the various vaccines that have been approved in various countries. Producers continue to explore adding capacity or licensing production to other producers. Governments – like the United States, Japan, India and Australia – are finding creative ways for nations to work together to build up additional capacity to reach countries with needs. COVAX has proven to be an important vehicle for distributing vaccines to low- and middle-income countries. As capacities expand and additional funding is available, COVAX will continue to be a critical part of the solution.

The IMF and World Bank have the ability to address many of the challenges facing developing countries with the support of its member governments. Hopefully, this week’s meetings will make a difference. And individual countries can and are doing more. Secretary Blinken’s remarks show the U.S. will be increasing its role and working with others to ensure global success. For a world fatigued from the pandemic, a path to resolution is needed now. Hopefully, we are close.

Recent G7 Trade Ministers Meeting — WTO issues of interest

The United Kingdom has the presidency of the G7 (Canada, France, Germany, Italy, Japan, United States and United Kingdom, with European Union as a guest) in 2021. On March 31, trade ministers had a virtual meeting which included WTO Director-General Ngozi Okonjo-Iweala. On the U.K. G7 web page, the objectives of the Trade Track of the G7 during the UK Presidency is reviewed. See G7 Trade Ministers, https://www.g7uk.org/trade-ministers/

“The UK’s 2021 G7 Presidency will feature a dedicated Trade Track at the G7 for the first time, led by the Department for International Trade. The Trade Track will be an opportunity for the UK to work with our G7 partners to shape a bold global vision for economic recovery that sees us build back better together – greener, more prosperous, resilient, and fair. 

“To do so, the Trade Track will focus on four priority areas:

“- WTO reform

“- trade and health

“- digital trade

“- trade and climate policy”

The Chair of the G7 Trade Track released a statement on March 31. The Chair in 2021 is the U.K. Secretary of State for International Trade and President of the Board of Trade and Minister for Women and Equalities, the Rt Hon Elizabeth Truss MP. See G7 Trade Ministers’ Meeting – Chair’s Statement, https://www.g7uk.org/g7-trade-ministers-meeting-chairs-statement/. The statement is copied below.

G7 Trade Ministers’ Meeting – Chair’s Statement – G7 UK Presidency 2021

“Today, the G7 Trade Ministers held their first meeting under the inaugural G7 Trade Track. Trade Ministers underlined the vital role global trade has played in tackling the impacts of the Covid-19 pandemic, welcomed the contribution trade can make to a strong economic recovery, and emphasised the need to build back better. They reaffirmed the importance of the rules-based multilateral trading system and welcomed Dr Ngozi Okonjo-Iweala, the new WTO Director-General, to their meeting.

“The G7 Trade Track has a bold purpose – to make the case globally for free and fair trade. G7 Trade Ministers are convinced that when the world’s leading democratic trading nations unite behind a shared agenda to make the global trading system fairer, more sustainable, and responsive to the needs of our citizens, this is an agenda that partners across the world will be ready to share in and help shape.

“Free and Fair Trade

“G7 Trade Ministers support a global trading system that is free and fair and works for all countries and peoples. This year represents a clear inflection point for the world and the global economic architecture. G7 Trade Ministers recognised the importance of providing the leadership needed to respond to the challenges faced by the multilateral trading system. Trade Ministers expressed their determination to provide the sustained effort and momentum necessary to ensure progress is made in the reform of the WTO to help secure shared prosperity for all. Therefore, G7 Trade Ministers will use this year’s G7 to advance the agenda of the 12th WTO Ministerial Conference and provide vital political momentum to the WTO reform debate. Trade Ministers will explore reforms that can enhance the WTO as a forum for negotiations, recognising the positive role that the plurilateral initiatives have played in engaging a broad spectrum of WTO members. G7 Trade Ministers also acknowledge that important work on transparency, special and differential treatment, and dispute settlement needs to be undertaken in the WTO.

“The multilateral trading system can be a force for good. It has increased competition and economic growth, helped raise living standards, and lifted millions out of poverty. It must serve the needs of all its members and provide the basis for free and fair trade. G7 Trade Ministers recognised that global trade should work for democratic and open-market systems and that these should not be undermined by unfair trade.

“Yet, not all of our citizens have felt the benefits of trade. Moreover, practices that distort markets and competition lead to decreased efficiency and reduced perceptions of fairness and trust in the system. Echoing the G7 Leaders’ Statement at Charlevoix in 2018, G7 Trade Ministers recalled the importance of fostering a truly level playing field. Trade Ministers will discuss the impact market-distorting practices, such as harmful industrial subsidies, including those causing excess capacity in some sectors, are having on our economies and chart a way to address these collectively.

