India

World COVID-19 pandemic peaks on November 26 and starts to slowly recede

The most recent surge in COVID-19 cases (up from 3.57 million cases over a fourteen day period in early August to over 5 million for fourteen days on October 22 to over 8 million new cases for fourteen days on November 17), seems to have peaked on November 26 with 8,296,264 new cases over fourteen days and has been slowly receding for the last three days, down to 8,142,629 new cases during the period November 16-29. Total cases since the end of December 2019 now stand at 62,271,031 as of November 29 according to the European Centre for Disease Prevention and Control (ECDC) publication “COVID-19 situation update worldwide, as of 29 November 2020”.

The World Health Organization puts out a publication that tracks cases and deaths on a weekly basis. COVID-19 Weekly Epidemiological Update (data as of 22 November). While it breaks countries and territories into different configuarations that the ECDC, the publication shows new cases in the period November 16-22 declining 6% in Europe and in South East Asia while increasing 11% in the Americas, 5% in the Eastern Mediterranean, 15% in Africa and 9% in the Western Pacific. Because of the large spike in cases in the September – November period in many parts of the world, deaths in the November 16-22 period increased in all regions — up 10% in Europe, 15% in the Americas, 4% in South-East Asia, 10% in the Eastern Mediterranean, 30% in Africa and 1% in the Western Pacific. The latest report is embedded below.

20201124_Weekly_Epi_Update_15

The graphs in the WHO publication show by region the trajectory of new cases and deaths over time. The chart showing aggregate data show a flattening of total new cases in the last weeks of November while the number of deaths globally are sharply increasing.

The WHO Africa region peaked in the summer and has declined until the last few weeks when there has been some increase in both cases and deaths.

The Americas saw a peak in both new cases and deaths in the July period with some declines in new cases until the second half of September when the current surge started and accelerated in November. Deaths declined until early October before starting to grow again.

The Eastern Mediterranean peaked in May-June for both cases and deaths, declined through August/September and have surged to new heights with continued upward trajectory as of November 22.

The WTO European Region had an early surge of cases and deaths in the March-April period. Deaths receded sharply through August. While new cases have increased since summer, there was a massive increase in the September – end of October period in new cases and rising deaths through November.

The WHO South-East Asia region saw a huge increase in cases and deaths in the May-August period, peaking in early September and declining since then. Much of the data for the region reflect activity in India.

The Western Pacific Region has had several peaks in terms of deaths and in new cases, though the numbers are the lowest of any WHO region. The latest peak in new cases was in early August with some increase in the October-November period. Deaths last peaked in early September and have declined through November.

The United States

Turning back to the ECDC data, the United States continues to have more confirmed cases (13,246,651) than any other nation and more confirmed deaths from COVID-19 (266,063) than any other nation. The United States is also still experiencing a surge in new cases and rising deaths. October 31 was the first day that ECDC data show the U.S. recording 100,000 new cases in a single day. Since November 5, the U.S. has had more than 100,000 new cases every day up to November 29. It is the only country to record one million new cases in a week and the only country to record two million new cases in fourteen days. For the last fourteen days, the U.S. recorded 2,341,760 new cases. The U.S., which accounts for 4.3% of the global population, accounts for 21.27% of all COVID-19 cases that have been reported since December 2019 and accounted for 28.76% of new cases in the last two weeks. The rate of increase remains high for the United States — up 31.67% from the 1,778,530 new cases in the two weeks ending November 15. There are concerns that the number of new cases will continue to increase into the new year based on the high rate of infections in many parts of the country, major potential spreading events around holidays in November (Thanksgiving) and December, and limited compliance with basic requirements for limiting the spread of the virus.

The number of deaths from COVID-19 that the U.S. accounts for has declined from roughly 20% to 18.30% as of November 29. In the last two week, while the U.S. has the largest number of deaths in the two weeks, the percent of total deaths accounted for by the U.S. in the November 16-29 period was 14.65%. However, many cities, communities and even states are at or nearing the limits of the health care capacity with hospitalizations now about 90,000, limits on health care professionals with the surging cases and some challenges on personal protective equipment. Thus, models used by the government projects a continued rise in the number of deaths in the coming months.

While the first vaccine could receive emergency approval for distribution in the U.S. as early as December 10, and the U.S. could have two or three vaccines in distribution in early 2021, the United States will unfortunately likely be a major part of the continued high rate of infections and deaths well into 2021.

Europe

While Europe had faced early challenges in a number of western European countries in February-April and very high death rates in a number of countries, the second wave of cases following the relaxation of restrictions in time for summer vacations accounted for the vast majority of the incrase in new cases during the October and early November time period. In earlier posts, I showed that Europe and the U.S. accounted for nearly all of the increase from 5 million new cases in the two weeks ending October 22 to the more than 8 million new cases in the two weeks ending November 17. See November 17, 2020, New COVID-19 cases over a fourteen day period continue to soar past eight million, up from five million on October 22, https://currentthoughtsontrade.com/2020/11/17/new-covid-19-cases-over-a-fourteen-day-period-continue-to-soar-past-eight-million-up-from-five-million-on-october-22/

While some of the major countries, including France, Italy, Spain, the United Kingdom and others have seen significant reductions in the number of new cases in recent weeks from the extraordinary figures recorded in late October, early November, numbers remain very high for a number of countries including Poland, Portugal, Serbia, Croatia, Hungary, Lithuania and Luxembourg — all of whom had new cases/100,000 population in the last fourteen days that were higher than the United States.

Because deaths lag new cases by a number of weeks, it is perhaps less surprising that much of Europe had deaths/100,000 population in the last fourteen days that were higher than the United States, most at rates that were two-three times the U.S. rate. The rate for the world in total was 1.82 deaths per 100,000 population for the November 16-29 period. The U.S. was 3.38 times the global average at 6.22 deaths per 100,000 population in that two week period. The following 25 European countries exceeded the U.S. rate: France (11.76 deaths/100,000 population); Italy (16.04); Spain (8.31); United Kingdom (9.40); Armenia (12.81); Austria (13.47); Belgium (18.84); Moldova (6.50); Poland (16.65); Portugal (10.30); Romania (11.50); Serbia (7.11); Switzerland (14.98); Bulgaria (23.69); Croatia (15.92); Czechia (18.74); Greece (11.08); Hungary (16.12); Lithuania (8.12); Luxembourg (13.19); Malta (6.79); Slovenia (19.85); Bosnia and Herzegovina (20.75); Georgia (13.19); and North Macedonia (20.12).

With new restrictions in recent weeks bringing new cases down in a number of European countries, death rates should start to decline as well in the coming weeks. Challenges in terms of superspreader events in Europe include holiday travel and events and winter holidays and sports. Germany has proposed placing restrictions on the ski season to try to minimize increased cases from a sport popular across much of Europe. See DW, 26 November 2020, Coronavirus: Germany seeks EU-wide ban on ski trips, https://www.dw.com/en/coronavirus-germany-seeks-eu-wide-ban-on-ski-trips/a-55732273.

The EU has contracts with at least six pharmaceutical companies or groups for vaccines if approved. The EU and United Kingdom will start to see vaccine dosages within weeks assuming approval in their jurisdictions.

Other countries

While much of the rest of the world has not seen great increases in the number of cases that is not true for all countries. For example, Iran which had 136,753 new cases in the November 2-15 period showed 186,274 new cases in the November 16-29 period (+36.21%). Jordan, which has a total number of cases of 210,709 since the end of December has recorded 65.54% of that total in the last four weeks (68,698 new cases during November 2-15; 69,404 new cases during November 16-29). Similarly, Morocco which has a total of 349,688 cases since December 2019 has more than 37% recorded in the last four weeks (69,127 during November 2-15; 61,477 during November 16-29).

In the Americas the following countries in addition to the United States have two week totals to November 29 greater than 100,000 new cases: Argentina (108,531); Brazil (441,313); Colombia (108,609). The following countries besides the United States have more than one million cases since late December 2019: Argentina (1,413,362); Brazil (6,290,272); Colombia (1,299,613), Mexico (1,100,683). Eleven other countries have more than 100,000 cases (with Peru having 960,368). Other than the U.S., countries are facing different trend lines, many down, some showing increases (e.g., Brazil, Canada, Dominican Republic, Paraguay).

In Asia, while India continues to see declines in the number of new cases, Indonesia, Israel, Japan, Kazakhstan, Malaysia, Pakistan, Palestine, South Korea, showed increased in the most recent two weeks, some quite large. This is in addition to Iran reviewed previously.

In Africa, South Africa has the most cases and saw an increase from 23,730 new cases during November 2-15 to 35,967 during November 16-29. Morocco was reviewed above. Most other major countries in Africa saw declines in recent weeks.

Conclusion

The world in the first eleven months of 2020 has struggled to get the COVID-19 pandemic under control with several major surge periods. The global number of new cases seems to have plateaued over the last week or so at extraordinarily high levels and the death rates has been climbing after a long period where deaths appeared to be declining. It is likely that the death rate will continue to increase for the rest of 2020.

After a period during the summer and early fall where restrictions in a number of countries were being relaxed, many countries in the norther hemisphere are reimposing various restrictions in an effort to dampen the spread of the coronavirus. While trade has significantly rebounded from the sharp decline in the second quarter of 2020, services trade remains more than 30% off of 2019 levels driven by the complete collapse of international travel and tourism. Many WTO members have put forward communications on actions that could be considered to speed economic recovery. The most recent was the Ottawa Group’s communication about a possible Trade and Health Initiative. See November 27, 2020, The Ottawa Group’s November 23 communication and draft elements of a trade and health initiative, https://currentthoughtsontrade.com/2020/11/27/the-ottawa-groups-november-23-communication-and-draft-elements-of-a-trade-and-health-initiative/.

The WTO TRIPS Council has a request for a waiver from most TRIPS obligations for all WTO Members on medical goods and medicines relevant to COVID-19 on which a recommendation is supposed to be forwarded to the General Council by the end of 2020 though it is opposed by a number of major Members with pharmaceutical industries. See November 2, 2020, India and South Africa seek waiver from WTO intellectual property obligations to add COVID-19 – issues presented, https://currentthoughtsontrade.com/2020/11/02/india-and-south-africa-seek-waiver-from-wto-intellectual-property-obligations-to-address-covid-19-issues-presented/.

With vaccines very close to approval in major markets like the United States and the European Union, there will be increased focus on efforts to ensure availability of vaccines and therapeutics and diagnostics globally on equitable and affordable terms. GAVI, CEPI and the WHO have been leading this initiative with the support of many governments and private sector players. Pharmaceutical companies also have global distribution plans being pursued in addition to the above efforts.

So there hopefully is light at the end of the tunnel that the COVID-19 pandemic has imposed on the world. But vaccines without vaccinations won’t solve the pandemic’s grip. So communication and outreach globally will be critical to seeing that available vaccines are properly used. And all peoples need to be able to access the vaccines, some of which will be less available simply because of the infrastructure needs to handle the vaccines.

Trade policy options to minimize trade restrictions coupled with global cooperation and coordination should result in the world being able to rebuild in 2021 and beyond as more and more of the world is vaccinated.

Multilateral efforts to help the poorest countries deal with debt, make available trade finance and other actions continue to be a pressing need. Better plans and preparation for pandemics of the future are clearly needed. Reports suggest that many of the poorest countries have experienced loss of a decade or more of economic advancement during the pandemic. Building back greener and in a sustainable manner is critical for all.

The efforts of developed country governments and others to provide the stimulus domestically to reduce the downward spiral of the individual national economies and the global economy has been critical to limiting the damage at home and abroad. But the assumption of large amounts of debt will also pose significant challenges moving forward because of the greatly heightened national debt/GDP ratios that have developed and may restrict options for individual governments moving forward.

What is certain is that 2020 will be remembered as a year in which a virus inflicted enormous damage to the global health and to the global economy. Collectively, the level of spread has been far greater than should have been possible. Many nations were not prepared. Some, like the United States, exacerbated the problems through a lack of national government planning and messaging. Others like many in Europe, having done a good job of controlling the spread in the early months, made major mistakes as they opened up for summer vacations and didn’t deal with the problems that resulted from the reopening and experienced breathtaking surges which roughly doubled the global daily rate of new cases in five-six weeks and have led to the reimposition of a series of restrictions to try to tame the pandemic a second time. We collectively are better than the results achieved to date. The number of deaths in advanced countries is simply disgraceful.

2021 offers the opportunity for the world to come together and put COVID-19 behind us. Whether we will come to the end of 2021 and feel that this global nightmare is behind us and that there are national and global game plans to rebuild in a greener and more sustainable manner with greater opportunities for all is the question. Hopefully, the answer will be yes.

WTO initiatives on trade and the environment — likely to receive a warm welcome under a Biden Administration

The challenges facing the world from climate change are staggering and getting worse. While the Trump Administration withdrew the United States from the Paris climate agreement, a Biden Administration will have the U.S. rejoin and work with other nations to find solutions to the pressing problems.

Today in Geneva, two initiatives were announced by groups of WTO Members. One addresses trade and environmental sustainability and was presented in a communication from 49 Members. Communication on Trade and Environmental Sustainability, WT/CTE/W/249 (17 November 2020). Neither the U.S., China, India, Brazil nor South Africa are on the communication though most developed countries and other Members are initial sponsors. The communication is embedded below.

W249

The second initiative was the launch of an informal dialogue on plastics pollution and environmentally sustainable plastics trade. Seven Members are launching the informal dialogue. All Members are welcome to participate. The seven Members involved in the launch are Australia, Barbados, Canada, China, Fiji, Jamaica and Morocco. Only Australia, Canada and Fiji are part of both initiatives. The press release from the Secretariat on today’s initiatives included the following discussion of the plastics initiative.

“The dialogue is borne out of the recognition of the need for coordinated action to address the rising environmental, health and economic cost of plastics pollution and the importance of the trade dimension as a solution.

“Proponents aim to circulate their communication soon. * * *

“Ambassador Xiangchen Zhang of China said at the online event that possible subjects for discussion include improving transparency, monitoring trade trends, promoting best practices, strengthening policy coherence, identifying the scope for collective approaches, assessing capacity and technical assistance needs, and cooperating with other international processes and efforts. Ambassador Nazhat Shameem Khan of Fiji said they hope this informal dialogue will encourage discussion and exploratory work on how the WTO can contribute to efforts to reduce plastics pollution and transition to a circular, more environmentally sustainable plastics trade.”

Deputy Director-General Alan Wm Wolff spoke at today’s event and identified a range of initiatives that have been looked at by the Committee on Trade and Environment, or that could be, that could help move forward both initiatives including resuming talks at eliminating tariffs and non-tariff barriers on environmental goods and services, reforming subsidies on fossil fuels, promoting a global circular economy, addressing the carbon content of traded products and other actions.

The press release and DDG Wolff’s remarks are embedded below.

WTO-_-2020-News-items-New-initiatives-launched-to-intensify-WTO-work-on-trade-and-the-environment

WTO-_-2020-News-items-Speech-DDG-Alan-Wolff-DDG-Wolff-remarks-on-the-Structured-Discussions-on-Trade-and-Environmental-Sustainability

Likely U.S. engagement in a Biden Administration

Because addressing the challenges from climate change are a core priority for the incoming Biden Administration, I would expect that once the new trade team is in place, the U.S. will become involved in both of the initiatives and other activities at the WTO on the importance of finding rules and solutions to pressing trade and environment issues.

The Biden team almost certainly supports most if not all of the items identified in paragraph 1 of the Communication (WT/CTE/W/249), including the importance of multilateral environmental agreements, that there is an urgent need for action on climate change, that trade and environmental objectives and policies should be mutually supportive, that trade and trade policy need to support efforts to reach the Sustainable Development Goals, among others. Similarly, the Biden Administration will presumably strongly support the four areas of activity identified in paragraph 2 of the Communication:

“2. Therefore, express our intention to collaborate, prioritize and advance discussions on trade and environmental sustainability, including by:

“intensifying our work to share experiences and best practices; promote transparency, dialogue and information sharing along the full value chain of products and materials;

“strengthening coherence at the national and international level with a view to identifying areas of common interest and for future work within the WTO, in order for WTO to address more effectively sustainable development issues;

“working in cooperation with relevant international organizations and relevant actors, including the private sector, to identify and support technical assistance and capacity building needs of Members, and in particular least-developed countries (LDCs).

“working on possible actions and deliverables of environmental sustainability in the various areas of the WTO.”

Similarly, I would expect the Biden Administration to have an active interest in working with industry and other governments to address the challenges of plastics pollution, although U.S. interests are likely to be more action oriented than the items teed up by China at today’s announcement.

Conclusion

For years, many Members have fought focusing energies at the WTO on issues involving trade and the environment. With the climate change crisis and consequences being felt around the world, it appears that many or most WTO Members are appreciating the need for the WTO to play its role in addressing sustainable development and the climate change challenge.

With a new U.S. Administration, the U.S. should be a very active participant in moving the WTO and its Members forward.

New COVID-19 cases over a fourteen day period continue to soar past eight million, up from five million on October 22

The COVID-19 pandemic continues to see an upward spiral in terms of the number of new infections although there has been a recent slowdown in new cases in Europe. Europe and the United States continue to constitute the bulk of the increase over the last 26 days as the following graph taken from the European Centre for Disease Prevention and Control’s COVID-19 situation update world wide, as of 17 November 2020 shows.

Distribution of COVID-19 cases worldwide, as of 17 November 2020

Distribution of COVID-19 cases worldwide, as of 17 November 2020


More specifically, in the last twenty-six days, the number of new COVID-19 cases globally over the last fourteen days has shot from five million to over eight million — a near sixty percent increase in a little over three and a half weeks. The total new cases identified since late December 2019 globally are now 55.15 million as of November 17.

On October 22, the European Centre for Disease Prevention and Control (ECDC) recorded the first day where the number of new COVID-19 cases over a fourteen day period globally surpassed five million (5,042,415). In just eight days, on October 30, the ECDC reports the fourteen day total shooting past six million new cases (6,093,987), an increase of 1,051,572 or 20.85% in eight days. The report for November 7 shows the total new cases in the last fourteen days crossing the seven million mark — 7,044,267 — or 15.59% over October 30 and 39.70% over October 22. And today, November 17, the ECDC report shows new cases in the last fourteen days as passing eight million (8,031,073) — 14.01% above November 7, 31.79% above October 30 and 59.27% above October 22. As reviewed in three prior posts (October 22 and October 30), the U.S. and Europe were major factors in hitting five million, six million and seven million daily cases and today’s data show them to continue to be the major causes of the continued rapid escalation in global cases. See October 22, 2020, COVID-19 new cases over last 14 days pass 5,000,000 for first time on October 22, https://currentthoughtsontrade.com/2020/10/22/covid-19-new-cases-over-last-14-days-pass-5000000-for-first-time-on-october-22/; October 30, 2020,  In last eight days, the number of global new COVID-19 cases over past fourteen days has grown from five to six million, https://currentthoughtsontrade.com/2020/10/30/in-last-eight-days-the-number-of-global-new-covid-19-cases-over-past-fourteen-days-has-grown-from-five-to-six-million/; November 7, 2020:  New COVID-19 cases over a fourteen day period continue to soar from five million on October 22 to six million on October 30 to seven million on November 7, https://currentthoughtsontrade.com/2020/11/07/new-covid-19-cases-over-a-fourteen-day-period-continue-to-soar-from-five-million-on-october-22-to-six-million-on-october-30-to-seven-million-on-november-7/

The table below shows the fourteen day totals for selected countries as of October 22, October 30, November 7 and November 17, and the change in new cases from October 22 – November 17. These twenty countries show an increase in the twenty-six days from October 22 – November 17 of 2,772,211 additional new cases while the increase from all countries was 2,988,658. So the 20 countries account for 92.76% of the total growth. In the prior periods (October 30 and November 7), the 20 countries had accounted for more than 100% of the increase in new cases. The 20 countries accounted for 2,558,802 new cases for the fourteen days ending October 22 or 50.75% of the global total at that time. For the fourteen days ending October 30, the 20 countries accounted for 3,584,674 new cases or 58.82% of the global total. For the fourteen days ending November 7, the 20 countries accounted for 4,568,491 new cases or 64.85% of the global total. And for the fourteen days ending November 17, the 20 countries accounted for 5,331,013 new cases or 66.38% of new cases. The table below shows that eight European countries — France, Spain, Belgium, Czechia, the Netherlands, Switzerland, Slovakia and Slovenia — showed significant new case reductions in the November 17 period compared to the November 7 period.