“Modernising Trade

“G7 Trade Ministers believe that the multilateral trading system is in need of reform to reflect changes in the global economy and environment. As the world transitions to net zero, Trade Ministers acknowledged the risk of carbon leakage to the environment and the potential ways of mitigating this. Acknowledging the role of trade in tackling the accelerating climate and biodiversity crisis, Trade Ministers recognised that 2021 will be a crucial year to drive international efforts to address climate change and protect nature, including at the UNFCCC COP26. Trade Ministers will therefore deepen discussions on the nexus between trade and climate and the environment with a focus on identifying opportunities for collaboration and facilitating sustainable supply chains. Additionally, G7 members are committed to reaching a meaningful conclusion in the WTO negotiations of fisheries subsidies – which have a clear impact on sustainability.

“Stressing that trade has to be at the service of citizens, G7 Trade Ministers underlined the importance of advancing women’s economic empowerment through trade, particularly to support the Covid-19 recovery. They shared the view that greater representation of women in trade as leaders, business owners, and fairly compensated workers will ultimately deliver more and better jobs and more growth in our economies. G7 Members will promote deepened studies and more cross-cutting analyses on trade policy and gender equality by international organisations, such as SheTrades Outlook. Recognising the progress that is being made on trade and gender equality at the WTO, Trade Ministers intend to use their next discussions to explore new opportunities to improve the evidence base to support women in trade and discuss their priorities in this area for the next WTO Ministerial Conference.

“G7 Trade Ministers also agreed to further consider the ways in which trade policy can develop to support trade in health products, and increased supply chain resilience, as we work to build back better from Covid-19. The scale and pace of the spread of the virus, and an uneven global recovery, are challenging all our economies. G7 Members also encourage cooperation among governments, manufacturers, and other industry players to identify policies which support ramped-up production and distribution of vaccines.

“Digital Trade

“G7 Trade Ministers recognised the importance of digital trade to growth, innovation, productivity, and prosperity. They recalled the immense opportunities that it offers to our people and our businesses, and they underlined the central role that it can play in the economic recovery from the pandemic. G7 Members are united in their support for open digital markets and their opposition to digital protectionism. As a group of market-based economies governed by the rule of law, they believe that digital markets should be competitive, transparent, and accessible to international trade and investment. They agree on the importance of data free flow with trust, safeguards for consumers and businesses, and digital trading systems that allow goods and services to move seamlessly across borders. G7 Trade Ministers resolve to promote digital trade worldwide and to pursue global governance that is fair and inclusive. They agreed to further develop a set of high-level principles during this Presidency that will guide the G7 approach to digital trade.

“Digital trade remains an important area for the creation of new rules at the WTO. The rules governing digital trade should be responsive to innovation and emerging technologies, so that businesses, consumers, and workers can harness their full potential. G7 Trade Ministers committed to redoubling their efforts to advance the Joint Statement Initiative on E-commerce at the World Trade Organization. They aim to achieve substantial progress by the 12th WTO Ministerial Conference.

“G7 Trade Ministers look forward to strengthening their dialogue and further advancing a shared agenda at their next meeting in May.”

The statement from the Chair was not surprising considering the composition of the G7 and the focus of the members on getting the pandemic under control, reviving economic and trade activities (“building back better), restoring relevance to the WTO by achieving positive developments at the 12th Ministerial Conference and pursuing WTO reform on a host of areas including updating rules to address distortions (e.g., industrial subsidies) not adequately addressed in current agreements, operation of special and differential treatment, transparency, and dispute settlement. Most G7 members also support the Joint Statement Initiatives on a range of topics, including digital trade, domestic services regulation, SMSEs, empowerment of women in trade and gender equality, and trade’s role in addressing the climate crisis.

While some G7 members have different views on specific issues, the opening G7 trade ministers meeting lays out a positive broad-based agenda for having trade help get the world through the pandemic, return to greater prosperity, and address longstanding challenges at the WTO both to relevance in the 21st century and to different economic systems rendering current rules only partially relevant.

Statements by several of the trade ministers who participated add some individual country focus. For example, USTR Amb. Katherine Tai participated in the meeting. A press release from USTR dated March 31 identifies the U.S. views. See USTR, Statement from USTR Spokesman Adam Hodge on Ambassador Katherine Tai’s Participation in the First G7 Trade Ministers Meeting, 03/31/2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/march/statement-ustr-spokesman-adam-hodge-ambassador-katherine-tais-participation-first-g7-trade-ministers

“WASHINGTON – United States Trade Representative Katherine Tai today virtually participated in the G7 Trade
Ministers Meeting hosted by the United Kingdom and chaired by Secretary of State Liz Truss. Ministers were joined in
this meeting by WTO Director General Dr. Ngozi Okonjo-Iweala. This was the first meeting of the G7 Trade Ministers.
Ambassador Tai and other G7 Ministers discussed the challenges facing the global trading system from non-market
forces and the need to work collectively to advance free and fair trade. Dr. Okonjo-Iweala and the Ministers discussed
pathways to achieving meaningful outcomes for the 12th WTO Ministerial Conference scheduled later this year.
Ministers also discussed their plans for future work on digital trade, women’s economic empowerment, and climate
change objectives. Ambassador Tai emphasized the Biden-Harris Administration’s objective to ensure that trade policy
focuses on benefitting workers, in addition to businesses and consumers. The Ministers are united in their desire to
support policies that will facilitate a rapid end to the pandemic and recognize that trade can contribute to a strong and
equitable recovery.”

Similarly, Canadian Minister of Small Business, Export Promotion and International Trade Mary Ng participated in the G7 trade ministers meeting. The following press release was issued on March 31 by the Canadian government. See Government of Canada, Minister Ng participates in first G7 trade and investment ministers’ meeting, March 31, 2021, https://www.canada.ca/en/global-affairs/news/2021/03/minister-ng-participates-in-first-g7-trade-and-investment-ministers-meeting.html

“As the Government of Canada continues to address the COVID-19 pandemic, collaborating with international partners is essential to fighting the virus and ensuring a sustainable and inclusive global economic recovery from the pandemic.

“Today, the Honourable Mary Ng, Minister of Small Business, Export Promotion and International Trade, participated in the first G7 trade and investment ministers’ meeting, which was hosted by the United Kingdom under its G7 presidency for 2021. The ministers agreed to pursue an ambitious G7 trade and investment agenda that responds to the challenges posed by the pandemic and to support an inclusive and sustainable recovery with the WTO at its core.

“Minister Ng welcomed the discussion with Ngozi Okonjo-Iweala, the new WTO director general, on the future of the WTO. The G7 ministers agreed to work together to advance concrete outcomes in advance of the 12th WTO Ministerial Conference in November.

“Pursuing trade and investment policies that support women and Indigenous and racialized communities is key to ensuring Canada’s economic recovery from COVID-19 is inclusive and meaningful. During a session on women’s economic empowerment, Minister Ng highlighted initiatives that Canada has undertaken to support women’s success in international trade. The Minister encouraged G7 members to participate in the implementation of the WTO trade and gender initiative and, as a specific example, encouraged member countries to use the SheTrades Outlook, an interactive policy tool that helps governments put in place policies to improve women’s participation in international trade.

“During the meeting, Minister Ng also emphasized the importance of digital trade and highlighted Canada’s work on a number of initiatives, such as the ongoing WTO negotiations on e-commerce.

“Minister Ng reiterated Canada’s support for the United Kingdom-led G7 work plan to enhance the capacity of the trading system to respond to public health emergencies. Ministers discussed the Ottawa Group’s Trade and Health Initiative, which seeks to strengthen the resilience of global supply chains and facilitate trade in essential medical supplies and vaccines.

“The trade ministers acknowledged the impacts of unfair trade practices on their economies and agreed to work together to address them. Recognizing the important role that trade has in tackling climate change and ensuring a sustainable environment, the ministers agreed to continue their efforts to take action on climate change through initiatives such as the WTO trade and environment sustainability initiative.”

The Canadian press release also provided a quote from Minister Ng:

“’Canada continues to work closely with our international partners to support Canadian businesses, workers and communities as we fight the pandemic and support an inclusive, sustainable economic recovery through rules-based international trade that works for everyone. We will make sure that the interests of Canadians across the country are at the forefront of our discussions as we work toward ensuring a strong, sustainable, and inclusive economic recovery.’

“- Mary Ng, Minister of Small Business, Export Promotion and International Trade”

The press reported reactions within China to the G7 trade ministers meeting with a focus on G7 concerns with addressing reforms to industrial subsidies. See, e.g., South China Morning Post, G7 pressure on China over subsidies ‘doomed to fail’ even as Biden administration gathers coalition, 1 April 2021, https://www.scmp.com/economy/china-economy/article/3128006/g7-pressure-china-over-subsidies-doomed-fail-even-biden (“Trade ministers from the Group of 7 (G7) – the United States, Germany, Britain, France, Canada, Italy and Japan – on Wednesday pledged collective action against ‘harmful industrial subsidies’ without naming China directly. China responded by saying it ‘won’t accept any accusation’ of its trade practice as it ‘has always honoured its commitments since it joined the World Trade Organization (WTO) at the end of 2001.”).