Country10-22-202010-30-202011-7-202011-17-2020Change
United States786,488966,2691,245,8761,914,2411,127,753
France303,912473,085620,778524,800220,888
United Kingdom244,954291,718315,486336,817 91,863
Spain169,394238,709282,700256,167 86,773
Italy115,708234,993377,812474,293358,585
Russia198,716227,530252,794315,975117,259
Belgium100,119171,522152,663 72,643 -27,476
Poland95,260169,302265,447338,308243,048
Czechia113,555161,058165,174114,627 1,072
Germany81,905151,137224,483255,367173,462
Netherlands103,024126,543125,163 84,442 -18,582
Ukraine76,48989,178109,792143,495 67,006
Switzerland35,26173,418107,837 93,395 58,134
Romania48,53260,55086,030114,508 65,976
Hungary18,16628,38848,845 65,890 47,724
Austria19,38735,43661,823 93,528 74,141
Bulgaria10,59220,64335,665 45,274 34,682
Slovakia18,91327,50333,177 25,447 6,534
Slovenia8,85920,02123,345 19,338 10,479
Sweden9,56817,67133,601 42,458 32,890
Total2,558,8023,584,6744,568,4915,331,0132,772,211

While the United States has the largest absolute increase in the last twenty-five days for a single country and accounted for 40.68% of the increase recorded by the twenty countries for the October 22-November 17 period, the U.S. accounted for 87.65% of the increase of the twenty countries for the November 7-November 17 period. While Europe has been the largest part of the increase in October and November, the rate of increase has slowed or declined for many European countries in the last fourteen days.

Europe led the U.S. in the dramatic increase in new cases in October and in the reintroduction of restrictions in many countries to attempt to bring the coronavirus back under control. Actions in Europe appear to be working at least in a large number of countries as the number of new cases is declining in some countries as can be seen in the table above. The United States is continuing with huge increases in new cases, in hospitalizations and is seeing a growing number of deaths. Many U.S. states are putting in place at least some restrictions to try to slow the growth of new cases and reduce the strain on the health care system. The next week or two will help understand whether the actions being taken in the U.S. are sufficient to reduce the growth in new cases.

Other parts of the world are not experiencing a second wave to the same extent as Europe or the United States, although much of the Americas remain at very high levels of new cases. Some major countries who have been seriously hit in recent months are seeing substantial reductions in new cases. India is one example — on October 22, the last 14 days showed 871,291 new cases; on October 30, for the last 14 days new cases were down to 718,383; on November 7 were down to 647,398 for the 14 days ; and for the fourteen days ending on November 1, India’s new cases were down to 606,667.

The EU and the US face problems on additional aid packages

The EU has at least a temporary crisis as Hungary and Poland have blocked adoption of the aid package that had been agreed to. See, e.g., Euronews, 16 November 2020, Hungary and Poland block EU’s COVID-19 recovery package over new rule of law drive, https://www.euronews.com/2020/11/16/hungary-and-poland-threaten-coronavirus-recovery-package.

The U.S. Congress and Administration have been unable to agree to additional stimulus funds to help the U.S. economy and citizens deal with the continued COVID-19 pandemic. The U.S. has more than 22 million Americans still out of work and with government assistance having terminated or to terminate shortly. Aid for small businesses and for sectors particularly hard hit by the pandemic is desperately needed as is funding for state and local governments and much more. While President Trump has urged Congress to pass an additional stimulus package, it is unlikely that action will be taken before the next Congress convenes and the new Administration is sworn in on January 20.

Progress on vaccine development

Two vaccines have completed phase 3 testing — one from Pfizer/BioNTech and one from Moderna — and information from the companies suggests efficacy rates of 90-94.5%. Thus, it is possible that these two vaccines will be approved for use in the coming weeks and will see large scale availability in the first half of 2021. Many other vaccines are in various phases of testing. So 2021 will hopefully see the roll out of various vaccines with significant availability around the world due to efforts of the companies and the efforts of the WHO/GAVI/CEPI to ensure availability to developing and least developed countries as well.

Conclusion

The top priority for many countries around the world remains getting the COVID-19 pandemic under control. The costs in terms of human life and serious health problems are enormous. So too the costs to the global economy from taking the steps necessary to address the pandemic are enormous.

How to address the pandemic and how to work internationally to secure a return to normalcy and a return to sustainable economic growth are the challenges for all governments and international organizations.

The fact that the number of new cases is continuing to surge globally ten and a half months after the start of global surveillance is obviously troubling and delays the return to normalcy. While some individual countries have gained control of the pandemic and others are making significant strides to reduce the number of new cases, “no one is safe until all are safe”. We have a long road to travel, and the western developed world is currently the major hot spot, struggling with the current extraordinary surge, although there are positive signs in Europe that at least many countries are slowing the spread after a very challenging September and October. We still are not in sight of a global peak although the rate of growth is slowing for the world as a whole though not for countries like the United States.

There is obviously some light at the end of the tunnel as vaccines and therapeutics get closer to public release. With more than 55 million infections recorded to date around the world and with more than 1.3 million deaths globally, the pressing question is how much worse will the situation become before the world gets back to normal with the pandemic controlled. The world is in for a challenging time til at least next summer and more realistically to the end of 2021 and the start of 2022.

New COVID-19 cases over a fourteen day period continue to soar from five million on October 22 to six million on October 30 to seven million on November 7

The COVID-19 pandemic continues to spiral out of control with the vast majority of the new cases in Europe and the United States as the following graph taken from the European Centre for Disease Prevention and Control’s COVID-19 situation update world wide, as of 7 November 2020 shows.

Distribution of COVID-19 cases worldwide, as of 7 November 2020

Distribution of COVID-19 cases worldwide, as of 7 November 2020

More specifically, in the last sixteen days, the number of new COVID-19 cases globally over the last fourteen days has shot from five million to over seven million — a near forty percent increase in a little over two weeks. The total new cases identified since late December 2019 globally are just under 50 million (49.37 million) as of November 7.

On October 22, the European Centre for Disease Prevention and Control (ECDC) recorded the first day where the number of new COVID-19 cases over a fourteen day period globally surpassed five million (5,042,415). In just eight days, on October 30, the ECDC reports the fourteen day total shooting past six million new cases (6,093,987), an increase of 1,051,572 or 20.85% in eight days. Today’s report (November 7) shows the total new cases in the last fourteen days crossing the seven million mark — 7,044,267 — or 15.59% over October 30 and 39.70% over October 22. As reviewed in two prior posts (October 22 and October 30), the U.S. and Europe were major factors in hitting five million and six daily cases and today’s data show them to continue to be the major causes of the continued rapid escalation in global cases. See October 22, 2020, COVID-19 new cases over last 14 days pass 5,000,000 for first time on October 22, https://currentthoughtsontrade.com/2020/10/22/covid-19-new-cases-over-last-14-days-pass-5000000-for-first-time-on-october-22/; October 30, 2020,  In last eight days, the number of global new COVID-19 cases over past fourteen days has grown from five to six million, https://currentthoughtsontrade.com/2020/10/30/in-last-eight-days-the-number-of-global-new-covid-19-cases-over-past-fourteen-days-has-grown-from-five-to-six-million/.

The table below shows the fourteen day totals for selected countries as of October 22, October 30 and November 7 and the change in new cases from October 22 – November 7. These twenty countries show an increase in sixteen days of 2,009,689 new cases over the fourteen day periods examined or more than the global total increase of 2,001,852 new cases over the same sixteen days The 20 countries accounted for 2,558,802 new cases for the fourteen days ending October 22 or 50.75% of the global total at that time. For the fourteen days ending October 30, the 20 countries accounted for 3,584,674 new cases or 58.82% of the global total. Finally, for the fourteen days ending November 7, the 20 countries accounted for 4,568,491 new cases or 64.85% of the global total.

Country10-22-202010-30-202011-7-2020Change
United States786,488966,2691,245,876459,388
France303,912473,085620,778316,866
United Kingdom244,954291,718315,48670,532
Spain169,394238,709282,700113,306
Italy115,708234,993377,812262,104
Russia198,716227,530252,79454,078
Belgium100,119171,522152,66352,544
Poland95,260169,302265,447170,187
Czechia113,555161,058165,17451,619
Germany81,905151,137224,483142,578
Netherlands103,024126,543125,16322,139
Ukraine76,48989,178109,79233,303
Switzerland35,26173,418107,83772,576
Romania48,53260,55086,03037,498
Hungary18,16628,38848,84530,679
Austria19,38735,43661,82342,436
Bulgaria10,59220,64335,66525,073
Slovakia18,91327,50333,17714,264
Slovenia8,85920,02123,34514,486
Sweden9,56817,67133,60124,033
Total2,558,8023,584,6744,568,4912,009,689

While the United States has the largest absolute increase in the last eight days for a single country, the vast majority of the increase flows from countries within the European Union. With the exception of the United States, the rest of the countries in the chart are from Europe, most from the EU.

It is little wonder, then, that the EU, the UK and Switzerland, with dramatic growth in the number of new cases, are imposing renewed restrictions at least in many countries and facing backlash from citizens suffering COVID-19 exhaustion. See, e.g., Politico, November 1, 2020, Europe is living a coronavirus flashback plus a backlash, https://www.politico.eu/article/europe-is-living-a-coronavirus-flashback-plus-a-backlash/. While health care is handled by the individual countries within the the EU, the EU has been advocating better coordination and maintaining trade flows within the Community as countries come to grips with the current wave. See, e.g., Politico, October 30, 2020, EU leaders link arms for long fight against virus, https://www.politico.eu/article/eu-leaders-link-arms-for-long-fight-against-virus/.

In the United States, the number of new cases is spiking again, with new cases now more than 100,000/day in recent days and the fourteen day total new cases of 1,245,876 is more than 20% higher than was recorded on November 1 — the first day where a fourteen day total of new cases in teh U.S. topped one million. See November 1, 2020, United States becomes second country to have more than 1,000,000 new COVID-19 cases in fourteen days, https://currentthoughtsontrade.com/2020/11/01/united-states-becomes-second-country-to-have-more-than-1000000-new-covid-19-cases-in-fourteen-days/. With most attention in the U.S. focused on the election results, the COVID-19 situation is receiving relatively limited press attention and no change in federal government response.

Other parts of the world are not experiencing a second wave to the same extent, although much of the Americas remain at very high levels of new cases. Some major countries who have been seriously hit in recent months are seeing substantial reductions in new cases. India is the leading example — on October 22, the last 14 days showed 871,291 new cases; on October 30, for the last 14 days new cases were down to 718,383, and were down to 647,398 for the 14 days ending on November 7.

Conclusion

The top priority for many countries around the world is getting the COVID-19 pandemic under control. The costs in terms of human life and serious health problems are enormous. So too the costs to the global economy from taking the steps necessary to address the pandemic are enormous. For example, the European Union recently reduced its projected economic growth in 2021 because of the second wave of COVID-19 cases. See Politico, November 5, 2020, EU cuts economic forecast due to coronavirus wave, https://www.politico.eu/article/eu-cuts-economic-forecast-due-to-coronavirus-wave/ (2021 forecast cut from 6.1% growth to 4.2% growth).

How to address the pandemic and how to work internationally to secure a return to normalcy and a return to sustainable economic growth are the challenges for all governments and international organizations, including the WTO, WHO, IMF, World Bank and many others. Recent IMF regional economic outlooks show varied projections for economic growth for different parts of the world and major challenges for areas like Sub-Saharan Africa. See, e.g., IMF Press Release, October 22, 2020, Regional Economic Outlook, Sub-Saharan Africa, a difficult road to recovery, https://www.imf.org/en/News/Articles/2020/10/21/pr20319-sub-saharan-africa-a-difficult-road-to-recovery.

The fact that the number of new cases is continuing to surge globally ten months after the start of global surveillance is obviously troubling and delays the return to normalcy. While some individual countries have gained control of the pandemic and others are making significant strides to reduce the number of new cases, “no one is safe until all are safe”. We have a long road to travel, and the western developed world is currently the major hot spot, struggling with the current extraordinary surge. We still are not in sight of a global peak and the rest of 2020 is likely to continue to stress global capabilities.

WTO reports a 30% decline in commercial services trade in 2nd quarter of 2020 — travel challenges through September will continue to put downward pressure on commercial services trade

A press release from the WTO on October 23, 2020 was headlined “Services trade drops 30% in Q2 as COVID-19 ravages international travel.” https://www.wto.org/english/news_e/news20_e/serv_22oct20_e.htm. One of the charts in the press release shows travel down 81% in the second quarter of 2020, with transport down 31% and all other commercial services down 9%. Within other services, construction exports were down 24%; manufacturing and repair services exports were down 22%; telecommunications services exports were down 8%; insurance services exports were down 3%; financial services exports were down 1%; and computer services exports up 4%, with remaining categories of services exports down 9-14%.

The press release contained a link to monthly trade trends through August which looked at both imports and exports of merchandise and of commercial services. See WTO statistics, latest trends, https://www.wto.org/english/res_e/statis_e/latest_trends_e.htm. Commercial services were presented at an aggregate level and showed percent change for months on a year-on-year basis. For the European Union commercial services exports outside of the EU, the rate of decline from 2019 data declined 29% in May 2020, 22% in June, 21% in July and 20% in August. For the United States, exports of commercial services declined by 31% in May, 30% in June, 29% in July and 29% in August. China’s exports of commercial services went from a decline of 6% in May to a decline of 5% in June, and a !% growth in July and a 6% growth in August. The United Kingdom showed a decline of 27% in commercial exports in May, an 11% decline in June, a 9% decline in July and a 1% increase in August. India showed declines in each of the four months from May-August of 10%, 8%, 11% and 10%. Similarly, Japan showed declines each month in the four months from 24% in May, 23% in June, 35% in July and 36% in August. Korea was the last country shown and had declines each month of 30%, 24%, 27% and 26%.

Travel continues to be the major driver of the decline in commercial services into the third quarter, with the UNWTO reporting in its World Tourism Barometer (Volume 18, Issue 6, October 2020) that international arrivals declined 81% in July and 79% in August compared to year earlier figures. For the first eight months of 2020 compared to the same period in 2019, international arrivals are down 70.1%, with Asia and the Pacific down 78.8%, Europe down 67.7%, the Americas down 64.8%, Africa down 69.% nd the Middle East down 68.7. UNWTO World Tourism Barometer, Volume 18, Issue 6, October 2020, https://www.e-unwto.org/doi/epdf/10.18111/wtobarometereng.2020.18.1.6.

While travel restrictions through August had been being reduced in a number of countries, the huge increase in Europe of new COVID-19 cases in October and early November has resulted in increased restrictions in a number of European countries and will likely mean extended challenges for international travel to and from Europe, as well as cut backs in domestic travel for the remainder of 2020.

The International Air Transport Association (IATA) puts out various publications including an Air Passenger Market Analysis. The September issue shows that revenue passenger kilometers (RPKs) were down 88.8% in September 2020 for international air travel, bringing the January-September decline to 72.3%. Domestic air travel by contrast was down, but “just” 43.3% in September (51.2% for January – September). Thus, the total market (international and domestic) was down 72.8% in September and 64.7% for the first nine months of 2020. IATA, Air Passenger Market Analysis, The recovery in passenger travel slows amid elevated risks, September 2020, https://www.iata.org/en/iata-repository/publications/economic-reports/air-passenger-monthly-analysis—september-2020/.

While the travel sector encompasses far more than air travel, the challenges facing the airline industry are similar to challenges faced by other parts of the sector, although other parts of the sector are often far more fragmented (restaurants, bars, hotels, entertainment venues) and without the resources to survive the prolonged depression in demand due to the pandemic.

IATA provided a powerpoint analysis by their Chief Economist, Brian Pearce, on the 6th of October 2020, entitled “COVID-19, Outlook for airlines’ cash burn,” https://www.iata.org/en/iata-repository/publications/economic-reports/outlook-for-airlines-cash-burn/. The powerpoint reviews the steep reduction in stock prices for airlines compared to other stocks, outlines the extraordinary level of aid the industry has received from governments ($160 billion) and suppliers ($20 billion), shows the timing when government support is ending, graphs the slow recovery in passenger revenues, and explores the challenge for the airlines to downsize costs sufficiently to deal with the drastic contraction in revenues, and shows an industry cash burn (expenditures exceeding revenues) of $51 billion in the 2nd quarter of 2020 and a projected further cash burn of $77 billion in the second half of 2021. The presentation also shows that many airlines can’t sustain for long the cash burn and ends on the sobering note that airlines are not expected to turn cash positive until 2022.

Press reports show challenges for airlines in many parts of the world. See, e.g., South China Morning Post (Bloomberg article), November 3, 2020, Asia airlines seen staving off pandemic ruin for now as troubles head West, https://www.scmp.com/news/asia/article/3108066/asia-airlines-seen-staving-pandemic-ruin-now-financial-troubles-head-west; BBC, November 3, 2020, Covid threatens to ground India’s aviation industry, https://www.bbc.com/news/world-asia-india-54729074.

The U.S. has seen tens of thousands of airline employees furloughed or dismissed since October 1st as government support came to an end in September, and Congress and the Administration have not been able to agree on a further package of supports for the industry or the nation more broadly as the pandemic continues to grow in size in the U.S. The surge in new cases in the United States is also resulting in various states imposing restrictions on bars and restaurants, and the hotel and entertainment industries continue to be severely affected by declines in demand.

Similarly, much of Europe has been reimposing at least some restrictions that affect the travel sector in an effort to regain control over the pandemic.

All of the above is simply to point out that the decline in commercial services trade reported by the WTO last month for the second quarter of 2020 is likely to continue through the remainder of 2020, led by the devastating contraction of the travel sector.

India and South Africa Seek Waiver from WTO Intellectual Property Obligations to Address COVID-19 — Issues Presented

India and South Africa submitted a communication to the WTO Council for Trade-Related Aspects of Intellectual Property Rights entitled “Waiver from Certain Provisions of the TRIPS Agreement for the Prevention,
Containment and Treatment of COVID-19.” IP/C/W/699 (October 2, 2020). The document and correction are embedded below.

W669

W669C1

The waiver request was made part of the agenda of the Council for TRIPS agenda for its meeting on October 15-16. The WTO Secretariat provided a short press release on the TRIPS Council meeting. The discussion on the waiver proposal is quoted below.

“Some 40 members engaged in a substantive discussion on a proposal submitted by India and South Africa for a temporary waiver of certain TRIPS obligations they said would facilitate an appropriate response to COVID-19. The proposal suggests a waiver for all WTO members on the implementation, application and enforcement of certain provisions of the TRIPS Agreement in relation to the “prevention, containment or treatment” of COVID-19. The proponents argued this would avoid barriers to the timely access to affordable medical products including vaccines and
medicines or to scaling-up of research, development, manufacturing and supply of essential medical products.

“The waiver would cover obligations in four sections of Part II of the TRIPS Agreement (https://www.wto.org/english/docs_e/legal_e/27-trips_04_e.htm) — Section 1 on copyright and related rights, Section 4 on industrial designs, Section 5 on patents and Section 7 on the protection of undisclosed information. It would last for a specific number of years, as agreed by the General Council, and until widespread vaccination is in place globally and the majority of the world’s population is immune. Members would review the waiver annually until its termination.

“According to the proponents, an effective response to the COVID-19 pandemic requires rapid access to affordable medical products such as diagnostic kits, medical masks, other personal protective equipment and ventilators as well as vaccines and medicines. The outbreak has led to a swift increase in global demand, with many countries facing shortages, constraining the ability to effectively respond to the outbreak. As new diagnostics, therapeutics and vaccines for COVID-19 are developed, there were significant concerns about how these will be made available
promptly in sufficient quantities and at affordable prices to meet global demand.

“The proponents argued that many countries — especially developing countries — may face institutional and legal difficulties when using TRIPS flexibilities, including the special compulsory licensing mechanism provided for in Article 31bis (https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_bis_oth.pdf), which they saw as a cumbersome process for the import and export of pharmaceutical products. Now was the time for the WTO as an organization to rise up to the collective call for defeating the pandemic. The WTO would not succeed in its efforts to rebuild the COVID-19 affected economies unless it acts now to first save those lives that are going to build these economies. It is time for members to take collective responsibility and put people’s lives before anything else, they concluded.

“While a number of developing and least developed country members welcomed the proposal as a contribution to the discussion, many were still studying it in their capitals and asked for clarification on certain points, particularly regarding its practical implementation and the possible economic and legal impact of the waiver at national level. A number of developing and developed country members opposed the waiver proposal, noting that there is no indication that intellectual property rights (IPRs) have been a genuine barrier to accessing COVID-19 related medicines and technologies.

“While acknowledging that the sustained and continued supply of such medicines and technologies is a difficult task, they observed that non-efficient and underfunded health care and procurement systems, spiking demand and lack of manufacturing capacity are much more likely to impede access to these materials. In the view of these members, solutions can be legitimately sought within the existing IP system as the TRIPS Agreement provides enough tools and sufficient policy space for members to take measures to protect public health. The suspension of IPRs,
even for a limited period of time, was not only unnecessary but it would also undermine the collaborative efforts to fight the pandemic that are already under way.

“Given this range of positions, the Council chair, Ambassador Xolelwa Mlumbi-Peter of South Africa, said that the item would remain suspended as members continue to consider the proposal. Requests for waivers concerning WTO agreements must be submitted initially to the relevant council for consideration. After 90 days, the TRIPS Council has to submit a report to the Ministerial Conference. Given that the proposal was submitted on 2 October, the 90-day time-period expires on 31 December 2020. The TRIPS Council meeting will be reconvened on the item of the waiver proposal as appropriate before that date, the chair said.”

WTO, 20 October 2020, Members discuss intellectual property response to the COVID-19 pandemic, https://www.wto.org/english/news_e/news20_e/trip_20oct20_e.htm.

Waiver provisions in the WTO

Article IX:3 and 4 of the Marrakesh Agreement Establishing the World Trde Organization deal with waivers from obligations WTO Members have assumed.

“Article IX

“Decision-Making

” * * *

“3.   In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements, provided that any such decision shall be taken by three fourths of the Members unless otherwise provided for in this paragraph.

“(a)    A request for a waiver concerning this Agreement shall be submitted to the Ministerial Conference for consideration pursuant to the practice of decision-making by consensus. The Ministerial Conference shall establish a time-period, which shall not exceed 90 days, to consider the request. If consensus is not reached during the time-period, any decision to grant a waiver shall be taken by three fourths of the Members.
 

“(b)    A request for a waiver concerning the Multilateral Trade Agreements in Annexes 1A or 1B or 1C and their annexes shall be submitted initially to the Council for Trade in Goods, the Council for Trade in Services or the Council for TRIPS, respectively, for consideration during a time-period which shall not exceed 90 days. At the end of the time-period, the relevant Council shall submit a report to the Ministerial Conference.

“4.   A decision by the Ministerial Conference granting a waiver shall state the exceptional circumstances justifying the decision, the terms and conditions governing the application of the waiver, and the date on which the waiver shall terminate. Any waiver granted for a period of more than one year shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereafter annually until the waiver terminates. In each review, the Ministerial Conference shall examine whether the exceptional circumstances justifying the waiver still exist and whether the terms and conditions attached to the waiver have been met. The Ministerial Conference, on the basis of the annual review, may extend, modify or terminate the waiver.”

Some questions from the waiver proposal

The waiver proposal put forward by India and South Africa is extraordinarily broad – covering all WTO Members for a broad range of products not clearly delineated, with the waiver of a broad array of TRIPS obligations without a demonstration of the relevance of the requests for some (e.g., copyright) for a potentially lengthy period of time.

The proposal raises a series of questions that should be addressed to understand whether the waiver is appropriate. These questions include whether such a broad waiver request is appropriate or envisioned by Article IX:3 and 4 of the Marrakesh Agreement? Shouldn’t those requesting a waiver be required to demonstrate that the existing flexibilities within the TRIPS Agreement are inadequate to address concerns they may have? Can two Members request a waiver of obligations for all WTO Members? Can a waiver request be considered where the product scope is lacking clarity, and the uses/needs of the waiver are very broad and potentially open to differing views? To what extent is there a need for those seeking a waiver to present a factual record of actions being taken by governments, companies and international organizations to provide access to medical goods during the pandemic including to developing and least developed countries? Shouldn’t those seeking a waiver identify the extent of existing licenses by major pharmaceutical companies with them or other WTO Members for the production of vaccines or therapeutics to address COVID-19?

Historical usage of waivers have not been as broad as that requested by India and South Africa

Waivers are exceptional by their nature and Article IX:3 talks in terms of a waiver of some obligation for a particular Member, not the waiver of many parts of an agreement for all members. When one looks at waivers granted previously by the WTO, one sees a range of topics — many relate to time for Members to implement changes from updates of the harmonized tariff systems (for individual countries who sought the temporary waiver), some pertain to preferential arrangements between one Member and another or a group of Members and some pertain to waiver of deadlines or specific obligations for least developed countries. Two documents prepared by the WTO Secretariat show waivers granted or continuing in existence in 2019 and all waivers between 1995 AND 2015. The two documents are embedded below.

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Thus, the present request for a waiver by India and South Africa doesn’t seem to comply with the literal terms of Article IX:3 of the Marrakesh Agreement or with the much more narrow scope of waivers typically considered. As reviewed above, the request would apply to all members, not just India and South Africa. The request also seems overly broad both in terms of products (not clearly defined), uses and provisions to be waived.

Existing flexibilities within the TRIPs Agreement

Because of the importance to all WTO Members of the health of their citizens, there has been a lot of focus and discussion within the WTO on the interface between intellectual property and public health. Under the original TRIPs Agreement and the subsequent amendment to the Agreement in 2005 that took effect as Article 31bis to the TRIPs Agreement in 2017, there is flexibility within the TRIPs Agreement for Members to deal with health emergencies including through compulsory licensing which can include the right to manufacture and export to developing and least developed countries who don’t have pharmaceutical manufacturing capabilities in-country. See TRIPs Agreement Article 31, Article 31bis and WT/L/641. The current language of Articles 31 and 31bis from the patent portion of the TRIPS Agreement are presented below.

Article 31 Other Use Without Authorization of the Right Holder

“Where the law of a Member allows for other use (7) of the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government, the following provisions shall be respected:

“(a)  authorization of such use shall be considered on its individual merits;
 

“(b)  such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly;
 

“(c)  the scope and duration of such use shall be limited to the purpose for which it was authorized, and in the case of semi-conductor technology shall only be for public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive;
 

“(d)  such use shall be non-exclusive;
 

“(e)  such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use;
 

“(f)  any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use;
 

 “(g)  authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances;
 

“(h)  the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization;
 

“(i)  the legal validity of any decision relating to the authorization of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member;
 

“(j)  any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member;
 

“(k)  Members are not obliged to apply the conditions set forth in subparagraphs (b) and (f) where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases. Competent authorities shall have the authority to refuse termination of authorization if and when the conditions which led to such authorization are likely to recur;
 

“(l)  where such use is authorized to permit the exploitation of a patent (“the second patent”) which cannot be exploited without infringing another patent (“the first patent”), the following additional conditions shall apply:
 

“(i)  the invention claimed in the second patent shall involve an important technical advance of considerable economic significance in relation to the invention claimed in the first patent;
 

“(ii) the owner of the first patent shall be entitled to a cross-licence on reasonable terms to use the invention claimed in the second patent; and
 

“(iii)  the use authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent.

Article 31bis

“1. The obligations of an exporting Member under Article 31(f) shall not apply with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) in accordance with the terms set out in paragraph 2 of the Annex to this Agreement.

“2. Where a compulsory licence is granted by an exporting Member under the system set out in this Article and the Annex to this Agreement, adequate remuneration pursuant to Article 31(h) shall be paid in that Member taking into account the economic value to the importing Member of the use that has been authorized in the exporting Member. Where a compulsory licence is granted for the same products in the eligible importing Member, the obligation of that Member under Article 31(h) shall not apply in respect of those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member.

“3. With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products: where a developing or least developed country WTO Member is a party to a regional trade agreement within the meaning of Article XXIV of the GATT 1994 and the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries (L/4903), at least half of the current membership of which is made up of countries presently on the United Nations list of least developed countries, the obligation of that Member under Article 31(f) shall not apply to the extent necessary to enable a pharmaceutical product produced or imported under a compulsory licence in that Member to be exported to the markets of those other developing or least developed country parties to the regional trade agreement that share the health problem in question. It is understood that this will not prejudice the territorial nature of the patent rights in question.

“4. Members shall not challenge any measures taken in conformity with the provisions of this Article and the Annex to this Agreement under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994.

“5. This Article and the Annex to this Agreement are without prejudice to the rights, obligations and flexibilities that Members have under the provisions of this Agreement other than paragraphs (f) and (h) of Article 31, including those reaffirmed by the Declaration on the TRIPS Agreement and Public Health (WT/MIN(01)/DEC/2), and to their interpretation. They are also without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under the provisions of Article 31(f).”

The WTO Secretariat has a page on its website that discusses intellectual property and the public interest, https://www.wto.org/english/tratop_e/trips_e/trips_and_public_interest_e.htm, which reviews both flexibilities for Members in addressing public interest needs as well as current topics being discussed within the TRIPS Council. There also have been publications by the WTO Secretariat, WIPO and WHO on flexibilities in accessing medical technologies. See, e.g., WTO, WIPO and WHO, Promoting Access to Medical Technologies and Innovation, SECOND EDITION, https://www.wto.org/english/res_e/booksp_e/who-wipo-wto_2020_e.pdf. And on October 21, 2020 the WTO held a technical workshop on health, trade and intellectual property in addressing COVID-19. See 21 October 2020, WTO workshop on health, trade and intellectual property: an integrated approach to COVID-19; https://www.wto.org/english/news_e/news20_e/heal_21oct20_e.htm. There is a lengthy combined powerpoint presentation available from the webpage which was used in the workshop.

Thus, there can be no doubt that the WTO TRIPS Agreement provides significant flexibilities to Members to address health emergencies. The waiver proposal from India and South Africa doesn’t review any actual efforts to utilize the flexibilities but just opines that Members won’t be able to effectively utilize them. Such an approach should not be acceptable for such far reaching requests as the proposal from India and South Africa.

Ongoing efforts by governments, companies and organizations to make medical goods available to developing and least developed countries

Strangely missing from the waiver request submitted by India and South Africa is any mention of the global efforts underway to ensure access to medical goods and vaccines and therapeutics as approved.

There have been various fund raising efforts in 2020 to provide the necessary wherewithal to organizations focused on developing vaccines for global distribution or focused on the distribution of medical goods, vaccines and therapeutics globally.

CEPI and GAVI in coordination with the WHO have extensive efforts underway, including access to large manufacturing capacity for approved vaccines within the pool of vaccines being developed and included in the CEPI portfolio.

In addition, some private companies involved in manufacturing vaccines under development have licensing arrangements with certain producers for distribution to developing and least developing countries. Some companies have made access to the drawings of their medical equipment available to any company wishing to produce the equipment.

Thus, it is hard to understand a need for a broad waiver when there is considerable international cooperation and substantial vaccine capacity available for some of the vaccines in late stage testing. The WTO membership deserves to have a full compilation of developments and existing actions to facilitate access to medical supplies for developing and least developed countries. The India and South Africa waiver proposal provides none of the relevant information.

While it is not the purpose of this post to develop the full factual record, I provide below some links which supply some information on ongoing developments. See The Guardian, October 20, 2020, India at heart of global efforts to produce Covid vaccine, Country plays central role in development, manufacture, and possible distribution of potential vaccines, https://www.theguardian.com/world/2020/oct/20/india-at-heart-of-global-efforts-to-produce-covid-vaccine (“A deal has already been struck for the Serum Institute of India, based in the city of Pune, to produce 1bn doses of the the Oxford/AstraZeneca vaccine, seen as the forerunner in the vaccine race.” “Johnson and Johnson, whose Covid-19 vaccine is also in phase 3 clinical trials, has struck a deal with the Indian pharmaceutical company Biological E to produce up to 500m doses if successful.” “Bharat Biotech, a Hyderabad-based pharmaceutical company, has a deal to manufacture 1bn doses of Washington University’s intranasal vaccine, now in clinical trials, and Indian pharmaceutical giant Dr Reddy’s has a deal to do a phase 2/3 human trials in India of Russia’s controversial Sputnik vaccine and then produce 100m doses. There are also at least a dozen indigenous vaccines being developed within India. ” “Poonawalla of the Serum Institute said that ‘50% of whatever quantity we manufacture will be kept for India and the remaining will go to low- and middle-income countries.'”).

GAVI, the Vaccine Alliance, October 15, 2020, COVID-19 SITUATION REPORT #19, https://www.gavi.org/sites/default/files/covid/Gavi-COVID-19-Situation-Report-19-20201015.pdf (“COVAX is the vaccines pillar of the Access to COVID-19 Tools (ACT) Accelerator, co-led by Gavi, the Coalition
for Epidemic Preparedness Innovations (CEPI) and WHO. Gavi is coordinating the development and implementation of the COVAX Facility, the global procurement mechanism of COVAX. The COVAX Facility will make investments across a broad portfolio of promising vaccine candidates (including those being supported by CEPI) to make sure at-risk investment in manufacturing happens now. Gavi is also coordinating the development and implementation of the Gavi COVAX Advance Market Commitment (AMC), the financing instrument that will support the participation of 92 low- and middle-income countries and economies in the COVAX Facility.
The goals of the COVAX Facility and AMC include:
“❖ to support the largest actively managed portfolio of vaccine candidates globally
“❖ to deliver 2 billion doses by the end of 2021
“❖ to offer a compelling return on investment by delivering COVID-19 vaccines as quickly as possible
“❖ to guarantee fair and equitable access to COVID-19 vaccines for all participants
“❖ to end the acute phase of the pandemic by the end of 2021”).

CEPI, October 21, 2020, CEPI expands global manufacturing network, reserving manufacturing capacity for more than 1billion doses of COVID-19 vaccines, https://www.gavi.org/vaccineswork/cepi-expands-global-manufacturing-network-reserving-manufacturing-capacity-over-1-billion-doses (“CEPI signs agreements with Biofabri (Spain) and GC Pharma (Republic of Korea) to reserve vaccine manufacturing capacity for more than 1 billion doses of COVID-19 vaccines designated by CEPI.
CEPI’s strategic investments in vaccine manufacturing at facilities around the world will support the COVAX goal to produce 2 billion doses of safe and effective vaccine by the end of 2021.”).

Conclusion

There is no doubt that the COVID-19 pandemic presents a global health crisis. In response to the crisis there have been activities within the WTO to minimize restrictions on the movement of medical goods and a workshop looking at the interface of trade, intellectual property and public health to help Members address internal needs. The TRIPS Agreement has various flexibilities to permit Members to address health challenges. At the same time there have been extraordinary efforts by many governments, companies and international organizations to cooperate both to develop vaccines and therapeutics but also to speed up manufacturing and work towards equitable distribution of medical goods. Leading pharmaceutical companies have already entered into licensing arrangements to provide billions of doses of vaccines when approved to developing and least developing countries. GAVI and CEPI in coordination with the WHO are working on supporting various vaccine development, securing manufacturing capacity and raising funds to permit broad distribution of vaccines and other products to countries in need and others who have contributed to the group effort.

So factually, it is hard to understand the waiver request filed by India and South Africa. Against a backdrop of how waivers have been used in the past and the lack of a demonstration that existing flexibilities won’t provide acceptable answers, the waiver proposal also is deficient in terms of legal justification. The proposal is not justified, is too broad both in terms of product coverage, Members who would be given waivers, and the range of
TRIPS provisions that would be waived for some number of years.

These are serious problems with a proposal that requires TRIPS Council action and referral to the General Council by the end of the year. Thus, the TRIPS Council should recommend against acceptance of the waiver proposal put forward by India and South Africa.


United States becomes second country to have more than 1,000,000 new COVID-19 cases in fourteen days

The European Centre for Disease Prevention and Control (ECDC) daily report, “COVID-19 situation update worldwide, as of 1 November 2020,” shows the number of new cases in the United States surpassing one million for the fourteen days October 19 – November 1. The 1,019,609 new cases reported by the United States for these fourteen days is the first time the United States has surpassed one million in a fourteen day period according to the daily reports from the ECDC. The United States is only the second country to have more than one million new cases in fourteen days, India being the first. India is now past peak, with the number of new cases declining significantly in recent weeks. The October 19-November 1 totals for the United States are 40.77% higher than the number of new cases in the fourteen day period, October 5-18. The huge growth in new cases in the United States is expected to continue in the coming weeks. The U.S. and Europe are accounting for all of the growth in global new cases in recent weeks. See October 30, 2020, In last eight days, the number of global new COVID-19 cases over past fourteen days has grown from five to six million, https://currentthoughtsontrade.com/2020/10/30/in-last-eight-days-the-number-of-global-new-covid-19-cases-over-past-fourteen-days-has-grown-from-five-to-six-million/.

The United States has the most cases since data for COVID-19 has been being collected (end of 2019), with 9,126,361 total COVID-19 cases or 19.77% of the global total of 46,156,540, even though the U.S. has just 4.3% of the world’s population. Similarly, the United States has recorded the most deaths from COVID-19, 230,556 or 19.27% of the 1,196,272 deaths recorded by all countries around the world.

As November approaches, Europe and the United States facing rapidly growing new COVID-19 cases

The number of new cases of COVID-19 reported globally skyrocketed during the October 12-25 period (5,431,119), up 24.37% from the September 28 – October 11 period (4,336,825). Data are from the European Centre for Disease Prevention and Control worldwide update series. Global confirmed cases to date are now 42,758,015.

The United States which has more confirmed cases (8,576,725) than any other nation and more confirmed deaths from COVID-19 (224,899), saw the number of new cases surge by 34.0% over the last two weeks with daily records set twice in the last week (both days over 80,000 new cases). The U.S. recorded the extraordinary number of 908,980 new cases during the fourteen day period July 20-August 2. That number declined to 740,721 during August 3-16 and further declined to 600,417 new cases in the August 17-30 period and was further reduced to 524,526 new cases in the August 31-September 13 period. The downtrend was reversed during September 14-27, when the number of new cases increased to 592,690 or a daily average of 42,335 cases. During September 28-October 11, the United States recorded 640,149 new cases (45,725/day). During October 12-25, the United States recorded 857,778 new cases and will likely surpass the prior two week peak in the next two weeks.

The United States regained the dubious distinction of recording the largest number of new cases in the last two weeks as India’s number of new cases continues to decline to 811,005 new cases from its peak of 1,238,176 new cases during the September 14-27 period. India is the only country to have recorded more than one million cases in a two week period. The United States appears likely to join India in the coming weeks.

Brazil (297,998 new cases) lost its hold on third place to France (367,624 new cases). Brazil’s new cases have been falling since July 20-August 2 (633,017 new cases) to 609,219 new cases during August 3-16, 529,057 new cases during August 17-30, 469,534 new cases during August 31-September 13, 402,304 new cases during September 14-27, 364,646 during September 28-October 11 and 297,998 new cases in October 12-25 (a decline of 52.92% since the end of July).

With the tremendous overall global growth and the declining volume of new cases in India and Brazil, the share of total new cases in the last fourteen days and since the end of December 2019 accounted for by India, Brazil and the United States declined to 36.21% in the most recent fourteen days from 47.31% in September 28-October 11. and from 54.33% during September 14-27 and down from 58.34% in the August 31-September 13 period. The three countries account for 51.04% of total cases since late December 2019 in the prior two weeks down from 53.25% of all cases confirmed since late December 2019 as of October 11.

The United States with 4.3% of global population has accounted for 20.06% of total confirmed cases since December 2019 — 4.67 times the share of total cases our population would justify. With the large increase in the most recent two weeks, the U.S. was 15.79% of the total new cases during the last two weeks (up from 14.66% during Sept. 28-October 11) or 3.67 times the U.S. share of global population. The U.S. also accounts for 19.53% of total deaths or 4.54 times the U.S. share of global population.

Changing pattern of growth in cases, Europe experiencing a spike in cases surpassing its first wave

Much of Europe is in a massive build-up of new cases, rivaling or exceeding the challenges faced during the March-April time period. This is resulting in reimposition of some restrictions by some European countries with a fair amount of pushback from citizens weary of the restrictions.

France has been hit hardest in terms of the number of new cases with the October 12-25 number of new cases reaching 367,624 up 92.04% from the 191,427 new cases in September 28-October 11 which was up from 153,535 in the September 14-27 period. The current number of new cases compares to the prior peak in the March 30-April 12 period of 56,215 new cases (or is 6.54 times the prior peak in the latest two week period).

The United Kingdom is similarly facing major challenges as the last two weeks saw new cases of 263,166 up 62.88% from the 161,567 new cases in September 28-October 11 which was more than twice the 64,103 new cases in September 14-27 and just 32,422 new cases in the August 31-September 13 period. The United Kingdom’s prior peak in the April 13-26 period was 69,386 new cases. So the most recent two weeks is at a level that is 3.79 times the prior peak.

Spain’s number of new COVID-19 cases rose to 185,020, an increase of 27.93% rom the September 28-Ocotber 11 period with 144,631 new cases. Spain’s peak in the spring had been in the period March 30-April 12 with 81,612 new cases. Thus, the last two weeks were 2.27 times the Spring peak number of new cases.

Italy’s last two weeks saw a breathtaking spike to 155,015 new cases, 3.74 times the number of new cases from the prior two week period September 28-October 11 when Italy recorded 41,390 new cases which was nearly double the number of cases in the September 14-27 period (21,807 new cases). Italy’s most recent two weeks was 2.59 times the prior peak for Italy in the Spring during the March 30-April 12 period of 59,799 new cases.

Czechia which spiked following summer vacations saw its number of new cases during October 12-25 surge to 136,790 up from 46,080 new cases in the September 28-October 11 period and 23,893 new cases in the September 14-27 period and 11,307 new cases in the August 31 – September 13 period. Czechia largely escaped the March-April wave in Europe. The data for the last eight weeks constitutes 86.95 percent of Czechia’s total recorded cases since December 2019.