Conclusion

The G7 is a potentially important grouping, particularly to articulate a vision for the future of the multilateral trading system. While the changes in global trade over the last quarter of a century ensure more voices need to be considered than those in the G7 (or those aligned with them), there is no forward movement without them.

The WTO, if a static organization, will continue its slide into irrelevance. The organization suffers a myriad of structural problems which have reduced the effectiveness of all of its core functions. There is a lack of common purpose among the WTO Members. Its rules reflect the world of the 1980s with no significant update in the rules since then.

The pressing global challenges flowing from the pandemic, from climate change and changing technology need a World Trade Organization that is up to date, nimble and driven by an agreed vision to promote sustainable development and greater equitable participation and benefits.

The initial articulation of G7 objectives from trade ministers is a step in the right direction. Time will tell whether the G7 can internally agree on the details of a trade agenda, can translate that into support among a large group of WTO Members and lead to meaningful agreements and reform. The opposition to meaningful reform from China and others within the WTO and the consensus principle of decision making renders it highly unlikely that the WTO will prove up to the needs of the moment. But efforts of the G7 and other groups is critical if a global trading system is to survive. One can only hope for success from the G7 efforts.

Global vaccinations against COVID-19; developments and challenges in the roll-out for many countries

Globally there have been extraordinary developments of vaccines to help against the COVID-19 vaccine. UNICEF has set up a COVID-19 Vaccine Market Dashboard which notes that at present 14 vaccines have been approved by one or more countries, that the companies in production or testing vaccines report existing or intended capacity in 2021 of 21 billion doses (depends on other vaccines being approved and companies overcoming any bottlenecks in supply), indicates that there are 10.4 billion “secured vaccine doses”, that there are 3.56 billion doses “secured and optioned for the COVAX facility” and that prices in the market range from $2.06/dose to $44.00/dose. See UNICEF, COVID-19 Vaccine Market Dashboard, https://www.unicef.org/supply/covid-19-vaccine-market-dashboard (visited April 2, 2021). The dashboard contains a great deal of information looking at information on products, capacity, agreements, price and delivery.

The COVAX facility, administered by Gavi, put out in early March the first round of allocation of vaccine doses procured for low- and middle-income countries and others choosing to participate in acquiring through COVAX to improve equitable and affordable access for all. 142 of the countries participating in the COVAX facility were identified as allocated delivery of specific quantities of vaccine from a total of 237 million doses that were expected to be available to COVAX during the February – May timeline. See The COVAX Facility, First Round of Allocation: Astra Zeneca/Oxford Vaccine (manufactured by Astra Zeneca & licensed and manufactured by Serum Institute of India), https://www.gavi.org/sites/default/files/covid/covax/COVAX-First-round-allocation-of-AZ-and-SII.pdf . 87 of the 92 countries who will receive doses at no cost or reduced cost are included in the first round allocation (“AMC” countries). The March 2, 2021 document is embedded below.

COVAX-First-round-allocation-of-AZ-and-SII

In an April 1, 2021 update, Gavi notes that to date COVAX has shipped more than 33 million doses to 74 country. See GAVI, COVAX vaccine roll-out, https://www.gavi.org/covax-facility (visited April 2, 2021). While the ramp-up of deliveries to COVAX is scheduled to occur over time, COVAX received notice in late March of delays for shipments from India (Serum Institute of India) in both March and April, which COVAX has estimated could be a delay for as much as 90 million doses and indicated the delays were due to internal needs in India for more doses to support their own vaccination program. See UNICEF, COVAX updates participants on delivery delays for vaccines from Serum Institute of India (SII) and AstraZeneca, 25 March 2021,https://www.unicef.org/press-releases/covax-updates-participants-delivery-delays-vaccines-serum-institute-india-sii-and. The bulk of the press release is copied below.

GENEVA/NEW YORK/OSLO, 25 March 2021 – Deliveries of COVID-19 vaccines produced by the Serum Institute of India (SII) to lower-income economies participating in the COVAX Facility will face delays during March and April as the Government of India battles a new wave of COVID-19 infections. COVAX and the Government of India remain in discussions to ensure some supplies are completed during March and April.

“According to the agreement between Gavi and the Serum Institute of India (SII), which included funding to support an increase in manufacturing capacity, SII is contracted to provide COVAX with the SII-licensed and manufactured AstraZeneca (AZ)-Oxford vaccine (known as COVISHIELD) to 64 lower-income economies participating in the Gavi COVAX AMC (including India), alongside its commitments to the Government of India.

“To date, COVAX has been supplied with 28 million COVISHIELD doses and was expecting an additional 40 million doses to be available in March, and up to 50 million doses in April.

“COVAX has notified all affected economies of potential delays. SII has pledged that, alongside supplying India, it will prioritize the COVAX multilateral solution for equitable distribution.