Belgium surged to 133,439 new cases in the October 12-25 period more than tripling the 40,791 new cases recorded in the September 28-October 11 period which more than doubling the numbers from September 14-27 of 17,797.

Poland, which had largely escaped the Spring wave of infections, recorded 120,308 new cases in the latest two week period (Oct. 12-25) up from 35,658 new cases in the September 28-October 11 period.

The Netherlands nearly doubled its number of new cases in the October 12-25 period (112,649) compared to the number of new cases in the September 28-Ocotber 11period (59,561). The last two weeks constitute 40.13% of total cases the Netherlands has recorded since December 2019.

Germany’s new cases in the October 12-25 period surged to 106,317 from 38,724 new cases during the September 28-October 11 period. The Spring peak for Germany had been during the March 30-April 12 period (67,932 new cases).

The Russian Federation saw continued increases in the number of new cases during the October 12-25 period (228,793) up from 141,513 in the September 28-October 11 period which was up 86,209 new cases in the September 14-27 period. Russia’s earlier peak was during the May 11-24 period when Russia recorded 137,206 new cases.

Ukraine recorded 81,144 new cases during the October 11-25 period compared to 60,762 new cases in September 28-October 11, and 43,645 new cases in the September-27 period.

Many other European countries saw large increases as well in the last two weeks, though the number of new cases are smaller those the countries reviewed above.

Developing country hot spots

Still a very large part of the new cases are in developing countries as has been true for the last few months although many countries, including India and Brazil are seeing many fewer new cases in the last two weeks. While India and Brazil had by far the largest number of new cases from developing countries, they were followed by Argentina (197,440), Colombia (104,964), Iran (66,452), Indonesia (57,028), Mexico (55,807), Iraq (49,029), Morocco (48,063), Peru (40,126), the Philippines (30,893), Turkey (25,753), South Africa (23,350), Chile (20,947), Bangladesh (20,434) and then dozens of other countries with smaller numbers of new cases. Of the listed developing countries, only Argentina, Colombia, Iran, Morocco, Turkey and South Africa saw increases from the September 28-October 11 period.

Deaths/100,000 population

The United States has the largest number of deaths of any country to date (224,899) and had the largest number of deaths in the last two weeks (10,522). Because the number of deaths typically follows increases in new cases (with a significant lag), the U.S. saw the number of new deaths increase 6.5% from the prior two weeks deaths (9,880). The countries with the highest number of deaths per 100,000 population for the last two weeks were the following: Argentina (11.24), Armenia (5.54), Moldova (5.22), Israel (5.06), Romania (4.94), Belgium (4.91), Iran (4.86), Colombia (4.65), Costa Rica (4.08), Mexico (4.00), Poland (3.63), Panama (3.44), Chile (3.27), and the United States (3.20). All other countries (including all other developed countries) had lower rates of death per 100,000 population. For all countries, the death rate over the last two weeks was 1.02 deaths/100,000 population. So the U.S.’s death rate over the last two weeks was 2.91 times the global average and was much higher than many large and/or developed countries. China’s number was so low, it was 0.00 people/100,000 population; France was 2.93, Germany 0.50, India 0.75, Italy 1.77, Japan 0.07, South Korea 0.05, Singapore 0.02, United Kingdom 2.98, Taiwan 0.00, Canada 0.90, Australia 0.03, New Zealand 0.00.

If looking at the entire period since the end of December 2019 through October 25, the average number of deaths for all countries per 100,000 of population has been 15.16 deaths. The nine countries (of 86 which account for over 98% of total deaths) with the highest death rates/100,000 for the full period are: Peru (10.87), Belgium (93.73), Bolivia (74.93), Brazil (74.34), Spain (74.04), Ecuador (72.19), Chile (73.30), Ecuador (72.19), Mexico (69.56), the United States (68.34). The United States death rate has been 4.51 times the global rate and many times higher than nearly all other developed countries and most developing countries. Consider the following examples: China, where the virus was first found, has a death per 100,000 population of just 0.33 people. India’s data show 8.67 per 100,000 population; Germany has 12.08; Japan has 1.35; Korea is just 0.89; Canada is 26.52; Switzerland is 21.96; Poland is 11.46; Ukraine is 14.30; Norway is 5.24; Australia is 3.59; New Zealand is 0.52.

Conclusion

The world in the first ten months of 2020 has struggled to get the COVID-19 pandemic under control. While many countries in Europe and some in Asia and the major countries in Oceania had greatly reduced the number of new cases over time, there has been a significant resurgence in many of these countries (particularly in Europe where current rates of new cases are greater than during the March-April initial wave) as their economies reopen, travel restrictions are eased, schools reopen in many countries and fall comes to the northern hemisphere. But the number of new cases continues to rage in a few countries in the Americas, with the United States heading to new records. While there are growing number of cases in many developing countries in Asia and Africa, many countries are seeing significant declines with relatively smaller number of cases in Africa in total than in other continents.

A recent WTO Secretariat information paper showed that there has been a reduction in shortages of many medical goods needed to handle the COVID-19 pandemic which is obviously good news, although as the global total of new cases continues to rise, there may yet be additional challenges in terms of supply. See 18 September 2020, Information Note, How WTO Members Have Used Trade Measures to Expedite Access to COVID-19 Critical Medical Goods and Services, https://www.wto.org/english/tratop_e/covid19_e/services_report_16092020_e.pdf.

Despite significant expansion of production of PPE around the world and despite progress within GAVI on its program for outreach with various vaccines when developed (including securing production capacity in a number of countries), and other relevant medical goods and the ongoing efforts of CEPI on vaccine developments, and the license agreements that have been entered into by a number of the major groups developing vaccines for COVID-19, India and South Africa have filed a waiver request from most TRIPs obligations “in relation to prevention, containment of treatment of COVID-19”. The waiver request would apply to all WTO Members for a number of years (yet to be determined). See Communication from India and South Africa, Waiver from Certain Provisions of the TRIPs Agreement for the Prevention, Containment and Treatment of COVID-19, 2 October 2020, IP/C/W/669. While I will address the waiver request in a later post, it is hard to imagine that the normal requirements for seeking a waiver have been met with the current communication. Based on the readout of the October 20, 2020 TRIPs Council meeting, it is likely that the waiver request will generate significant controversy in the coming three months and could complicate current efforts at greater global cooperation in addressing the pandemic.

With the third round of consultations for a new Director-General concluding on Tuesday, October 27, whoever the new Director-General ends up being can add the waiver request to the list of highly controversial matters that confront the WTO heading towards the end of 2020.

COVID-19 new cases over last 14 days pass 5,000,000 for first time on October 22.

According to data compile by the European Centre for Disease Prevention and Control, total new COVID-19 cases reported globally reached 5,042,415 for the last fourteen days on October 22, 2020 bringing the totals since data started to be gathered at the end of 2019 to 41.299 million cases. See European Centre for Disease Prevention and Control, October 22, 2020, COVID-19 situation update worldwide, as of 22 October 2020, https://www.ecdc.europa.eu/en/geographical-distribution-2019-ncov-cases. This is the first day where the two week total exceeded five million. The most recent two week total compares to 3,780,469 new cases for the two weeks ending on September 13; 3,019,983 new cases for the two weeks ending on July 19; 1,932,024 new cases for the two weeks ending on June 21; and 1,281,916 new cases for the two weeks ending on May 24.

While vaccines are available in China and the Russian Federation to some extent and emergency approval of two vaccines may be presented to the U.S. Food and Drug Administration in the second half of November 2020, countries is the Americas and Europe in particular are seeing sharp increases in the number of new cases as cooler weather and greater time indoors accompanies the start of Fall.

Here are all countries (13) that had 100,000 new cases or more in the last two weeks according to the ECDC report. They account for 3,605,666 of the cases in the last two weeks (71.5%). All but India and Brazil are increasing, most dramatically:

India – 871,291 (down from recent periods)

United States – 786,488 (increasing)

France – 303,912 (increasing)

Brazil – 298,078 (down from recent periods)

United Kingdom – 244,954 (increasing)

Russian Federation – 198,716 (increasing)

Argentina – 196,410 (increasing)

Spain – 169,394 (increasing)

Italy – 115,708 (increasing)

Czechia – 113,555 (increasing)

Colombia – 104,017 (increasing)

Netherlands – 103,024 (increasing)

Belgium – 100,119 (increasing)

Individual countries in Europe are reimposing some restrictions in response to the sharp spike in new cases, including lockdowns in Ireland and Czechia. See Politico, October 21, 2020, EU leaders to discuss Coronavirus on October 29, https://www.politico.eu/article/eu-leaders-to-confer-on-pandemic-oct-29/. The EU has made arrangements with three groups developing vaccines for early supplies and is reported to be close to arrangements with three more (and possibly with a fourth).

Different states in the United States are responding to the rising number of new cases in different ways reflecting in part the politicization of prevention measures like wearing masks and the continued mixed messages coming from government officials on the pandemic. Rural America which had escaped most of the early infections has been going through large surges, particularly in the middle of the country and in the northern states in the midwest. Hospitalizations have increased in many states and will likely continue to climb if predictions of worsening new case counts continue to play out. The U.S. has made arrangements with a number of pharmaceutical companies and groups for early access to vaccines that receive approval for distribution.

In a recent WTO TRIPs Council meeting, the U.S. and U.S. reportedly opposed a proposal from India and South Africa to waive certain intellectual property protections for a period of time to address getting vaccines and therapeutics to all peoples when available. See World Trade Organization press release, October 20, 2020, Members discuss intellectual property response to the COVID-19 pandemic, https://www.wto.org/english/news_e/news20_e/trip_20oct20_e.htm; Inside U.S. Trade’s World Trade Online, October 20, 2020, U.S., EU oppose WTO effort to waive IP protections amid pandemic, https://insidetrade.com/daily-news/us-eu-oppose-wto-effort-waive-ip-protections-amid-pandemic.

As the pandemic continues to rage with a shifting focus on hot spots back to more developed countries and as vaccines get close to approval and mass production, the question of distribution of vaccines and therapeutics to countries in need will become a more pressing issue. While there has been greater international cooperation (with the exception of the U.S.) in supporting groups focuses on getting vaccines to developing and least developed countries, there obviously remains a tension between the role of government in taking care of its citizens and its role in contributing to global outreach. See Nature, 24 September 2020, Who Gets a Covid Vaccine First? Access plans are taking shape, https://media.nature.com/original/magazine-assets/d41586-020-02684-9/d41586-020-02684-9.pdf While the WHO would like to see all countries pool vaccines and make them available to vulnerable groups globally before addressing other national needs, that is a highly unlikely scenario among major producing countries. Particularly for developed countries experiencing large surges in new cases, the political pressure to address the immediate needs at home will likely rule government actions. The good news is that some pharmaceutical companies involved in vaccine development have plans to produce or license production in multiple countries, including in countries for broader distribution to developing and least developed countries. This is in addition to the government and private sector support to GAVI and others for obtaining vaccines and therapeutics and making them available to countries in need.

Conclusion

The spread of the COVID-19 pandemic continues to accelerate and will likely worsen for the Americas and Europe in the coming weeks. If there are increased restrictions by countries in an effort to slow the spread of the coronavirus, that will slow the economic rebound in important parts of the world and will likely slow the rebound in trade in goods and services.

At the same time, the world is getting close to knowing whether a number of the vaccine trials underway by western pharmaceutical companies have been successful and whether vaccines from these companies will join those of China and Russia. As vaccines and some therapeutics become commercially available, there will be the important challenge of seeing that all peoples with needs are able to access the vaccines and therapeutics on an equitable and affordable basis. The jury is out as to how access will actually work and whether the roll out of vaccines and therapeutics will in fact be equitable and affordable.

Reform at the WTO — fundamental divisions continue on key issues for U.S.

At the recent Informal Trade Negotiations Committee and Informal Heads of Delegation meeting on October 12 and the General Council meeting on October 13, WTO Members continued to line up on opposite sides of major reform proposals from the United States and others.

While the U.S. and other supporters of change in developing country status for special and differential treatment (“S&DT”) have not included least developed countries (where there is no dispute on the need for assistance), China, India, and South Africa hide behind a Doha Development Agenda item on S&DT on existing agreements and proposals put forward by the G90 in an effort to avoid their need to justify any special and differential treatment in new agreements or ongoing negotiations. The concept that Members who have advanced economically rapidly over the last twenty-five years are going to get additional S&DT benefits on existing agreements while not permitting a better differentiation of which WTO Members have actual needs is not one likely to move forward and will exacerbate the negotiating impasse at the WTO. There is a good summary of the S&DT debate at the General Council meeting on October 13 in the October 14 issues of Washington Trade Daily. https://files.constantcontact.com/ef5f8ffe501/7ce1179a-5882-4f55-96ce-84eea151fa27.pdf.

The U.S., EU and China statements at the General Council meeting and the U.S. and EU statements at the informal TNC and Heads of Delegation meeting the day before are available on each country’s WTO website.

Developing Counry criteria; Special and Differential Treatment

Below are excerpts from the October 13 General Council meeting on agenda item 6, “Procedures to strengthen the negotiating function of the WTO — Statement by the United States (WT/GC/W/757/Rev.10 and WT/GC/W/764/Rev.1).”

Statement by U.S. Amb. Dennis Shea:

“At the HODs meeting yesterday, I spoke about the paralysis of the WTO’s negotiating function.

“In our view, the root causes are complex and varied. They include:

“- Appellate Body overreach, which enticed many Members to disfavor negotiation and instead pursue litigation to achieve desired outcomes;

“- A chronic lack of transparency by many Members, especially some major players, which is distorting our grasp of key issues and undermining the foundation for negotiations; and

“- Certain Members’ unjustifed claim of automatic entitlement to blanket special and differential treatment (S&D), which ensures that ambition levels remain far too weak to produce negotiated outcomes. Members cannot find trade-offs or build coalitions when significant players use S&D to avoid making meaningful offers.

“As we’ve discussed our S&D reform proposal with Members, we have heard three criticisms.

“First, certain advanced, wealthy, or influential Members claim they have an automatic, permanent, and sacrosanct entitlement to blanket S&D. We disagree. Our approach to S&D eligibility can and must evolve to reflect the trade and development reality of today.

“Second, some Members argue for a different solution – the “case-by-case” approach, where each Member is asked to contribute to the full extent of its capabilities to a set of disciplines. But we know from experience—it’s called the Doha Round—that this approach does not work when some Members are not willing to take on obligations commensurate with their role in the global economy.

“- Some Members point to the Trade Facilitation Agreement (TFA) as a successful case-by-case approach to S&D, but the TFA is not a readily or generally applicable model moving forward. Recall that under the TFA, a Member may lose competitiveness if other Members fully implement the agreement and it does not. Most trade agreements operate differently, in that a Member is likely to believe it will be better off if other Members fully implement the obligations and it does not.

“Third, some Members say it is folly to try to create categories of Members. This is an odd criticism, given that categories already exist. Today, there are three categories – first, those Members to which all obligations apply; second, the LDCs that enjoy enhanced flexibilities; and third, the majority of Members – around 90 – that claim entitlement to blanket S&D as self-declared developing countries.

“So the starting point is not categorization, but what to do with this last category of Members that represent significantly divergent economies. These Members simply do not fit the same mold or have the same needs. The more economically advanced of these countries are clearly capable of negotiating the flexibilities they need, rather than availing themselves of blanket S&D.

“As just one example, China’s global merchandise exports are 14 times greater than the combined exports of all 49 countries that the UN categorizes as LDCs. Its economy is more than 11 times the economies of all 49 LDCs combined. China’s per capita income is more than five times higher than that of the LDC average – a remarkable development since 1995, when China’s per capita income was within $900 of the LDC’s average.

“China even admitted at the General Council meeting in July that China is not in the same position as Benin or Liberia. It is helpful that China recognizes that it should not receive the same flexibilities as LDCs. But does that mean that China believes it is in the same position as Pakistan or Kenya? Because today, China claims the right to seek the same blanket S&D as these and other lower-income countries.

“In 1995, China’s per capita income was nearly 20 percent smaller than that of Kenya and more than 25 percent smaller than that of Pakistan. Today, China’s per capita income is nearly four times that of Kenya, and more than triple that of Pakistan.

“The failure to differentiate some of this organization’s most advanced, wealthy, or influential Members from LDCs and others diminishes the value of special and differential treatment to those who need it most. It also imperils our ability to reach new agreements that could provide greater opportunities for the WTO’s poorest Members who are least integrated into the global trading system.

“This issue, and the need for reform, is not going away. We look forward to continuing our engagement with Members.”

U.S. Mission to International Organizations in Geneva, WTO General Council Meeting, October 13, 2020, item 6, https://geneva.usmission.gov/2020/10/13/statement-by-ambassador-shea-at-the-wto-item-6/.

Statement by EU Ambassador Joao Aguiar Machado:

“PROCEDURES TO STRENGTHEN THE NEGOTIATING FUNCTION OF THE WTO – STATEMENT BY THEUNITED STATES

“The EU reconfirms that development is a central pillar of this organisation.

“The current distinction between developed and developing countries no longer reflects the reality of the rapid economic growth in some developing countries. We should therefore continue to work on special and differential treatment with a view to ensuring that flexibilities are made available to those members who actually need them to enable them to fully benefit from their membership to this Organisation.

“The European Union firmly believes that if this organisation is to prosper, special and differential treatment must become much more granular, in function of an individual Member’s demonstrated needs and capacities. Future differentiation should be designed in terms of specific individual country needs at the sectoral or activity level rather than calling for a block exemption of a large category of Members. Furthermore, the EU considers that each developing country’s need for SDT should be assessed on a case-by-case and evidence-based basis. The notable exception should be the LDCs who deserve particular treatment and who in any case have graduation mechanism.

“We are open to looking into special and differential treatment (SDT) provisions in future agreements, such as the ongoing negotiations on fisheries subsidies. We expect to have a discussion with Members as to what development concern is raised by the provisions under discussion and what flexibility is necessary in order to eventually allow the affected Members to fully implement the agreement. It is only where special and differential treatment responds to a specific need that it can be truly effective. In this context, we call on advanced WTO Members claiming developing country status to undertake full commitments in ongoing and future WTO negotiations. As mentioned previously, this should particularly be the case for members of the G20, which represent the world’s most important economies.

EU Statements by Ambassador Joao Aguiar Machado at the General Council meeting, 13 October 2020, https://eeas.europa.eu/delegations/world-trade-organization-wto/86935/eu-statements-ambassador-jo%C3%A3o-aguiar-machado-general-council-meeting-13-october-2020_en

Statement of China Amb. Zhang Xiangchen on item 6:

“Thank you, Mr. Chairman.

“I have repeated many times that, the debate on criteria to differentiate developing members is totally meaningless, as it is a systematic and directional mistake. Development is one of the key objectives of the WTO, which is also an important attraction for many countries choosing to join in this Organization. As WTO members, our focus on development should be on how to translate the concept of development into practice rather than anything else.

“To be specific, our collective efforts should be focused on how to effectively enforce the existing special and differential treatment (S&DT) provisions, and negotiate meaningful S&DT for the developing members, for example in the fisheries subsidy negotiations. For the existing S&DT provisions, there should be assurance that developing members in need could truly benefit from and fully integrate into the multilateral trading system.

“Mr. Chairman, we did a preliminary review on the current 155 S&DT provisions contained in the 16 WTO agreements, finding that at least 105 provisions are too vague to operate, accounting for 67.7%; for the remaining 50 provisions, at least half of them are related to transitional period or technical assistance. So, there are only 25 S&DT provisions in existing WTO agreements that are directly linked to individual Members’ rights and obligations, accounting for 16.1% of the total. It is therefore fair to say, the overwhelming majority of current S&DT provisions are only pie in the sky. There has never been an almighty blank check.

“It is a long-standing consensus to make S&DT provisions more “precise, effective, and operational”, which is also a commitment across WTO Agreements. That is the very reason why developing members requested to discuss more than 200 ‘Implementation Issues’ aiming at rebalancing the imbalanced rules from the Uruguay Round, and G90 put forward their written proposals. I fully endorse the statement made by the Ambassador of South Africa. Actually, recalling the past 20 years, G90 has been compromising by reducing their 88 original requests, to 25 in Nairobi, and to 10 in Buenos Aires, demonstrating their utmost sincerity and restraint. Such reduction is not because their request was wrong, rather it is because they do hope all Members could be engaged and thus show flexibility.
For the current 10 proposals, some are to fill the loopholes of existing provisions, such as proposing procedural arrangement to invoke Article 18 of GATT; some are to restore good practices in multilateral rules, such as treating subsidies granted by LDCs and developing members facing certain constraints as non-actionable subsidies according to Article 8 of ASCM; some are to allow developing members to have longer time-frames for transitions or comments, such as granting 180 days for members facing capacity constraints to make comments on SPS measures notified by developed members, whereas the current practice is 90 days; some are to urge developed members to honor their already-committed obligations, including technology transfer. G90 has made comprehensive responses both orally and in writing to all questions from members on their proposals. However, no progress has been made due to certain Members’ reluctance to engage.

“Mr. Chairman, the WTO is a rule-based organization. If we want to win back people’s confidence in this organization, the most fundamental thing is to treat existing rules and implement promised commitments, with respect and awe. To make existing S&DT provisions “more precise, effective and operational” is the clear commitment and unfinished mission of all members, which is also the most urgent task in the area of development. I call upon all members to show our sincerity by meaningfully engaging in the discussion of the G90 proposal and carefully responding to practical concerns of developing members, rather than wasting time and resources on no outcome debates.

“Mr. Chairman, since China was mentioned specifically, I would like to make a comment to respond. China standing against to the differentiation of developing members does not mean we want to enjoy the same favorable treatment as small economies and LDCs. What we want is only to safeguard our institutional right of S&DT.

“In practice, according to our accession agreement, China has 14 specific S&DT provisions among all 155 articles, accounting only for 9%. Among the 14, 6 provisions are traditionally “obligations” of the developed members, such as providing translations of documents in WTO official languages upon request, only 8 provisions are so called meaningful “rights”, such as relatively higher tariffs for certain goods.

“Even in such circumstances, China always shows restraint in invoking S&DT provisions. Obviously, China did not request to have the same S&DT as Benin, Liberia, Kenya or Pakistan, which was proclaimed by the United States. On the contrary, as a large trading nation, we recognize the responsibility China should bear. Our approach is to address different issues according to their specific situations and make contributions within our capability. As we did in the ITA expansion negotiations, China is the largest contributor among all the participants. We will continue to do that in the future.

“Thank you, Mr. Chairman.”

Source: Ministry of Commerce website, Permanent Mission of the People’s Republic of China to the World Trade Organization, Statement by H.E. Ambassador Zhang Xiangchen of China at the General Council Meeting (Item 6 and 7) October 13, 2020, http://wto2.mofcom.gov.cn/article/chinaviewpoins/202010/20201003007644.shtml.

The two documents that are the basis of agenda item 6 are embedded below.

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Market-Oriented Conditions

The U.S. with support from Japan and Brazil and with concurrence of the EU put forward again the importance for market-oriented conditions to the global trading system. Not surprisingly, China led the opposition. Below are the formal statements of the U.S., EU and China on agenda item 7, “Importance of Market-Oriented Conditions to the World Trading System, Joint Statement by Brazil, Japan, and the United States (WT/GC/W/803/Rev.1)

Statement of U.S. Amb. Dennis Shea:

“The United States, Brazil, and Japan have requested this agenda item to continue addressing the importance of market-oriented conditions to the global trading system.

“As a result of our work together, Brazil, Japan, and the United States have released a joint statement (WT/GC/W/803/REV.1). The statement reflects the importance we attach to market-oriented conditions for the world trading system and further elaborates the draft General Council decision circulated earlier this year.

“The joint Brazil-Japan-U.S. statement reflects our shared belief in the core principles of the WTO, to include that market-oriented conditions are fundamental to a free, fair, and mutually advantageous world trading system.

“We affirm a number of criteria that reflect the market-oriented conditions and disciplines to which our own enterprises are subject.

“And, we affirm that all Members’ enterprises should operate under these conditions to ensure a level playing field for our citizens, workers, and businesses.

“When Brazil and the United States first introduced the joint statement in July, we invited the support and engagement of Members who wish to become co-sponsors.

“We are pleased to report that, since that time, we have been able to hold consultations with a number of supportive Members. We were also pleased to welcome Japan’s decision to become a co-sponsor of the joint statement, and we are thankful for their efforts to engage with other Members on this important matter. The views that we have heard in small group discussions confirm that the joint statement reflects our shared values as WTO Members.

“We will continue to invite supportive Members to participate in one of our small groups as the discussions intensify.

“We see this discussion as necessary in the context of achieving meaningful WTO reform. To achieve such reform, WTO Members must continue moving toward – and not away from – more open, market-oriented policies and conditions.

“But as was made clear in recent G20 discussions, and reflected in the Riyadh Initiative Annex to the Trade Ministers’ Communique, not all WTO Members agree that “market-oriented policies” is a principle of the WTO.

“One Member in particular could not reaffirm the principles of the Marrakesh Declaration or even bring itself to reference the Declaration, and went on to dispute that its accession commitments tied it to any market-oriented policies.

“The usefulness of the recent G20 exercise was to clearly articulate this division in the Membership, and that some do not agree with the core values of the institution. This crystalizes for us the importance of reaffirming those core values.

“The Brazil-Japan-U.S. joint statement recalls that the WTO was established to promote Member economies’ participation in a world trading system ‘based on open, market-oriented policies and the commitments set out in the Uruguay Round Agreements and Decisions’.1

“The market-based reforms that GATT parties and acceding Members undertook during that process helped to ensure that their participation was indeed based on open, market-oriented conditions. These Members’ reform efforts demonstrated their commitment to an international trading system that depends on the operation of market-oriented conditions in each of our economies.

“Ensuring that market-oriented conditions exist for market participants is critical to realizing the benefits of the international trading system that come from our mutual commitment to these rules. This common foundation is necessary to ensure a level playing field for all Members.

“Some Members have argued that our efforts to affirm the importance of market-oriented conditions are a pretext for questioning Members’ choice of different economic models. They argue that the WTO provides no basis for discussing those choices.

“However, that is not the discussion we are proposing to have, and these Members may have misunderstood our purpose. What we have argued is that market-oriented conditions provide a level playing field and therefore are necessary conditions for fair trade. And, we have not heard any Member argue for a different position. Do any Members really believe that fair trade can result when special advantages are given to domestic entities under these conditions?

“Take, for example, the joint statement elements on financing and investment. Where a Member’s economic conditions generally ensure market-determined financing and investment decisions, it would mean that receipt of state-directed or politically-directed financing confers an
unfair advantage. This is not a question of debating different economic models, but rather reflects a shared understanding of fair play.

“To this end, the Brazil-Japan-U.S. joint statement affirms that Members’ enterprises should operate under market-oriented conditions and notes the elements that indicate and ensure those conditions for market participants. We encourage Members to review these elements in detail as our discussions advance.

“As we see it, the continued relevance of the WTO will depend on whether it can deliver on the promises of a world trading system based on open, market-oriented policies. The success of our reform efforts will depend on our ability to ensure the fundamental premise of free, fair, and mutually advantageous trade remains intact.

“1.Marrakesh Declaration of 15 April 1994, fifth preambular paragraph.”

U.S. Mission to International Organizations in Geneva, WTO General Council Meeting, October 13, 2020, item 7, https://geneva.usmission.gov/2020/10/13/statement-by-ambassador-shea-at-the-wto-item-7/.

Statement of EU Amb. Joao Aguiar Machado:

“IMPORTANCE OF MARKET-ORIENTED CONDITIONS TO THE WORLD TRADING SYSTEM – JOINTSTATEMENT BY BRAZIL, JAPAN, AND THE UNITED STATES

“The EU has repeatedly stated that market-oriented conditions are central to allowing a level-playing field. EU has also repeatedly expressed its concerns with non-market-oriented policies and practices that have resulted in distortions to the world trading system.

“The role of the WTO – and therefore the role of all of us, as Members – is to ensure that there are effective rules in place to eliminate these distortions and to ensure a level-playing field. There are clearly gaps in the WTO rulebook that do not enable us to do so. These gaps must be addressed through the negotiation of new or updated rules to address the issues raised in the statement of the United States and its co-sponsors.”

EU Statements by Ambassador Joao Aguiar Machado at the General Council meeting, 13 October 2020, https://eeas.europa.eu/delegations/world-trade-organization-wto/86935/eu-statements-ambassador-jo%C3%A3o-aguiar-machado-general-council-meeting-13-october-2020_en.

Statement of China Amb. Zhang Xiangchen on item 7:

“Thank you, Mr. Chairman,

“It is true that the multilateral trading system is built on the basis of market economy, and all the WTO rules reflect the prevailing practices of market economy and are binding on all Members. There is also no doubt that in the past 40years, China persistently deepens its reform and opening up to the world in the direction of market economy, which is exactly the basis of our accession to the WTO and the reason for our firm support for the multilateral trading system.

“However, the challenge we are facing is not what Marrakesh Declaration says, but what some Members are doing. By the way, with regard to Marrakesh Declaration, when we talk about open and market-oriented policies, we should not forget Article 5, which I quote “Ministers recall that the results of the negotiations embody provisions conferring differential and more favorable treatment for developing economies, including special attention to the particular situation of least-developed countries”. Those words are equally important. Unfortunately, now some Members have selective amnesia.

“I have no intention to repeat what I have said at the previous meeting that ‘common sense issues like market orientation do not need to be discussed at the General Council’, and simply dismiss the whole discussion. Albert Einstein, a scientist who had worked in Bern, once said, ‘Success is equal to hard work plus correct method plus less empty talk’. Chinese people have also believed in ’empty talks harm the country’ since ancient times. So, my questions are: what is the purpose of this proposal? what are the follow-up measures to be taken in the next step? What puzzles me even more is that, at this moment, if we cannot prevent a Member’s government from forcing foreign companies to sell their equities and technology to its national companies in any way, how can we sit here comfortably and discuss and tell the world what the market orientated conditions are?

“Mr. Chairman, we need to bear in mind that for more than three years, we have failed to take effective actions to stop unilateralist and protectionist measures that undermine the market rules from raging around the world, and this organization we work for has been widely criticized for falling short of such actions. We should feel ashamed. However, at least, we could still argue that it is not because we do not want to, but because we are not capable enough. But now, why should we talk empty about the market-oriented conditions to give more reasons for the international community to laugh at us, for being not only incapable, but also naive?

“When a principle or a system is broken, what we should do is to take concrete actions to try to fix it rather than verbally repeating the importance and correctness of the rules to show the innocence of someone who broke the rules.

“Ambassador Shea once said that ‘when the state puts its thumb – or even its fist – on the scale to distort competition and drive preferred outcomes to benefit certain domestic actors, that is unfair.’ I couldn’t agree with him more about that. But it is a common sense that if you ask others to do something, you should do it first.

“Let me give you some specific examples. When a country, on the grounds of national security, arbitrarily and frequently imposes tariffs on foreign goods or deprives foreign services of market access, that is unfair. When a country uses tariffs as a leverage to force its trading partners to concede in trade negotiations, the market is distorted. When a country blatantly violates fundamental trade rules and at the same time blocks the independent and neutral adjudications, the level playing field is gone. Instead of chanting the empty slogan of ‘market-oriented conditions’, it’s better for us to take concrete actions to address the above wrongful practices which undermine the fair competition and market-oriented conditions.

“Thank you, Mr. Chairman.”

Source: Ministry of Commerce website, Permanent Mission of the People’s Republic of China to the World Trade Organization, Statement by H.E. Ambassador Zhang Xiangchen of China at the General Council Meeting (Item 6 and 7) October 13, 2020, http://wto2.mofcom.gov.cn/article/chinaviewpoins/202010/20201003007644.shtml.

The joint document discussed is embedded below.

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Conclusion

The WTO is in crisis. None of its three core functions are operating as intended. The negotiating function is barely operational for various reasons including the move by many Members to try to achieve through litigation what they haven’t pursued or achieved through negotiations. The excesses of the Appellate Body has led to its temporary inoperability.

Moreover, the changing reality of competition internationally is that many WTO Members who have claimed developing country status have rapidly developed yet have not generally denounced special and differential treatment nor have they taken up greater liberalization commitments commensurate with their level of economic development. S&DT is treated as a perpetual right versus a temporary assist for Members with demonstrable needs. Self-selection is not the norm in other international organizations and makes no sense where not rooted in factual criteria which are reviewed over time with countries which advance accepting full obligations as appropriate.

The rise of countries like China which have many aspects of their economies which create distortions not covered by existing WTO rules calls out for leadership by those countries to work within the system to adopt new rules so that all trade distorting practices are addressable within the system. China appears intent of ensuring that the WTO is not able to address its acts, policies and practices which distort trade but which are not presently addressable by WTO agreements.

Similarly, the functioning of the WTO Committees in terms of notifications and review is problematic in at least many of the Committees. Without timely, complete and accurate information, trading partners are unable to understand how other Members are conducting themselves and where potential problems may exist. Subsidies notifications have been an area of particular concern but it is not the only area.

The recent General Council meeting showed the continuing deep divide of core reform concerns of the United States and others. A WTO incapable of reform will drift into irrelevance.

With the selection process of the next Director-General starting the last round of consultations on Monday, October 19, WTO Members not only need to decide who will lead the Secretariat but whether the WTO is important enough to have Members come together on the common vision of the organization and develop a willingness to find a road forward. The odds of success seem small at the moment.

WTO remaining candidates for the Director-General position — Questions and Answers from the July 15 and 16 meetings with the General Council

The third round of consultations with WTO Members on which of the two remaining candidates is preferred and hence may be the most likely to obtain consensus to become the next Director-General gets started next Monday, October 19 and ends on October 27.

Both Minister Yoo of Korea and Dr. Okonjo-Iweala of Nigeria are in the process of seeking support from WTO Members and have the full support of their governments which are making calls and sending letters to government officials in many of the WTO Members.

Minister Yoo is back in Europe seeking support in this third round (she and Dr. Okonjo-Iweala both received preferences from the EU in the second round). Press reports indicate that China is believed to be supporting Dr. Okonjo-Iweala, and Japan is understood to have concerns with both candidates. Thus, Minister Yoo is working to bolster support in other regions of the world to supplement what is assumed to be only partial support within Asia.

Dr. Okonjo-Iweala has received the support from Kenya after Kenya’s candidate did not advance to the third round. It is not clear whether she will receive support from all African Members of the WTO, although Kenya’s action is obviously an imortant positive for her.

So the next eleven days will be an active time as each of the remaining candidates seeks support in the final round of consultations from Members in different geographical areas as well as in different categories (developed, developing and least developed countries).

One source of information about the candidates that hasn’t been available to the public but is now available is the questions and answers provided to the General Council meetings with each candidate on July 15 (Dr. Okonjo-Iweala) and July16 (Minister Yoo). While there were three days of meetings with the General Council to accommodate the eight candidates, the two remaining candidates appeared during the first two days. The Minutes of the Meeting of the General Council, 15-17 July 2020 are contained in WT/GC/M/185 (31 August 2020). The procedures for each candidate were reviewed by the General Council Chairman David Walker (New Zealand).

“Each candidate would be invited to make a brief presentation lasting no more than fifteen minutes. That would be followed by a question-and-answer period of no more than one hour and fifteen minutes. During the last five minutes of the question-and-answer period, each candidate would have the opportunity to make a concluding statement if she or he so wished.” (page 1, para. 1.5).

Dr. Ngozi Okonjo-Iweala’s statement, questions asked, answers given and closing statement are in Annex 2 on pages 16-26. Minister Yoo Myung-hee’s statement, questions asked, answers given and closing statement are in Annex 5 on pages 51-60. The statements have previously been reviewed in my posts and are available on the WTO webpage.

Questions are picked randomly from Members who indicated an interest in asking questions. Dr. Okonjo-Iweala received questions during the meeting from nineteen Members with another thirty-nine Members having submitted their names to ask questions of her. Minister Yoo received questions during her meeting from seventeen Members with another forty-four Members having submitted their names to ask questions of her.

Dr. Okonjo-Iweala’s questions came from Afghanistan, Ireland, Kazakhstan, Ukraine, Norway, New Zealand, South Africa, European Union, Paraguay, Estonia, Australia, Latvia, Guatemala, Japan, Mongolia, Brazil, and Malaysia. The questions dealt with a range of issues including the following sample:

  • The negative impact of the COVID-19 pandemic on developing countries, LDCs and small vulnerable economies (SVEs).
  • How to ensure the benefits of open trade are distributed equitably?
  • What steps will you undertake to ensure a multilateral outcome at the next Ministerial?
  • Role of the Director-General (DG) in addressing lack of trust among Members.
  • Role of the DG in facilitating economic recovery and resilience.
  • What is necessary to restore functioning of a binding, two-step dispute settlement system in the WTO?
  • Do transparency and notification obligations need to be strengthened?
  • Focus in the first 100 days.
  • Your initial approach to the reform of the WTO.
  • What kind of approach and efforts would you like to make to advance the subject of e-commerce?
  • Role of plurilaterals in the WTO.
  • How to deal with the different views on special and differential treatment?
  • What are your plans relating to empowering women in the future WTO agenda?

Minister Yoo’s questions came from Guatemala, Belgium, United States, India, Germany, El Salvador, Chinese Taipei, Sri Lanka, Spain, Qatar, Lithuania, Gabon, Botswana, China, Barbados, Malaysia, and Zimbabwe. The questions dealt with a range of issues including the following sample:

  • Do you have any proposal on how to overcome the current crisis?
  • How do you plan to include measures to respect sustainable trade in an agenda focused on free trade and trade liberalization?
  • In looking at interim arbitration agreement of EU and other countries, is it appropriate for WTO resources to be used for activities that go beyond what is contemplated by the DSU?
  • How to convince Members that the multilateral trading system is still best way forward over bilateral and plurilateral trading arrangements?
  • Is there a gap in the WTO rulebook with regard to level playing field issues such as subsidies, economic action by the State and competition?
  • Do you have a multilateral solution to issues like e-commerce which are being tackled in the Joint Statement Initiatives that would be of interest to a large number of Members?
  • WTO is lagging behind in pursuing the development dimension; what is the path forward?
  • Role of DG re fighting protectionism and unilateral measures.
  • How to strike a balance between public stockholding and food security and the avoidance of unnecessary trade restrictions?
  • What is your view on the Doha Development Agenda?
  • What role the WTO can play to help drive Africa’s integration agenda?
  • What is the most important issue to achieve results?

Both candidates gave extensive answers to the questions posed while avoiding staking out a position on any issue that is highly controversial within the WTO. The answers are worth reading in their entirety. As a result the minutes of the meeting are embedded below.

WTGCM185

Each candidate in their summing up at the end of her meeting with the General Council circled back to their prepared statement. Their short summing up statements are copied below.

Dr. Ngozi Okonjo-Iweala (page 26):

“The nature of the questions that I have heard and the nature of the discussions give me hope. Members are clearly interested in a WTO that works, in a WTO that is different from what we have now, in a WTO that shows a different face to the world. I can see it and I can feel it. And if ever I am selected as Director-General, that gives me hope that there is a foundation to work on. Before coming in here, I have spoken to several Members, but I did not really know that. From listening to all of you and fielding your questions, I now know that there is a basis to work on. And I want to thank you for it.

“And I really want to end where I began. Trade is very important for a prosperous and a recovered world in the 21st century. The WTO is at the centre of this. A renewed WTO is a mission that we must all undertake, and we need every Member, regardless of economic size, to participate in this. If we want the world to know who we are as the WTO, we have to commit. Having listened to you, I hear the commitment and I want to thank you sincerely for that.”

Minister Yoo Myung-hee (page 60):

“I spent the past few days meeting with Ambassadors and delegates in Geneva. When I listen to your views, together with the questions today, it seems that there are diverse views and priorities of Members – whether it concerns the negotiations, how to pursue development objectives and special and differential treatment, the plurilaterals or restoring the Appellate Body function. So, how can we, a dynamic group of 164 Members with different social and economic environments, come to an agreement? This brings me back to my original message. We need to rebuild trust in the WTO. How? Amid these divergent and different views of Members, I would share the commitment and hope to restoring and revitalizing the WTO.

“This pandemic has forced us to reflect upon what is needed from the multilateral trading system. Despite the current challenges, I have a firm belief in the multilateral trading system and what we can actually achieve in the future if we put our heads together and also our hearts into it. We are embarking on a new journey towards a new chapter for the WTO. Building on the past twenty-five years, when we embark on the new journey for the next twenty-five years, I am ready to provide a new leadership that will harness all the frustrations but most importantly all the hopes from Members to make the WTO more relevant, resilient and responsive for the next twenty-five years and beyond.”

Conclusion

The process that WTO Members agreed on in 2002 to promote a process for finding a candidate for a new Director-General is cumbersome, time consuming and burdensome for candidates brave enough to put their hat in the ring. To date, the 2002 process has resulted in Members agreeing by consensus on a new Director-General (2005 and 2013). The process in 2020 has worked remarkably smoothly as well despite the deep divisions in the membership and the multiple-pronged crisis facing the organization.

The two finalists bring different backgrounds and skill sets to be considered by Members. Each started strong in the General Council meetings in mid-July as can be seen from their answers to questions posed, and each has continued to impress many Members in the subsequent months. There are political considerations in the selection process of the Director-General (just as in any major leadership position of an international organization). Both candidates are getting active support of their home governments. Fortunately, the membership has two qualified and very interesting candidates to consider. Whoever emerges as the candidate most likely to achieve consensus among the Members will still face the hurdle of whether any Member (or group of Members) will block the consensus. While that seems unlikely at the present time, one never knows.