“Participating economies have also received WHO guidance on optimizing the national deployment doses of the AstraZeneca-Oxford vaccine in a constrained supply environment.

“Separately, the COVAX Facility has informed participants allocated AstraZeneca-manufactured doses of the AstraZeneca-Oxford vaccine that some of the first deliveries due in March are now set to take place in April.

“In this early phase of COVID-19 vaccine roll-out, vaccine manufacturers require time to scale and optimize their production processes. AstraZeneca, which uses a novel supply chain network with sites across multiple continents, is working to enable initial supply to 82 countries through COVAX in the coming weeks.

“COVAX retains its objective of supplying initial doses of vaccines to all participating economies in the first half of the year before ramping up significantly in the second half of 2021. To date, COVAX has shipped vaccines to over 50 countries and economies.”

While there have been various manufacturing challenges in the early months of vaccine roll-outs, the decision by India to slow distribution of vaccine doses purchased by COVAX will clearly slow distribution to many least developed and developing countries dependent on COVAX for their vaccine doses. Since as much as a third of vaccine doses that COVAX has distributed have gone to India, the Indian government has what is at least a public relations challenge at the present time. See India Today, India received one-third of vaccines made for poor countries by India under COVAX programme: Report, 30 March 2021, https://www.indiatoday.in/coronavirus-outbreak/vaccine-updates/story/india-received-one-third-of-vaccines-made-for-poor-countries-by-india-under-covax-programme-report-1785242-2021-03-30. However, with a number of variants of the virus circulating widely and with infections increasing in many countries around the world, the delays are of concern to many governments with anxious populations looking for a path past the pandemic.

In a paper from Airfinity and the St. Gallen Endowment for Prosperity through Trade on March 31, 2021, an effort is made to look at the likely damage to low income countries from the announced delays in shipments to COVAX. See Simon J. Evenett and Matt Linley, Halting India’s Vaccine Exports: The Fallout, 31 March 2021. The paper estimates that the delays in shipments will push back achieving even minimum vaccinations by 60-90 days for many of the COVAX recipient countries. The paper is embedded below.

AF-SGEPT-TL1-31-March-2021-finalised

While there is a lot of positive news being reported (e.g., expansion of capacities and expected shipments in 2021, effectiveness of some of the existing vaccines against some of the new variants, agreement between the United States, Japan, India and Australia to generate one billion doses of a vaccine in India for distribution in the Indo-Pacific area in 2021 and 2022, and the United States hosting a funding effort for COVAX later in April to help close the funding needs for 2021 (after the U.S.’s $4 billion contribution)), delays for up to 90 million doses ( 37.97% of the total doses expected in the February – May 2021 time period by COVAX) to those dependent on COVAX is a significant challenge. See, e.g., Gavi, United States to host launch event for Gavi COVAX AMC 2021 investment opportunity, 29 March 2021, https://www.gavi.org/news/media-room/united-states-host-launch-event-gavi-covax-amc-2021-investment-opportunity; March 25, 2021, Global vaccinations for COVID-19 — continued supply chain and production issues and a new wave of infections in many countries delay greater ramp up for some until late in the second quarter of 2021, https://currentthoughtsontrade.com/2021/03/25/global-vaccinations-for-covid-19-continued-supply-chain-and-production-issues-and-a-new-wave-of-infections-in-many-countries-delay-greater-ramp-up-for-some-until-late-in-the-second-quarter-of-2021/; March 12, 2021, COVID-19 vaccines – U.S., Japan, India and Australia agree to one billion doses for Indo-Pacific countries, https://currentthoughtsontrade.com/2021/03/12/covid-19-vaccines-u-s-japan-india-and-australia-agree-to-one-billion-doses-for-indo-pacific-countries/; March 12, 2021, The 8-9 March  “Global C19 Vaccine Supply Chain and Manufacturing Summit” – efforts to ramp-up production, https://currentthoughtsontrade.com/2021/03/12/the-8-9-march-global-c19-vaccine-supply-chain-and-manufacturing-summit-efforts-to-ramp-up-production/.

The WTO Director-General Ngozi Okonjo-Iweala is planning a meeting on vaccines later in April that was described in a WTO press release as follows.

“DG Okonjo-Iweala also said that she plans to convene an event in mid-April to discuss ramping up COVID-19 vaccine production and how the WTO can contribute to a more rapid and equitable distribution of vaccines. 

“The event, to be held under Chatham House rules, will include all regional member groups, representatives from vaccine manufacturers from developing and developed countries, civil society groups working on access to medicine, and other relevant stakeholders.