Whoever becomes the next Director-General will face the daunting challenges of an organization with all three major functions not operating as needed, deep divisions among major players and among major groups. The lack of forward movement and the lack of trust among Members will weigh heavily on the new Director-General with a narrow window before the next Ministerial Conference likely to take place next June. It is remarkable that talented individuals with long histories of accomplishments would be willing to take on the problems the WTO is weighed down with at the present time. Hopefully, the next Director-General will be known in the next three weeks.

The effect of COVID-19 on the operation of WTO dispute settlement panels — Australia and others raise at the September 28 Dispute Settlement Body meeting

While most attention on the WTO’s dispute settlement system has focused on the operation of the Appellate Body, the timeliness of disputes is often driven by the actions of the panel. Under Article 12 of the Dispute Settlement Understanding (DSU), panels are to render their reports within six months (3 months in urgent matters) and no longer than nine months after the panel is composed. Few if any panels in recent years have remotely come close to meeting a nine month report deadline.

With the COVID-19 pandemic and the resulting limitations on in person meetings at the WTO and travel restrictions, the panel process has been further complicated. At the recent Dispute Settlement Body (DSB) meeting of September 28, Australia had put on the agenda the issue of “COVID-19 and dispute settlement”. Agenda item 9 of Proposed Agenda for the 28 September 2020 Dispute Settlement Body meeting, WT/DSB/W/670.

The subsequent press release on the DSB meeting contained the following description of the discussion of Australia’s issue on COVID-19 and dispute settlement.

Statement by Australia on COVID-19 and dispute settlement

“On behalf of 14 members (Australia; Brazil; Canada; Ecuador; Guatemala; Hong Kong, China; Mexico; New Zealand; Norway; Peru; Singapore; Switzerland; Ukraine; and the United Kingdom), Australia made a statement expressing concern about delays in dispute settlement proceedings resulting from the COVID-19 pandemic.

“While it is encouraging that DSB meetings have been able to resume at the WTO, ongoing restrictions affecting international travel and immigration place in question the feasibility of physical participation of panelists and capital-based delegates at meetings in Geneva into the future, Australia noted. During 2020, various governments, private sector organizations, and domestic and international adjudicative bodies worldwide have adapted their usual ways of working to continue operating in these difficult conditions; WTO members must ensure the dispute settlement system does the same.

“Australia urged panels to consider, in consultation with parties, flexible, alternative arrangements to ensure dispute proceedings can continue to progress in a timely manner despite the challenge of current restrictions. Australia recalled that Article 12.1 of the WTO’s Dispute Settlement Understanding (DSU) affords panels discretion in the working procedures they adopt in individual disputes, and that panels, after consulting in parties, may determine alternative arrangements that would best serve the satisfactory settlement of the matters. Some panels have already adjusted their procedures to hold substantive meetings virtually through video conferencing technology; Australia welcomed these developments but, to ensure the equitable operation of the dispute settlement system, WTO members must find solutions to enable all current and future matters to move forward in one way or another.

“Several delegations took the floor to comment. Japan said that while virtual meetings are an option, face to face meetings were preferable, and that each panel should consult with parties on how to proceed in order to strike an appropriate balance between prompt settlement of disputes and protection of due process. India said oral hearings were an intrinsic aspect of due process rights guaranteed by the DSU and that panels cannot truncate these rights without the agreement of the parties in a dispute.

“The United States encouraged each panel to consult with the parties on how to proceed, bearing in mind the views of the parties and the relevant provisions of the DSU. China said it was fundamental to provide certainty in dispute settlement in order to avoid any undue delay; it noted some panels have adopted flexible procedures as a response. The EU said that the discretion of panels is not completely unfettered and that they must ensure the prompt settlement of disputes, a principle that was valid for all disputes. Both South Africa and Nigeria (for the African Group) noted the asymmetrical impact of the COVID-19 pandemic on developing country members.”

WTO Dispute Settlement, 28 September 2020, Panel established to review China’s compliance with farm subsidy ruling, https://www.wto.org/english/news_e/news20_e/dsb_28sep20_e.htm.

The fact that Australia and others raised the issue at the DSB is certainly welcome, although the comments of Members at the DSB meeting indicates that there are both an array of problems facing different Members and arguably mixed motives for some in concerns about alternative approaches to in person meetings.

First, panels have regularly used the existence of the pandemic as a justification for a lengthy delay in the likely release of a panel report. See, e.g., India – Additional Duties on Certain Products from the United States, WT/DS585/4 (4 June 2020)(panel composed on 7 January 2020, because of pandemic, report to parties not before the second quarter of 2021); India – Measures Concerning Sugar and Sugarcane, WT/DS579/9; WT/DS580/9; WT/DS581/10 (29 April 2020)(complainants are Guatemala, Australia and Brazil)(panels composed on 28 October 2019, report to the parties not before the second quarter of 2021).

Thus, the issue of delay caused by the pandemic is an important one to address to maintain the timely operation of panels. While many developing countries may have greater challenges in terms of internal infrastructure for alternative means of handling disputes remotely, the claim of due process concerns at least for some Members is suspect particularly if the functioning of administrative and judicial activities in-country are being handled remotely/virtually as is true in many countries. For example, in the United States, arguments at federal courts are handled remotely, including at the highest court in the land. No Member should be allowed to delay panel proceedings on due process grounds where their own administrative and court proceedings are handled remotely during the pandemic. The Secretariat should seek transparency from Members on how their agencies and courts are handling matters during the pandemic.

Certainly, WTO Members should identify challenges they face to being able to engage in remote/virtual hearings if in person events are not possible. Where problems exist, the WTO Secretariat in conjunction with other organizations should look to see what technical assistance can be provided to permit active participation. Similarly, if issues affect the ability of panelists to handle matters remotely, there should be a review of options that may exist to facilitate panelists ability to participate. Again, the Secretariat should seek information from Members on challenges they face in participating in dispute proceedings and should have information on potential panelists on the same types of issues.

While the basic premises that panels should consult with parties is clearly the correct path to follow (contrary to the current practice of many panels and that reviewed in detail about the Appellate Body), there is the question of what happens when there is a difference among the parties as to how to proceed. The good offices of the Director-General can be used to possibly bridge the differences. Delay should only be permitted when the concerns of the party objecting to proceeding cannot be reasonably overcome.

It will be interesting to see if Members press for a prompt resolution to the concerns raised at the last DSB meeting, or if they simply let the problems continue to fester and delay the proper operation of panels.

World COVID-19 pandemic continues to spin out of control — more than 4.3 million new cases in last two weeks

After plateauing in terms of new cases during August, COVID-19 new cases are increasing rapidly for the world as a whole. For the period September 28-October 11, data compiled by the European Centre for Disease Prevention and Control show new cases in the world being 4,366,825 — an increase of 6.24% from the prior two weeks. Thee period September 14-27, dshow new cases i at 4,110,081. That compares to 3,780,469 new cases in the August 31-September 13 period and 3,558,360 for August 17-30, 3,624,548 for August 3-16 and 3,568,162 for the July 20-August 2 period. Total cases since the end of December 2019 are now at 37.268 million.

The United States which has more confirmed cases (7,718,947) than any other nation and more confirmed deaths from COVID-19 (214,377), saw the number of new cases increase over the last two weeks following the change in direction recorded in the prior two weeks after three two week periods where the U.S. saw a decline in new cases. The U.S. recorded the extraordinary number of 908,980 new cases during the fourteen day period July 20-August 2. That number declined to 740,721 during August 3-16 and further declined to 600,417 new cases in the August 17-30 period and was further reduced to 524,526 new cases in the August 31-September 13 period. The downtrend was reversed during September 14-27, when the number of new cases increased to 592,690 or a daily average of 42,335 cases. During September 28-October 11, the United States recorded 640,149 new cases (45,725/day). That number is likely to continue upward as recent days have seen the United States recording new cases at more than 50,000/day.

The United States had the second largest number of new cases, following only India whose number of new cases has started a slow descent from its peak of 1,238,176 new cases two weeks ago, with 1,061,274 new cases recorded during September 28-October 11. India is the only country to have recorded more than one million cases in a two week period.

Brazil maintains its hold on third place though its new cases are falling since July 20-August 2 (633,017 new cases) to 609,219 new cases during August 3-16, 529,057 new cases during August 17-30, 469,534 new cases during August 31-September 13, 402,304 new cases during September 14-27 and 364,646 during September 28-October 11.

India, the United States and Brazil accounted for 47.31% of the new global cases during the last two weeks, down from 54.33% during September 14-27 and down from 58.34% in the August 31-September 13 period. The three countries account for prior two weeks) and account for 53.25% of all cases confirmed since late December 2019.

The United States with 4.3% of global population has accounted for 20.70% of total confirmed cases since December 2019 — 4.81 times the share of total cases our population would justify. With the increase in the most recent two weeks, the U.S. was 14.66% of the total new cases during the last two weeks (Sept. 28-October 11) or 3.41 times the U.S. share of global population. The U.S. also accounts for 19.97% of total deaths or 4.64 times the U.S. share of global population.

Changing pattern of growth in cases, developing world still experiencing significant volume of new cases

As reviewed above the United States is seeing a rising number of cases over the last four weeks, a trend that unfortunately seems certain to continue in the near future.

Many developed countries have seen a second wave of cases, as will be reviewed below, which has increased the percent of global new cases occurring in developed countries.

Still a very large part of the new cases are in developing countries as has been true for the last few months. While India and Brazil had by far the largest number of new cases from developing countries, they were followed by Argentina (181,412), Colombia (96,709), Mexico (87,897), Indonesia (57,613), Iraq (54,155), Iran (53,167), Peru (45,496), the Philippines (35,670), Morocco (31,157), Chile (23,616), South Africa (21,398), Turkey (21,065), Bangladesh (19,200) and then dozens of other countries with smaller numbers of new cases. Of the listed developing countries, only Argentina, Mexico, Indonesia, Iran, Morocco, Chile and South Africa saw increases from the September 14-27 period.

Continued developed country resurgence in new cases

With the reopening of some international travel and with the end of the summer holiday season and the start of cooler weather in fall for northern hemisphere countries, there has been a noticeable surge of new cases in many developed countries, particularly in Western Europe where is it generally described as the coming of a second wave of COVID-19 cases.

France’s spike continued with 191,427 new cases in September 28-October 11 up from 153,535 in the prior two weeks. France’s most recent numbers are 3.36 times the number recorded in August 17-30 period (57,009 new cases) and 1.89 times the number in the August 31-September 13 period, 101,381.

Spain’s spike seems to have plateaued and started a decline in the September 28-Ocotber 11 period with 144,631 new cases. For August 17-30, Spain saw 96,473 new cases. The August 31-September 13 period saw a further large increase for Spain to 127,040 cases. For the period from September 14-27, Spain’s numbers further increased to 150,155.

The United Kingdom is facing major challenges as the last two weeks saw new cases more than double to 161,567 from 64,103 new cases in September 14-27 and just 32,422 new cases in the August 31-September 13 period.

The Netherlands more than doubled its number of new cases during September 28-Ocotber 11 to 59,561 from 27,584 new cases during September 14-27 and just 11,374 during August 31-September 13.

Germany showed a significant increase in the most recent two weeks to 38,724 from 24,712 the prior two weeks and 17,657 new cases in the period from the end of August to mid September.

Czechia which spiked following summer vacations saw its number of new cases during September 28-October 11 grow to 46,080 from 23,893 the prior two weeks and from 11,307 in the August 31 – September 13 period.

Italy jumped to 41,390 new cases during September 28-October up from 21,807 during September 14-27.

Belgium added 40,791 in the September 28-October 11 period more than doubling the numbers from September 14-27 of 17,797.

Romania added 31,168 in the last two weeks up from 18,849 the prior two week.

The Russian Federation had a large spike in the last two week up to 141,513 from 86,209 in the September 14-27 period.

Ukraine saw 60,762 new cases in September 28-October 11, up from 43,645 new cases the prior two weeks.

Canada has seen a second wave in the last four weeks, with new cases in August 31-September 13 time period being 8,468, followed by 15,530 during September 14-27 and 26,466 during September 28-October 11.

Israel’s second wave which reached 73,883 new cases during September 14-27, saw a decline to 62,903 new cases in the September 28-October 11 period.

Deaths/100,000 population

The United States has the largest number of deaths of any country to date (214,377) and had the second largest number of deaths in the last two weeks (9,880) behind only India (13,381). Both the U.S. and India saw the number of new deaths decline from the prior two weeks. The countries with the highest number of deaths per 100,000 population for the last two weeks were the following: Argentina (17.95), Israel (5.87), Mexico (5.80), Ecuador (5.27), Costa Rica (4.91), Colombia (4.70), Moldova (4.43), Brazil (4.17), Bolivia (4.03), Panama (3.74), Spain (3.62), Chile (3.59), Iran (3.50), Romania (3.46), Peru (3.33), and the United States (3.00). All other countries (including all other developed countries) had lower rates of death per 100,000 population. For all countries, the death rate over the last two weeks was 1.03 deaths/100,000 population. So the U.S.’s death rate over the last two weeks was 2.91 times the global average and was much higher than many large and/or developed countries. China’s number was so low, it was 0.00 people/100,000 population; France was 1.47, Germany 0.19, India 1.01, Italy 0.53, Japan 0.06, South Korea 0.06, Singapore 0.00, United Kingdom 1.18, Taiwan 0.00, Canada 0.86, Australia 0.11, New Zealand 0.00.

If looking at the entire period since the end of December 2019 through October 11, the average number of deaths for all countries per 100,000 of population has been 14.14 deaths. The nine countries (of 86 which account for over 98% of total deaths) with the highest death rates/100,000 for the full period are: Peru (102.19), Belgium (88.82), Bolivia (72.02), Brazil (71.17), Spain (70.16), Ecuador (70.15), Chile (70.03), Mexico (65.56), the United States (65.15). With the exception of Bolivia, Brazil, Chile, Ecuador, Mexico Peru and the United States, each of the other top countries overall has shown a drastic reduction since their peaks in April and as reflected in the experience in the last two weeks (the European countries were typically less than 1 death per 100,000). The United States death rate has been 4.61 times the global rate and many times higher than nearly all other developed countries and most developing countries. Consider the following examples: China, where the virus was first found, has a death per 100,000 population of just 0.33 people. India’s data show 7.93 per 100,000 population; Germany has 11.58; Japan has 1.28; Korea is just 0.84; Canada is 25.62; Switzerland is 20.98; Poland is 7.83; Ukraine is 11.11; Norway is 5.16; Australia is 3.56; New Zealand is 0.52.

Conclusion

The world in the first nine and a half months of 2020 has struggled to get the COVID-19 pandemic under control. While many countries in Europe and some in Asia and the major countries in Oceania had greatly reduced the number of new cases over time, there has been a significant resurgence in many of these countries (particularly in Europe) as their economies reopen, travel restrictions are eased, schools reopen in many countries and fall comes to the northern hemisphere. But the number of new cases continues to rage in much of the Americas (and there is a new surge in Canada and the start of resurgence in the U.S.), in parts of Asia (in particular India) and in limited parts of Africa. A recent WTO Secretariat information paper showed that there has been a reduction in shortages of many medical goods needed to handle the COVID-19 pandemic which is obviously good news, although as the global total of new cases continues to rise, there may yet be additional challenges in terms of supply. See 18 September 2020, Information Note, How WTO Members Have Used Trade Measures to Expedite Access to COVID-19 Critical Medical Goods and Services, https://www.wto.org/english/tratop_e/covid19_e/services_report_16092020_e.pdf.

In the northern hemisphere, countries are going into fall where there will likely be greater time spent indoors which could result in a significant spike in cases which could further stretch the global ability to respond.

Moreover, in many countries, stimulus packages have run their course such that large scale increases in unemployment could happen in the coming weeks. This has been the case in the United States even though the President and many of those closest to him have tested positive for COVID-19. Efforts at a new stimulus package have stalled despite a House which passed a package back in May and a second package in recent weeks. It remains unclear if anything will happen before the national elections on November 3. The result has been tens of thousands of employees furloughed in the airline industry, at major employers like Disney and will likely be the case for many state and local government employees with the start of the fiscal year in October and the obligation for most states to run a balanced budget. The failure of a new stimulus initiative will significantly increase the braking action on the economy from the pandemic in the fourth quarter of 2020 in the United States.

Similarly as countries in much of the developed world take new restrictive actions to address the second wave of cases, there will likely be significant ongoing effects to the global economy and international trade.

The last four weeks (beginning on September 14 through October 11) have seen the global number of new cases continue to grow after six weeks in July and most of August of what appeared to be a peak or plateau. For the reasons reviewed above, October – December are likely to see continued growth in the global number of new cases.

The progress on developing safe and effective vaccines is encouraging and has been sped by the willingness of major economies like the U.S. and the EU to fund manufacturing ahead of actual approval of the promising vaccines. Still the timing of outcomes remains unknown though anticipated by the end of 2020 and first part of 2021. China has been distributing one of its vaccines to parts of its population in advance of formal clearance of stage three trials. The Russians have been lining up customers for their vaccine even though the stage three trials are only underway and the results will lag the initial rollout of the vaccine. For other countries (the U.S., European Union, Japan, etc.) the rollout of vaccines if approved will take time to get large parts of the global population vaccinated. It is unclear what the global capacity will be to produce vaccines proven to be safe and effective, although reports suggest a likely significant shortfall despite government assistance in the global supplies that will be available in 2021. This uncertainty about likely capacities, plus the large purchases made by major western governments (U.S., EU, U.K., Japan), will likely place a large cloud over much if not all of 2021 in terms of distribution of vaccines even in an optimistic scenario.

With the world collectively unable to get the pandemic under control in many parts of the world, with likely increases this fall and winter, with fatigue in many countries on the actions needed to slow the spread of the virus and, in at least some countries, the mixed messages from government on the correct actions needed to gain control, the rest of 2020 will be very challenging. With the global death count now over one million, there have already been tens of thousand and likely hundreds of thousands of deaths that didn’t need to occur. The prospect of tens of thousands or even hundreds of thousands more dying needlessly hang over the global community as an inexplicable failure of at least some governments to protect their citizens and to cooperate for a comprehensive global response.

In last two weeks global COVID-19 cases increased by more than 4.1 million as virus continues to spin out of control

After plateauing in terms of new cases during August, COVID-19 new cases are increasing rapidly for the world as a whole. For the period September 14-27, data compiled by the European Centre for Disease Prevention and Control show new cases in the world topping four million for the first time — 4,110,081. That compares to 3,780,469 new cases in the August 31-September 13 period and 3,558,360 for August 17-30, 3,624,548 for August 3-16 and 3,568,162 for the July 20-August 2 period. Total cases since the end of December 2019 are now above 32.9 million.

The United States which has more confirmed cases (7,078,798) than any other nation and more confirmed deaths from COVID-19 (204,497), saw the number of new cases increase over the last two weeks after three two week periods where the U.S. saw a decline in new cases. The U.S. recorded the extraordinary number of 908,980 new cases during the fourteen day period July 20-August 2. That number declined to 740,721 during August 3-16 and further declined to 600,417 new cases in the August 17-30 period and was further reduced to 524,526 new cases in the August 31-September 13 period. The downtrend was reversed these past two week, when the number of new cases increased to 592,690 or a daily average of 42,335 cases. The United States had the second largest number of new cases, following only India whose number of new cases is continuing to increase, and were 1,238,176 in the last two weeks, slightly higher than the 1,211,623 new cases reported in the August 31-September 13 period. India is the only country to have recorded more than one million cases in a two week period and appears to have plateaued at a rate of more than 88,000/day over the last month.

Brazil maintains its hold on third place though its new cases are falling since July 20-August 2 (633,017 new cases) to 609,219 new cases during August 3-16, 529,057 new cases during August 17-30, 469,534 new cases during August 31-September 13 and down to 402,304 new cases during September 14-27.

India, the United States and Brazil accounted for 54.33% of the new global cases during the last two weeks (down from 58.34% in the prior two weeks) and account for 54.04% of all cases confirmed since late December 2019 (up from 54.01% through two weeks ago).

The United States with 4.3% of global population has accounted for 21.51% of total confirmed cases since December 2019 — five times the share of total cases our population would justify. With the increase in the most recent two week after six weeks of declines, the U.S. was 14.42% of the total (up from 13.87% of new cases during August 17-30) or 3.35 times the U.S. share of global population. The U.S. also accounts for 20.55% of total deaths or 4.78 times the U.S. share of total population.

Continued growth of cases in the developing world

With the number of new cases in the United States declining over most of the last two months, the trend of new cases being focused on the developing world has shifted with a resurgence in Europe following the summer vacation period with a renewal of at least some international travel. While India and Brazil had by far the largest number of new cases from developing countries, they were followed by Argentina (166,781), Colombia (97,074), Peru (77,301), Iraq (73,883), Mexico (62,458), Iraq (59,191), Indonesia (56,582), the Philippines (43,393), Iran (43,146), Turkey (23,331), Chile (23,313), Bangladesh (21,829), South Africa (21,284) and then dozens of other countries with smaller numbers of new cases. Of the listed developing countries, only India, Argentina, Iraq, Indonesia, Iran and Turkey saw increases from the August 31-September 13 period.

Developed country resurgence in new cases

With the reopening of some international travel and with the end of the summer holiday season, there has been a noticeable surge of new cases in a number of developed countries, particularly in Western Europe where is it generally described as the coming of a second wave of COVID-19 cases. France overtook Spain for the most new cases during September 14-27 with a total of 153,535. France nearly doubled the large number it had experienced in the August 17-30 period (57,009 new cases) in the August 31-September 13 period with new cases reaching 101,381. Spain continues to show large increases for a developed country that had gotten the COVID-19 spread under control until recently. For August 17-30, Spain saw an additional 96,473 new cases. The August 31-September 13 period saw a further large increase for Spain to 127,040 cases. For the period from September 14-27, Spain’s numbers further increased to 150,155. The United Kingdom nearly doubled the number of new cases to 64,103 up from 32,422 new cases in the August 31-September 13 period. The Netherlands more than doubled its number of new cases during September 14-27 from the prior two week period going to 27,584 new cases from 11,374. Germany showed a significant increase in the most recent two weeks to 24,712 from the prior two weeks (17,657 new cases; two weeks before that 17,538 new cases). Czechia which spiked following summer vacations saw its number of new cases grow to 23,893 from 11,307 in the August 31 – September period; Italy added 21,807 (up from 19,444 the prior two weeks); Romania added 18,849 (up from 16,553 in the prior two weeks). Other countries in Europe (Russia (86,209 new cases), Ukraine (43,645 new cases) and Hungary (12,189 new cases)) as well as Israel (73,883 new cases) also saw significant additional new cases.

Deaths/100,000 population

The United States has the largest number of deaths of any country to date (204,497) and had the second largest number of deaths in the last two weeks (10,796) behind only India (15,917), though the U.S. number of new deaths declined slightly from the prior two weeks while India’s number of new deaths continued to climb. The countries with the highest number of deaths per 100,000 population for the last two weeks were the following: Argentina (9.68), Colombia (5.09), Brazil (4.83), Peru (4.76), Costa Rica (4.72), Bolivia (4.61), Mexico (4.42), Panama (3.96), Chile (3.67), Puerto Rico (3.65), Israel (3.97) and the United States (3.28). All other countries (including all other developed countries) had lower rates of death per 100,000 population. For all countries, the death rate over the last two weeks was 0.98 deaths/100,000 population. So the U.S.’s death rate over the last two weeks was 3.35 times the global average and was much higher than many large and/or developed countries. China’s number was so low, it was 0.00 people/100,000 population; France was 1.18, Germany 0.13, India 1.16, Italy 0.36, Japan 0.08, South Korea 0.08, Singapore 0.00, United Kingdom 0.52, Spain 3.16, Taiwan 0.00, Canada 0.25, Australia 0.27, New Zealand 0.02.

If looking at the entire period since the end of December 2019 through September 13, the average number of deaths for all countries per 100,000 of population has been 13.10 deaths. The nine countries (of 86 which account for over 98% of total deaths) with the highest death rates/100,000 for the full period are: Peru (98.87), Belgium (87.07), Bolivia (67.79), Spain (66.54), Chile (66.44), Ecuador (64.89), United Kingdom (62.97), Brazil (67.00), the United States (62.14). With the exception of Bolivia, Brazil, Chile, Ecuador, Peru and the United States, each of the other top countries overall has shown a drastic reduction since their peaks in April and as reflected in the experience in the last two weeks (the European countries were typically less than 1 death per 100,000). The United States death rate has been 4.74 times the global rate and many times higher many other developed countries and most developing countries. Consider the following examples: China, where the virus was first found, has a death per 100,000 population of just 0.33 people. India’s data show 6.92; Germany has 11.39; Japan has 1.22; Korea is just 0.78; Canada is 24.76; Switzerland is 20.81; Poland is 6.38; Ukraine is 8.87; Norway is 5.07; Australia is 3.45; New Zealand is 0.52.

Conclusion

The world in the first nine months of 2020 has struggled to get the COVID-19 pandemic under control. While many countries in Europe and some in Asia and the major countries in Oceania have greatly reduced the number of new cases over time, there has been a significant resurgence in many of these countries (particularly in Europe) as their economies reopen, travel restrictions are eased and as schools reopen in many countries. But the number of new cases continues to rage in much of the Americas (other than Canada), in parts of Asia (in particular India) and in limited parts of Africa. A recent WTO Secretariat information paper showed that there has been a reduction in shortages of many medical goods needed to handle the COVID-19 pandemic which is obviously good news, although as the global total of new cases continues to rise, there may yet be additional challenges in terms of supply. See 18 September 2020, Information Note, How WTO Members Have Used Trade Measures to Expedite Access to COVID-19 Critical Medical Goods and Services, https://www.wto.org/english/tratop_e/covid19_e/services_report_16092020_e.pdf.

In the northern hemisphere, countries are going into fall where there will likely be greater time spent indoors which could result in a significant spike in cases which could further stretch the global ability to respond.

Moreover, in many countries, stimulus packages have run their course such that large scale increases in unemployment could happen in the coming weeks. This is obviously the case in the United States in the airline industry (but also elsewhere) and will likely be the case for many state and local government employees with the start of the fiscal year in October and the obligation for most states to run a balanced budget. See, e.g., Bloomberg Businessweek, September 23, 2020, Airlines Face Desolate Future as Attempts to Reopen Crumble, https://www.bloomberg.com/news/articles/2020-09-23/coronavirus-pandemic-airlines-face-empty-future-as-crisis-continues?utm_campaign=news&utm_medium=bd&utm_source=applenews. The failure of a new stimulus initiative will significantly increase the braking action on the economy from the pandemic in the fourth quarter of 2020.

The September 14-27 period has seen the global number of new cases continue to grow after six weeks in July and most of August of what appeared to be a peak or plateau. October – December are likely to see continued growth in the global number of new cases.

The progress on developing safe and effective vaccines is encouraging and has been sped by the willingness of major economies like the U.S. and the EU to fund manufacturing ahead of actual approval of the promising vaccines. Still the results of the phase three trials are not yet in and as a temporary delay by AstraZeneca with its phase three trial showed, the timing of outcomes remains unknown though anticipated by the end of 2020 and first part of 2021. China has been distributing one of its vaccines to parts of its population in advance of formal clearance of stage three trials. The Russians have been lining up customers for their vaccine even though the stage three trials are only underway and the results will lag the initial rollout of the vaccine. For other countries (the U.S., European Union, Japan, etc.) the rollout of vaccines if approved will take time to get large parts of the global population vaccinated. It is unclear what the global capacity will be to produce vaccines proven to be safe and effective, although reports suggest a likely significant shortfall despite government assistance in the global supplies that will be available in 2021. This uncertainty about likely capacities, plus the large purchases made by major western governments (U.S., EU, U.K., Japan), will likely place a large cloud over much if not all of 2021 in terms of distribution of vaccines even in an optimistic scenario.

The ride is likely to get more complicated going forward with the world collectively unable to get the pandemic under control in many parts of the world, with likely increases this fall and winter, with fatigue in many countries on the actions needed to slow the spread of the virus and, in at least some countries, the mixed messages from government on the correct actions needed to gain control. With the global death count nearing one million, there have already been tens of thousand and likely hundreds of thousands of deaths that didn’t need to occur. The prospect of tens of thousands or even hundreds of thousands more dying needlessly hang over the global community. 2020 has proven to be a very challenging year. Time will tell if the challenge is confined to this year or continues to inflict substantial costs in 2021 and beyond.

COVID-19 cases increase in last two weeks, setting new global record for new cases in fourteen day period.

In my last two posts of August 30 and August 16, I suggested that it appeared that the global spread of COVID-19 may have peaked or plateauted. See August 30, 2020, The global number of confirmed COVID-19 cases passes 25 million with more than 843,000 deaths – increased race to lock-up vaccine supplies, https://currentthoughtsontrade.com/2020/08/30/the-global-number-of-confirmed-covid-19-cases-passes-25-million-with-more-than-843000-deaths-increased-race-to-lock-up-vaccine-supplies/; August 16, 2020, Is the world at the peak of the COVID-19 pandemic?  Last two weeks suggest a peaking of the growth of global infections may be at hand, https://currentthoughtsontrade.com/2020/08/16/is-the-world-at-the-peak-of-the-covid-19-pandemic-last-two-weeks-suggest-a-peaking-of-the-growth-of-global-infections-may-be-at-hand/. However, data compiled by the European Centre for Disease Prevention and Control for the August 31-September 13 period shows a return to growth in new cases. The latest two weeks show total new cases of 3,780,469. This compares to the total new cases for the August 17-30 time period of 3,558,360, 3,624,548 for August 3-16 and 3,568,162 for the July 20-August 2 period. Total cases since the end of December 2019 are now just shy of 29 million.

The United States which has more confirmed cases (6,486,108) than any other nation and more confirmed deaths from COVID-19 (193,701), had a third two-week decline in new cases. The U.S. recorded the extraordinary number of 908,980 new cases during the fourteen day period July 20-August 2. That number declined to 740,721 during August 3-16 and further declined to 600,417 new cases in the August 17-30 period and was further reduced to 524,526 new cases in the August 31-September 13 period. The most recent period is still 28.21% higher than what had been the prior peak during April 13-26 of 409,102 new cases. Even with the significant reduction in new cases in the August 31-September 13 period, the United States had the second largest number of new cases, following only India whose number of new cases is continuing to rapidly increase, and were 1,211,623 in the last two weeks (the first country to have more than one million cases in a two week period). Brazil maintains its hold on third place though its new cases are also falling since July 20-August 2 (633,017 new cases) to 609,219 new cases during August 3-16, 529,057 new cases during August 17-30 and 469,534 new cases during August 31-September 13. India, the United States and Brazil accounted for an extraordinary 58.34% of the new global cases during the last two weeks and account for 54.01% of all cases confirmed since late December 2019. The United States with 4.3% of global population has accounted for 22.52% of total confirmed cases since December 2019. With the continued declining numbers in the last two weeks while the overall total of new cases grew, the U.S. was still 13.87% of new cases during August 17-30 or roughly three times the U.S. share of global population.

Continued growth of cases in the developing world

With the number of new cases in the United States declining, the trend to new cases being focused on the developing world continues although there has been some significant resurgence of new cases in a number of developed countries during the summer vacation period with a renewal of at least some international travel. While India and Brazil had by far the largest number of new cases from developing countries, they were followed by Argentina (143,681), Colombia (109,050), Peru (83,397), Mexico (72,261), Iraq (59,332), Indonesia (45,562), the Philippines (44,732), South Africa (25,663) and then dozens of other countries with smaller numbers of new cases.

Developed country resurgence in new cases

With the reopening of some international travel and with the end of the summer holiday season, there has been a noticeable surge of new cases in a number of developed countries, particularly in Western Europe. Spain showed the largest increase of a developed country that had gotten the COVID-19 spread under control until recently. For August 17-30, Spain saw an additional 96,473 new cases. The August 31-September 13 period saw a further large increase for Spain to 127,040 cases. France nearly doubled the large number it had experienced in the August 17-30 period (57,009 new cases) in the latest two weeks, with new cases reaching 101,381. Germany was up slightly from the prior two weeks (17,538 new cases) at 17,657 new cases. Italy added 19,444; Romania added 16,553; the United Kingdom added 32,422; the Netherlands increased by 11,374; Czechia increased by 11,307. Other countries in Europe (Russia and Ukraine) as well as Israel also saw significant additional new cases.

Deaths/100,000 population

The United States has the largest number of deaths of any country to date (193,701) and had the second largest number of deaths in the last two weeks (10,922) behind only India (15,088), though the U.S. number of new deaths declined from the prior two weeks while India’s number of new deaths continued to climb. The countries with the highest number of deaths per 100,000 population for the last two weeks were the following: Ecuador (24.91), Bolivia (20.49), Colombia (7.29), Argentina (6.48), Peru (6.11), Mexico (5.32), Brazil (5.09), Panama (4.05), Chile (3.77), Puerto Rico (3.65), Costa Rica (3.41) and the United States (3.32). All other countries (including all other developed countries) had lower rates of death per 100,000 population. For all countries, the death rate over the last two weeks was 1.02 deaths/100,000 population in the last two weeks.

If looking at the entire period since the end of December 2019 through September 13, the average number of deaths for all countries per 100,000 of population has been 12.13 deaths. The ten countries (of 71 which account for 98% of total deaths) with the highest death rates/100,000 for the full period are: Peru (94.10), Belgium (86.59), Bolivia (63.38), Spain (63.38), Chile (62.76), Ecuador (62.53), United Kingdom (62.45), Brazil (62.17), Italy (58.98), the United States (58.86). With the exception of Bolivia, Brazil, Chile, Ecuador, Peru and the United States, each of the other top countries overall has shown a drastic reduction since their peaks in April and as reflected in the experience in the last two weeks (the European countries were typically less than 1 death per 100,000).

Conclusion

The world in the first eight months of 2020 has struggled to get the COVID-19 pandemic under control. While many countries in Europe and some in Asia and the major countries in Oceania have greatly reduced the number of new cases over time, there has been some resurgence in many of these countries as their economies reopen, travel restrictions are eased and as schools reopen in many countries. But the number of new cases continues to rage in much of the Americas (other than Canada), in parts of Asia (in particular India) and in parts of Africa. Since most new cases are now in developing countries, it is unclear how many of these countries will be able to handle a significant number of cases, whether their healthcare infrastructure will be overwhelmed and whether they will have the medical goods needed to handle the cases safely.

The August 31-September 13 period has seen the global number of new cases growing after six weeks of what appeared to be a peak or plateau. That is not good news for the world as in many parts of the world schools are reopening and fall and winter will bring greater time indoors likely resulting in continued growth in new cases.

The progress on developing safe and effective vaccines is encouraging and has been sped by the willingness of major economies like the U.S. and the EU to fund manufacturing ahead of actual approval of the promising vaccines. Still the results of the phase three trials are not yet in and as a temporary delay by AstraZeneca with its phase three trial shows, the timing of outcomes remains unknown though anticipated by the end of 2020 and first part of 2021. Still the rollout of vaccines if approved will take time to get large parts of the global population vaccinated. This will likely place a large cloud over much if not all of 2021 even in an optimistic scenario.

Whether the world will rise to the challenges in terms of improving access to medical goods, to maintaining an open trading system, to aiding not only national populations but ensuring assistance to the most vulnerable, and when vaccines are approved to ensuring an equitable and affordable access by all are open questions. If the world is not able to collaborate on these issues, the 2020s will be a lost decade and will threaten global security.

The global number of confirmed COVID-19 cases passes 25 million with more than 843,000 deaths — increased race to lock up vaccine supplies

In my post of August 16, I suggested that it appeared that the global spread of COVID-19 may have peaked in the August 3-16 period. See August 16, 2020, Is the world at the peak of the COVID-19 pandemic?  Last two weeks suggest a peaking of the growth of global infections may be at hand, https://currentthoughtsontrade.com/2020/08/16/is-the-world-at-the-peak-of-the-covid-19-pandemic-last-two-weeks-suggest-a-peaking-of-the-growth-of-global-infections-may-be-at-hand/. Data compiled by the European Centre for Disease Prevention and Control show total new cases for the August 17-30 time period to be 3,558,360 compared to 3,624,548 for August 3-16 and 3,568,162 for the July 20-August 2 period. Thus, global new cases seem to have peaked or to have reached a plateau.

The United States which has more confirmed cases than any other nation and more confirmed deaths from COVID-19, had a second two-week decline in new cases. The U.S. recorded the extraordinary number of 908,980 new cases during the fourteen day period July 20-August 2. That number declined to 740,721 during August 3-16 and further declined to 600,417 new cases in the August 17-30 period. The most recent period is still 46.76% higher than what had been the prior peak during April 13-26 of 409,102 new cases. Even with the significant reduction in new cases in the August 17-30 period, the United States had the second largest number of new cases, following only India whose number of new cases is continuing to rise and were 953,051 in the last two weeks. Brazil maintains its hold on third place though its new cases are also falling since July 20-August 2 (633,017 new cases) to 609,219 new cases during August 3-16 and to 529,057 new cases during August 17-30. India, the United States and Brazil accounted for an extraordinary 58.5% of the new global cases during the last two weeks and account for 53.39% of all cases confirmed since late December 2019. The United States with 4.3% of global population has accounted for 23.82% of total confirmed cases since December 2019. With the declining numbers in the last two weeks, the U.S. was still 16.87% of new cases during August 17-30 or roughly four times the U.S. share of global population.

Continued growth of cases in the developing world

With the number of new cases in the United States declining, the trend to new cases being focused on the developing world continues although there has been some significant resurgence of new cases in a number of developed countries during the summer vacation period with a renewal of at least some international travel. While India and Brazil had by far the largest number of new cases from developing countries, they were followed by Colombia (143,225), Peru (113,632), Argentina (109,585), Mexico (73,998), Iraq (54,863), the Philippines (55,213), South Africa (38,898) and then dozens of other countries with smaller numbers of new cases.

Spain showed the largest increase of a developed country that had gotten the COVID-19 spread under control until recently. For August 17-30, Spain saw an additional 96,473 new cases. France added 57,009 new cases; Germany saw 17,538 new cases. Other countries in Europe as well as Japan and Korea also saw significant additional new cases.

Deaths/100,000 population

The United States has the largest number of deaths of any country to date (182,779) and had the second largest number of deaths in the last two weeks (13,298) behind only India (13,518). The countries with the highest number of deaths per 100,000 population were the following: Colombia (8.45), Bolivia (8.12), Peru (7.79), Brazil (6.27), Argentina (6.12), Mexico (5.70), Panama (5.58),Chile (4.15), United States (4.04). All other countries (including all other developed countries) had lower rates of death per 100,000 population. For all countries, the death rate over the last two weeks was 1.01 deaths/100,000 population.

If looking at the entire period since the end of December 2019 through August 30, the average number of deaths for all countries per 100,000 of population has been 11.10 deaths. The nine countries (of 71 which account for 98% of total deaths) with the highest death rates/100,000 for the full period are: Belgium (86.34), Peru (87.99), United Kingdom (62.27), Spain (61.81), Chile (59.00), Italy (58.77), Brazil (57.08), Sweden (which did not impose any restrictions)(56.90), the United States (55.54). With the exception of Brazil, Chile, Peru and the United States, each of the other top countries overall has shown a drastic reduction since their peaks in April and as reflected in the experience in the last two weeks (all the European countries were less than 1 death per 100,000).

Race for vaccines

There have been many press articles looking at efforts by the United States, by the EU and by others to lock up large quantities of vaccines from companies whose vaccines are in third phase trials for early availability to their populations. See, e.g., European Commission, 14 August 2020, Coronavirus: Commission reaches first agreement on a potential vaccine, https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1438. The Russian Federation has released a vaccine that did not go through a third phase trial and has received interest from some developing countries. After international criticism, the Russian Federation is now pursuing Phase 3 trials. AP, Putin touts Russia’s COVID-19 vaccine as effective and safe, August 27, 2020, https://apnews.com/f505b2fe730b56b558b8f76bf1932af0.

China has been promising some trading partners preferential access to its vaccines. See, e.g., Wall Street Journal, August 17, 2020, China Seeks to Use Access to COVID-19 Vaccines for Diplomacy, https://www.wsj.com/articles/china-seeks-to-use-access-to-covid-19-vaccines-for-diplomacy-11597690215

For the Philippines, their President has been shopping with the U.S., Russia and China for early access. See, e.g., Nikkei Asia, August 11, 2020, Duterte takes Russia’s offer of COVID vaccine after asking China, https://asia.nikkei.com/Politics/International-relations/Duterte-takes-Russia-s-offer-of-COVID-vaccine-after-asking-China.

Beyond the national or regional efforts to secure priority for vaccines when developed, joint efforts continue as part of the WHO effort to ensure that vaccines and other medical goods relevant to addressing COVID-19 are available equitably to all people and at affordable prices. See, e.g., European Union, Coronavirus Global Response, https://global-response.europa.eu/index_en.

So while it may not be surprising to see countries looking first and foremost about the health of their own citizens, the World Health Organization has warned that no one is safe until all are safe from the COVID-19. The next six months to a year will be a test of whether the efforts of many to provide funding and other resources to ensure greater equitable access to vaccines at affordable prices can coexist with national efforts to prioritize their own citizens.