“’The idea is to move us along on our quest to solve this unacceptable inequitable access of poor countries to vaccines,’ she said. ‘At the bottom of this is a very serious scarcity in supply. And how to solve it is to look at how we expand manufacturing in all its ways.’ 

“She stressed that the event would help advance global discussions on access to vaccines. She expressed hope both for increased vaccine manufacturing in the short- to medium-term, and a longer-term framework agreement that would provide for automatic access to vaccines and other medical products for developing countries in future health crises, including a way forward on the TRIPS waiver proposal many of them support.

“’We also need to look to the future and agree a framework where countries do not need to stand in the queue in order to get access to life-saving vaccines, therapeutics, and diagnostics,’ she said, emphasizing that this can be done while still incentivizing research and development.”

WTO, Director-General urges WTO members to deliver concrete results this year, 30 March 2021, https://www.wto.org/english/news_e/news21_e/dgno_30mar21_e.htm.

Conclusion

Governments are understandably focused on trying to end the pandemic at home as a first priority. The efforts of the WHO, Gavi, CEPI and UNICEF through the COVAX facility in recent years has provided a welcome source of hope for many nations for greater equity in distribution and in affordability of vaccines, including in the last year addressing the enormous challenge presented by the COVID-19 pandemic. Many countries and private groups have stepped up with major funding contributions to make vaccine available. Individual governments are also working to increase supplies globally. Many bottlenecks have arisen with the large number of inputs and the enormous increase in demand that has arisen over the last year. There is a need for continued efforts by governments and businesses to address the challenges and to see that the needs of the low- and middle-income countries can be met in a timely manner as well. While there will be a lot more production in the second half of 2021, there are and will continue to be challenges in the second quarter. Focus on identifying challenges and global cooperation to solve bottlenecks will do a lot to ensure greater global success in the remainder of 2021.

Biden Administration continues treatment of Hong Kong as no longer autonomous from China, inter alia, for purposes of marking of products

The U.S. Department of State released on March 31, 2021 the 2021 Hong Kong Policy Act Report. See U.S. Department of State, Hong Kong Policy Act Report, Press Statement, March 31, 2021, https://www.state.gov/hong-kong-policy-act-report/; U.S. Department of State, 2021 Hong Kong Policy Act Report, REPORT, Bureau of East Asian and Pacific Affairs, March 31 2021, https://www.state.gov/2021-hong-kong-policy-act-report/.

The Press statement is copied below (emphasis added).

“Over the past year, the People’s Republic of China (PRC) has continued to dismantle Hong Kong’s high degree of autonomy, in violation of its obligations under the Sino-British Joint Declaration and Hong Kong’s Basic Law.  In particular, the PRC government’s adoption and the Hong Kong government’s implementation of the National Security Law (NSL) have severely undermined the rights and freedoms of people in Hong Kong.

“Each year, the Department of State submits to Congress the Hong Kong Policy Act Report and accompanying certification.  In conjunction with this year’s report, I have certified to Congress that Hong Kong does not warrant differential treatment under U.S. law in the same manner as U.S. laws were applied to Hong Kong before July 1, 1997.

“This report documents many of the actions the PRC and Hong Kong governments have taken against Hong Kong’s promised high degree of autonomy, freedoms, and democratic institutions.  These include the arbitrary arrests and politically-motivated prosecutions of opposition politicians, activists, and peaceful protesters under the NSL and other legislation; the postponement of Legislative Council elections; pressure on judicial independence and academic and press freedoms; and a de facto ban on public demonstrations.

“I am committed to continuing to work with Congress and our allies and partners around the world to stand with people in Hong Kong against the PRC’s egregious policies and actions.  As demonstrated by the March 16 Hong Kong Autonomy Act update, which listed 24 PRC and Hong Kong officials whose actions reduced Hong Kong’s autonomy, we will impose consequences for these actions.  We will continue to call on the PRC to abide by its international obligations and commitments; to cease its dismantlement of Hong Kong’s democratic institutions, autonomy, and rule of law; to release immediately and drop all charges against individuals unjustly detained in Hong Kong; and to respect the human rights of all individuals in Hong Kong.”

The Report covers a range of issues including discussion of:

  • national security law,
  • impact on rule of law,
  • arrests, bail, and investigations proceedings,
  • impact on democratic institutions,
  • progress towards universal suffrage and impact on the legislature,
  • impact on the judiciary,
  • Impact on Freedom of Assembly,
  • Impact on Freedoms of Speech and Association,
  • Impact on Freedom of the Press,
  • Disinformation/Malign Political Influence Activities,
  • Impact on Internet Freedoms,
  • Impact on Freedom of Movement,
  • Impact on Freedom of Religion or Belief,
  • Impact on U.S. Citizens,
  • Impact on Academics and Exchanges,
  • Areas of Remaining Autonomy,
  • U.S.-Hong Kong Cooperation and Agreements,
  • Export Controls,
  • Sanctions Implementation,
  • U.S. Sanctions
  • Hong Kong Policy Act Findings

The summary of the report is copied below.

“Consistent with sections 205 and 301 of the United States-Hong Kong Policy Act of 1992 (the “Act”) (22 U.S.C. 5725 and 5731) and section 7043(f)(3)(C) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2021 (Div. K, P.L. 116-260), the Department submits this report and the enclosed certification on conditions in Hong Kong from June 2020 through February 2021 (“covered period”).

“Summary

“The Department of State assesses during the covered period, the central government of the People’s Republic of China (PRC) took new actions directly threatening U.S. interests in Hong Kong and inconsistent with the Basic Law and the PRC’s obligation pursuant to the Sino-British Joint Declaration of 1984 to allow Hong Kong to enjoy a high degree of autonomy. In the Certification of Hong Kong’s Treatment under United States Laws, the Secretary of State certified Hong Kong does not warrant treatment under U.S. law in the same manner as U.S. laws were applied to Hong Kong before July 1, 1997.

“By unilaterally imposing on Hong Kong the Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (NSL), the PRC dramatically undermined rights and freedoms in Hong Kong, including freedoms protected under the Basic Law and the Sino-British Joint Declaration. Since the imposition of the NSL in June 2020, Hong Kong police arrested at least 99 opposition politicians, activists, and protesters on NSL-related charges including secession, subversion, terrorism, and collusion with a foreign country or external elements. These include 55 people arrested in January for organizing or running in pan-democratic primary elections in July 2020, 47 of whom were formally charged with subversion on February 28. Additionally, the Hong Kong government used COVID-19-related public health restrictions to deny authorizations for public demonstrations and postponed Hong Kong’s Legislative Council (LegCo) elections for at least one year.”

Ongoing WTO dispute filed by Hong Kong

Hong Kong has filed a request for consultations and a request for a panel at the WTO to contest actions during the Trump Administration which resulted in a requirement that goods from Hong Kong exported to the United States be labeled as manufactured in China because of prior actions by China that limited Hong Kong autonomy. A panel has been established but not yet composed. See WTO, DS597: United States — Origin Marking Requirement, https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds597_e.htm. I have reviewed the dispute in prior posts. See February 23, 2021, WTO Dispute Settlement Body meeting of February 22, 2021 — panels authorized in two matters; impasse on the Appellate Body remains, https://currentthoughtsontrade.com/2021/02/23/wto-dispute-settlement-body-meeting-of-february-22-2021-panels-authorized-in-two-matters-impasse-on-appellate-body-remains/; January 16, 2020, Request for the establishment of a WTO panel by Hong Kong, China contesting the U.S. origin marking requirement, https://currentthoughtsontrade.com/2021/01/16/request-for-the-establishment-of-a-wto-panel-by-hong-kong-china-contesting-the-u-s-origin-marking-requirement/.

What is clear from yesterday’s Hong Kong Policy Act Report is that the concerns in the United States on the actions by China to restrict Hong Kong’s autonomy have not gone away with the Biden Administration but have increased with the escalating actions by the Chinese government. While Hong Kong will pursue its challenge, one shouldn’t expect a change in U.S. position nor should one expect a resolution in the WTO in the next several years.

When will WTO DG Okonjo-Iweala reveal choices for Deputy Directors-General?

Today, March 31, 2021, marks the end of the tenure of the four existing Deputy Directors-General of the WTO. Normally, an incoming Director-General would have identified his/her choices for the four Deputy Director-General slots ahead of assuming office himself/herself. See, e.g., March 6, 2021, WTO’s four Deputy Directors-General tenure reportedly concludes at the end of March 2021 — thanks for an outstanding job, https://currentthoughtsontrade.com/2021/03/06/wtos-four-deputy-directors-general-tenure-reportedly-concludes-at-the-end-of-march-2021-thanks-for-an-outstanding-job/ ( “It is normal for existing Deputy Directors-Generals (DDGs) to depart shortly after the arrival of a new Director-General and to be selected before the new Director-General takes office. Indeed, typically DDGs have four year terms that start one month after the Director-General’s term. Pursuant to procedures adopted in late 2002, DDGs employment starts later and ends later than the DG’s. See PROCEDURES FOR THE APPOINTMENT OF DIRECTORS-GENERAL, Adopted by the General Council on 10 December 2002, WT/L/509 (20 January 2003) at para. 22 (‘In order to ensure continuity at the senior management level, the terms of office of the Director-General and of the Deputy Directors-General shall be staggered, such that the terms of the Deputies expire subsequent to the expiry of the Director-General’s term.’). Because of the short time from appointment (February 15, 2021) to start (March 1, 2021) as Director-General for Dr. Ngozi Okonjo-Iweala, presumably the DDG selection process was delayed until after she took up her position on March 1.”).

With less than eight months til the 12th Ministerial Conference at the end of November in Geneva, there is a great deal of work to be done if the Ministerial Conference is going to be successful. As reviewed in a WTO press release of March 30, DG Ngozi Okonjo-Iweala spoke at an informal General Council meeting on March 30. See WTO, Director-General urges WTO members to deliver concrete results this year, 30 March 2021, https://www.wto.org/english/news_e/news21_e/dgno_30mar21_e.htm. The press release reviews her comments and those of General Council Chair Ambassador Dacio Castillo (Honduras) and is copied below.

“The meeting was called by General Council Chair Ambassador Dacio Castillo (Honduras) to initiate a process of consultations on the nature of the prospective outcome document for the Twelfth Ministerial Conference (MC12), which will take place in Geneva the week of 29 November.

“He described the options in front of members, based on the documents that emerged from earlier Ministerial Conferences: a consensus Ministerial Declaration, a summary issued under the conference chair’s own responsibility, and a ‘hybrid’ document containing elements of the two.

“Members ‘may wish to start thinking about what type of outcome document we might realistically envisage for MC12, including its structure and elements,’ the General Council Chair added, announcing he would begin consultations on these issues with interested delegations. He cautioned that this process should not divert attention from ongoing substantive negotiations.

“With only seven working months until MC12, DG Okonjo-Iweala called on members to “create a recipe for success upfront,” starting with “two or three or four concrete deliverables” in areas such as fisheries and agreeing on work programmes for other items where differences remain.

“She noted that MC12 would come at the end of a series of international policy discussions aimed at ‘examining the lessons from this pandemic and trying to put the framework for tackling the next.’ If trade ministers emerge at the end of the year ‘with no agreement, no contributions to the meaningful issues that are being faced by the world today, nothing to add in terms of a framework for tackling the next pandemic, it will not look good.’

”’My wish is for all the Ambassadors, Ministers and Leaders on trade to come out of MC12 looking good. Looking good means being seen by the world as having delivered for today’s problems,’ she said.

“DG Okonjo-Iweala also said that she plans to convene an event in mid-April to discuss ramping up COVID-19 vaccine production and how the WTO can contribute to a more rapid and equitable distribution of vaccines.

“The event, to be held under Chatham House rules, will include all regional member groups, representatives from vaccine manufacturers from developing and developed countries, civil society groups working on access to medicine, and other relevant stakeholders.

“‘The idea is to move us along on our quest to solve this unacceptable inequitable access of poor countries to vaccines,’ she said. ‘At the bottom of this is a very serious scarcity in supply. And how to solve it is to look at how we expand manufacturing in all its ways.’

“She stressed that the event would help advance global discussions on access to vaccines. She expressed hope both for increased vaccine manufacturing in the short- to medium-term, and a longer-term framework agreement that would provide for automatic access to vaccines and other medical products for developing countries in future health crises, including a way forward on the TRIPS waiver proposal many of them support.

“‘We also need to look to the future and agree a framework where countries do not need to stand in the queue in order to get access to life-saving vaccines, therapeutics, and diagnostics,’ she said, emphasizing that this can be done while still incentivizing research and development.”

Obviously, having a full team, including the four Deputy Directors-General, on board to help facilitate work by Members on items of interest to the Members will be critical to permitting the Secretariat to support the WTO Members in their work in these coming months.

In a prior post, I had suggested the need for DG Okonjo-Iweala to pick a team that respects the historical geographical distribution of positions but also to pick individuals with sufficient trade and political gravitas to help the DG achieve the range of initiatives facing the WTO. See February 13, 2021, Leadership change at the WTO — with Dr. Ngozi Okonjo-Iweala’s arrival next week, what support team and early changes in the role of the Secretariat could help WTO Members move forward?, https://currentthoughtsontrade.com/2021/02/13/leadership-change-at-the-wto-with-dr-ngozi-okonjo-iwealas-arrival-next-week-what-support-team-and-early-changes-in-the-role-of-the-secretariat-could-help-wto-members-move-forward/.

Press reports have indicated that there is, as there always is, a lot of lobbying by Members, on the composition of the Deputy Directors-General. Hopefully DG Ngozi Okonjo-Iweala will announce the new DDGs soon. The Director-General faces many issues with a deeply divided membership. A strong team including at the DDG level will improve the chances that the Secretariat can help the messy process of Member negotiations and moving to reform.