Conclusion

The world in the first eight months of 2020 is struggling to get the COVID-19 pandemic under control. While many countries in Europe and some in Asia and the major countries in Oceania have greatly reduced the number of new cases over time, there has been some resurgence in many of these countries as their economies reopen, travel restrictions are eased and as schools reopen in many countries. But the number of new cases continues to rage in much of the Americas (other than Canada), in parts of Asia (in particular India) and in parts of Africa. Since most new cases are now in developing countries, it is unclear how many of these countries will be able to handle a significant number of cases, whether their healthcare infrastructure will be overwhelmed and whether they will have the medical goods needed to handle the cases safely.

August has seen the global number of new cases peak and possibly start to decline. That is some good news although the number of new cases on a daily basis continues to strain the global supply system.

The progress on developing safe and effective vaccines is encouraging and has been sped by the willingness of major economies like the U.S. and the EU to fund manufacturing ahead of actual approval of the promising vaccines. While this puts a lot of money at risk should one or more of the vaccines in trials not prove safe or effective, it saves a great deal of time in getting product to market if approved. In a global economy in which least developed countries, small and vulnerable economies and other developing countries are experiencing significant economic challenges because of travel restrictions and trade contractions flowing from efforts to address the pandemic, achieving equitable and affordabale access to vaccines when available is a global imperative. Time will tell if the imperative is achieved or not.

WTO Dispute Settlement Body Meeting of August 28, 2020 — How disputes are being handled in the absence of reform of the Appellate Body

No forward movement has been made on resolving the impasse of the WTO’s Appellate Body which effectively ceased to operate for new appeals after December 10, 2019 when the number of active Appellate Body members fell below the minimum of three needed to hear appeals. At every monthly Dispute Settlement Body meeting, one of the Members presents the proposal to start the process of selecting new Appellate Body members and the U.S. indicates it is not in a position to agree to that action.

While the impasse continues, Members are dealing with how to proceed on specific disputes that have been filed and how to deal with panel decisions that get issued. For the EU and 22 other Members who are parties to the multi-party interim appeal arrangement (MPIA), disputes involving two members of the MPIA are handled through the MPIA after a panel decision if one or both parties are dissatisifed with the panel decision. Current members of the MPIA are Australia, Benin, Brazil, Canada, China, Chile, Colombia, Costa Rica, Ecuador, the European Union, Guatemala, Hong Kong (China), Iceland, Mexico, Montenegro, New Zealand, Nicaragua, Norway, Pakistan, Singapore, Switzerland, Ukraine and Uruguay. This means that more than 110 WTO Members are not parties to the MPIA including the United States, Japan, Korea, India, Indonesia, Malaysia, Argentina, Peru, Egypt, South Africa, Saudi Arabia, the Russian Federation and many others.

Disputes between all other WTO Members or between other Members and one of the MPIA members require the parties to the dispute either before the panel decision or afterwards to decide how they will proceed. Concerns of many WTO Members is that a party dissatisfied with a panel decision will take an appeal which will effectively stop resolution of the matter as an appeal cannot be heard while there is no functioning Appellate Body.

MPIA members can take appeals where they are in a dispute with a non-MPIA member instead of seeking resolution through other means. For example, the Russian Federation is not a member of the MPIA. Their dispute with the EU on its antidumping methodology resulted in a panel decision that the EU found problematic. The EU filed an appeal on August 28, 2020. See WTO, Dispute Settlement, EU appeals panel report on EU dumping methodologies, duties on Russian imports, https://www.wto.org/english/news_e/news20_e/ds494apl_28aug20_e.htm. When raised at the August 28 dispute settlement body (DSB) meeting, Russia provided the following comment:

“The Russian Federation made a statement regarding the European Union’s appeal of the panel ruling in in DS494 (https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds494_e.htm) (EU —
Cost Adjustment Methodologies and Certain Anti-Dumping Measures on Imports from Russia). Russia said it was disappointed with the EU’s decision and that that the EU’s action, in the absence of a functioning Appellate Body, essentially meant that the matter was being appealed “into the void.” The EU was seeking to escape its obligations by not trying to resolve the dispute,
Russia said.” https://www.wto.org/english/news_e/news20_e/dsb_28aug20_e.htm.

Interestingly, the EU has been working to be able to retaliate on any WTO Member who is not a party to the MPIA who appeals from a panel decision where the EU is a party. Presumably they understand that their action will encourage countries like the Russian Federation to take unilateral action against the EU where the EU appeals a panel decision instead of seeking a mutually agreeable solution.

The United States has reviewed at prior DSB meetings that there are many ways for Members to resolve disputes between themselves. At the recent DSB meeting, the U.S. in its prepared statement, after reviewing its ongoing concerns with the Appellate Body and the need to understand why the Appellate Body ignored the clear limits on its authority under the Dispute Settlement Understanding, provided examples of how Members are resolving disputes since December 10, 2019:

“ As discussions among Members continue, the dispute settlement system continues to function.

“ The central objective of that system remains unchanged: to assist the parties to find a solution to their dispute. As before, Members have many methods to resolve a dispute, including through bilateral engagement, alternative dispute procedures, and third-party adjudication.

“ As noted at prior meetings of the DSB, Members are experimenting and deciding what makes the most sense for their own disputes.

“ For instance, in Indonesia – Safeguard on Certain Iron or Steel Products (DS490/DS496), Chinese Taipei, Indonesia, and Vietnam reached procedural understandings that included an agreement not to appeal any compliance panel report.3

“ Similarly, in the dispute United States – Anti-Dumping Measures on Certain Oil Country Tubular Goods from Korea (DS488), Korea and the United States agreed not to appeal the report of any compliance panel.4

“ Australia and Indonesia have agreed not to appeal the panel report in the dispute Australia – Anti-Dumping Measures on A4 Copy Paper (DS529).5

“ Parties should make efforts to find a positive solution to their dispute, consistent with the aim of the WTO dispute settlement system.

“ The United States will continue to insist that WTO rules be followed by the WTO dispute settlement system. We will continue our efforts and our discussions with Members and with the Chair to seek a solution on these important issues.

“3 ‘Understanding between Indonesia and Chinese Taipei regarding Procedures under Articles 21 and 22 of the DSU’, (WT/DS490/3) (April 11, 2019), para. 7 (‘The parties agree that if, on the date of the circulation of the panel report under Article 21.5 of the DSU, the Appellate Body is composed of fewer than three Members available to serve on a division in an appeal in these proceedings, they will not appeal that report under Articles 16.4 and 17 of the DSU.’) and ‘Understanding between Indonesia and Viet Nam regarding Procedures under Articles 21 and 22 of the DSU’, WT/DS496/14 (March 22, 2019), para. 7 (‘The parties agree that if, on the date of the circulation of the panel report under Article 21.5 of the DSU, the Appellate Body is composed of fewer than three Members available to serve on a division in an appeal in these proceedings, they will not appeal that report under Articles 16.4 and 17 of the DSU.’).

“4 ‘Understanding between the Republic of Korea and the United States regarding Procedures under Articles 21 and 22 of the DSU’, (WT/DS488/16) (February 6, 2020), para. 4 (‘Following circulation of the report of the Article 21.5 panel, either party may request adoption of the Article 21.5 panel report at a meeting of the DSB within 60 days of circulation of the report. Each party to the dispute agrees not to appeal the report of the Article 21.5 panel pursuant to Article 16.4 of the DSU.’).

“5 Minutes of the Meeting of the Dispute Settlement Body on January 27, 2020 (WT/DSB/M/440), paras. 4.2 (‘Indonesia also wished to thank Australia for working together with Indonesia in a spirit of cooperation in order to reach an agreement not to appeal the Panel Report’ and 4.3 (‘Australia and Indonesia had agreed not to appeal the Panel Report and to engage in good faith negotiations of a reasonable period of time for Australia to bring its measures into conformity with the DSB’s recommendations and rulings, in accordance with Article 21.3(b) of the DSU.’).”

Statements by the United States at the Meeting of the WTO Dispute Settle- ment Body, Geneva, August 28, 2020 at 14, https://geneva.usmission.gov/wp-content/uploads/sites/290/Aug28.DSB_.Stmt_.as-deliv.fin_.public.pdf.

Thus, there are ways for WTO Members to resolve disputes between themselves even with the Appellate Body inoperative. Some countries, like Australia, have sought positive resolutions where the other disputing party is not a member of MPIA. To date, the European Union has not sought resolution with members who are not party to the MPIA but have rather filed appeals so cases will sit in limbo until such time as the impasse is resolved.

Concluding comments

While each of the eight candidates to become the next Director-General of the WTO believe resolution of the dispute settlement system impasse is an important priority for the WTO, they differ in how quickly they believe Members will be able to overcome the impasse — Dr. Jesus Seade (Mexico) believes it can be resolved in the first 100 days. Amb. Tudor Ulianovschi believes that the challenges presented will not be resolved ahead of the 12th Ministerial Conference in 2021 but will be resolved sometime thereafter. Most other candidates hold out hope that the impasse can be resolved by the next Ministerial in 2021. Thus, the current situation of no functioning Appellate Body may continue for some time.

The U.S. Trade Representative Robert Lighthizer in an Op Ed last week in the Wall Street Journal suggested that reform of the dispute settlement system is critical but may involve changing the system from its existing two-tiered configuration under the DSU to a one-tier process more like commercial arbitration. If that is the path that the United States pursues, resolution of the current situation will take years. See August 24, 2020,  USTR Lighthizer’s Op Ed in the Wall Street Journal – How to Set World Trade Straight, https://currentthoughtsontrade.com/2020/08/24/ustr-lighthizers-op-ed-in-the-wall-street-journal-how-to-set-world-trade-straight/.

Similarly, if dispute settlement reform is lumped into the broader WTO reform being discussed, the timing will be significantly delayed if reform of the WTO is to be meaningful and return the organization to a place of relevance in the 21st century.

With the queue of panel decisions that are yet due this year involving some high profile issues (e.g., national security actions by the United States on steel and aluminum and retaliation taken by many trading partners) and with the recent panel report on the U.S. countervailing duty order on Canadian softwood lumber, pressure will likely build on WTO Members to find a lasting solution to the current impasse. Increased pressure suggests heightened tensions in an organization already suffering from distrust among Members and, as a result, largely nonfunctioning pillars of negotiation, notification/monitoring, dispute settlement. In short, 2021 promises to be a challenging environment for the WTO Members and the incoming Director-General.

Recent Congressional Research Service report, Global Economic Effects of COVID-19

Governments around the world have been struggling with the health and economic costs of the COVID-19 pandemic. Multilateral institutions generate a great deal of information on the pandemic and its effects and many countries do as well.

On August 21, 2020, the Congressional Research Service released an updated report on Global Economic Effects of COVID-19, Report No. R46270, https://crsreports.congress.gov/product/pdf/R/R46270.

While the United States went through a huge resurgence of COVID-19 cases, hospitalizations and deaths in the June-August 2020 time period, there have been smaller resurgences in a number of other developed countries in the July – August time frame including Australia, Japan, Korea, France, Germany, Spain and others. At the same time, the pandemic is raging in much of the Americas (other than Canada), in India, in some parts of Asia and increasingly in a number of African countries. While it is likely that the world total on new cases peaked in the two weeks ending August 16, the two weeks that end on August 30 will be very close to those numbers (3.6 million cases),

Most global economic outlook projections have been premised on the pandemic’s worst economic effects being in the 2nd quarter of 2020 with a strong recovery in the third quarter and a continued rebound through 2021. Those projections are increasingly at risk as major economies struggle to return to normal without the need for further economic restrictions to address new surges of the pandemic. In the United States, despite efforts by the House of Representatives to pass legislation several months ago to continue the stimulus to the economy to help those unemployed and avoid massive evictions, help schools prepare for the fall season and state and local governments deal with the massive shortfall in revenue among other matters, the Senate didn’t take up legislation until late July and had trouble agreeing on any additional funding. The impasse between the Democrats and the Republicans and White House has led to limited if any support in August and heading into the fall with the potential for millions of additional job losses and reopenings that are not adequately prepared. The opening of schools in recent weeks has had a number of challenges and many schools are proceeding virtually in an effort to remain safe but putting downward pressure on the economy. Thus, the global challenges are likely to worsen in the remaining months of 2020 making the global economic recovery slower and later than has been hoped.

The first pages of the CRS report (pages 5-8, Overview (excluding Table 1)) do an excellent job of reviewing the challenges for the United States and the world and re copied below.

“Overview

“The World Health Organization (WHO) first declared COVID-19 a world health emergency in January 2020. Since then, the emergency has evolved into a global public health and economic crisis that has affected the $90 trillion global economy beyond anything experienced in nearly a century. Governments are attempting to balance often-competing policy objectives between addressing the public health crisis and economic considerations that include, but are not limited to these:

“ Confronting ballooning budget deficits weighed against increasing spending to support unemployed workers and social safety nets.

“ Providing financial support for national health systems that are under pressure to develop vaccines while also funding efforts to care for and safeguard citizens.

“ Implementing monetary and fiscal policies that support credit markets and sustain economic activity, while also assisting businesses under financial distress.

“ Implementing fiscal policies to stimulate economic activity, while consumers in developed economies sharply increase their savings as households face limited spending opportunities, or a form of involuntary saving, and concerns over their jobs, incomes, and the course of their economies, or precautionary saving.

“ Intervention by central banks and monetary authorities generally in sovereign debt and corporate bond markets to stabilize markets and insure liquidity are raising concerns among some analysts that this activity is compromising the ability of the markets to perform their traditional functions of pricing risk and allocating capital.

“ Fiscal and monetary policies that have been adopted to date to address the immediate impact of the health crisis compared with the mix of such policies between assisting households, firms, or state and local governments that may be needed going forward should the health and economic crises persist.

“Policymakers and financial and commodity market participants generally have been hopeful of a global economic recovery starting in the third quarter of 2020, assuming there is not a second wave of infections. Some forecasts, however, raise the prospects that the pandemic could negatively affect global economic growth more extensively and for a longer period of time with a slow, drawn-out recovery. Without a quick resolution of the health crisis, the economic crisis may persist longer than most forecasters have assumed and require policymakers to weigh the most effective mix of additional fiscal and monetary policies that may be required without the benefit of a relevant precedent to follow. Additional measures may have to balance the competing requirements of households, firms, and state and local governments. Various U.S. States reversed course in late June to impose or reimpose social distancing guidelines and close down businesses that had begun opening as a result of a rise in new confirmed cases of COVID-19, raising the prospect of a delayed recovery.

“In its July 29 policy statement and subsequent press conference, the U.S. Federal Open Market Committee (FOMC) indicated that the rise in COVID-19 cases in the United States since mid-June was weighing down economic growth and that, ‘The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.’

“Differences in policy approaches between countries are threatening to inflict longer-term damage to the global economy by impairing international political, trade, and economic relations, particularly between countries that promote nationalism and those that argue for a coordinated international response to the pandemic. Policy differences are also straining relations between developed and developing economies and between northern and southern members of the Eurozone, challenging alliances and conventional concepts of national security, and raising questions about the future of global leadership.

“In some countries, the pandemic has elevated the importance of public health as a national security issue and as a national economic priority on a par with traditional national security concerns such as terrorism, cyberattacks, and proliferation of weapons of mass destruction.1 The pandemic-related economic and human costs could have long-term repercussions for economies through the tragic loss of life and job losses that derail careers and permanently shutter businesses. Fiscal and monetary measures implemented to prevent a financial crisis and sustain economic activity may also inadvertently be adding to income and wealth disparities. Within some countries, the economic fallout may be adding to widening racial and socio-economic cleavages and increasing social unrest. In speaking about these costs for Americans, Federal Reserve Chairman Powell said on May 19, 2020,

“‘Since the pandemic arrived in force just two months ago, more than 20 million people have lost their jobs, reversing nearly 10 years of job gains. This precipitous drop in economic activity has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future.2’

“The virus was first diagnosed in Wuhan, China, but has been detected in over 200 countries and all U.S. states.3 In early March 2020, the focal point of infections shifted from China to Europe, especially Italy, but by April, the focus had shifted to the United States, where the number of infections was accelerating. The infection has sickened more than 20.2 million people, about one-fourth in the United States, with over 800,000 fatalities. At one point, more than 80 countries had closed their borders to arrivals from countries with infections, ordered businesses to close, instructed their populations to self-quarantine, and closed schools to an estimated 1.5 billion children.4

“Over the 22-week period from mid-March to mid-August 2020, 56.3 million Americans filed for unemployment insurance.5 On a seasonally adjusted basis, the number of insured unemployed workers was 14.8 million in mid-August, down from a peak of 25 million in mid-May, as indicated in Table 1. The total number of people claiming benefits in all programs in the week


1 Harris, Shane and Missy Ryan, To Prepare for the Next Pandemic, the U.S. Needs to Change its National Security Priorities, Experts Say, The Washington Post, June 16, 2020. https://www.washingtonpost.com/national-security/to-prepare-for-the-next-pandemic-the-us-needs-to-change-its-national-security-priorities-experts-say/2020/06/16/b99807c0-aa9a-11ea-9063-e69bd6520940_story.html.
2 Powell, Jerome H. Coronavirus and CARES Act, Testimony before the Committee on Banking, Housing and Urban Affairs, U.S. Senate, May 19, 2020.
3 “Mapping the Spread of the COVID-19 in the U.S. and Worldwide,” Washington Post Staff, Washington Post, March 4, 2020. https://www.washingtonpost.com/world/2020/01/22/mapping-spread-new-COVID-19/?arc404=true.
4 “The Day the World Stopped: How Governments Are Still Struggling to Get Ahead of the COVID-19,” The Economist, March 17, 2020. https://www.economist.com/international/2020/03/17/governments-are-still-struggling-to-get-ahead-of-the-COVID-19.
5 Unemployment Insurance Weekly Claims, Department of Labor, August 20, 2020. https://www.dol.gov/; Romm, Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, The Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-coronavirus/

ending August 1, totaled 28 million, up from 1.7 million in the comparable week in 2019. The insured unemployment rate was 10.2%, also down from the peak reached in early May. On May 8, 2020, the Bureau of Labor Statistics (BLS) reported that 20 million Americans lost their jobs in April 2020, pushing the total number of unemployed Americans to 23 million,6 out of a total civilian labor force of 158 million. The increase pushed the national unemployment rate to 14.7% (with some caveats), the highest since the Great Depression of the 1930s.7 On June 6, BLS reported that nonfarm employment increased by 2.5 million in May, reducing the total number of unemployed Americans to 21 million8 and pushing the unemployment rate down to 13.5%, again with some caveats.9 On July 2, the BLS also released data on the employment situation in June, indicating that nonfarm payroll rose by 4.8 million, lowering the unemployment rate to 11.5%; on August 7, the BLS reported that nonfarm payrolls rose by 1.8 Million in July, lowering the number of unemployed individuals to 16.4 million and the unemployment rate to 10.2%.10

“Preliminary data also indicate that U.S. GDP fell by 9.5% in the second quarter of 2020 from the previous quarter, but at an annualized rate of 33%, the largest quarterly decline in U.S. GDP recorded over the past 70 years.11 In its May 27 Beige Book analysis, the Federal Reserve (Fed) reported that economic activity had fallen sharply in each of the 12 Federal Reserve districts.12

“In Europe, governments have attempted a phased reopening of businesses.13 After several months of data indicating an economic rebound had begun in the Eurozone, surveys of business activity in August reportedly indicated that the recovery was slowing amid a rise in new COVID-19 cases and countries reimposing new quarantines and lockdowns in various parts of the Euro area.14 Industrial production across the Eurozone as a whole fell by 17% in April, raising the annual decline to 28%, surpassing the contraction experienced during the global financial crisis.15 The European Commission’s July 8, 2020, forecast projected that EU economic growth in 2020 could contract by 8.3% and only partially recover in 2021.16 In addition, a July forecast by the European Commission forecasts a larger drop in gross domestic product (GDP) in 2020 among European economies than it had forecasted in its spring report, with a less vibrant recovery in 2021. Second quarter data indicate that economic growth in the EU contracted by 11.7% from the first quarter and by 14.1% compared with the same quarter in 2019.17 Second quarter data indicate the UK economy contracted by 20.4%, the largest quarterly decline on record.

“After protracted talks, European leaders agreed on July 21 to a new €750 billion (about $859 billion) pandemic economic assistance package to support European economies. Second quarter data also indicated that employment among the EU countries fell by 2.6%, or 5.5 million jobs. The jobs data, however, does not include roughly 45 million people, or a third of the workforce in Germany, France, Britain, Italy, and Spain, currently covered by employment protection programs.18 Similarly, Japan reported on August 17 that its economy contracted by 7.8% in the second quarter of 2020, compared with the previous quarter, or at an annual rate of 27.8%.19

“On May 27, 2020, European Central Bank (ECB) President Christine Lagarde warned that the Eurozone economy could contact by 8% to 12% in 2020, a level of damage to the Eurozone economy that Lagarde characterized as being unsurpassed in peacetime.20 Foreign investors have pulled an estimated $26 billion out of developing Asian economies not including more than $16 billion out of India, increasing concerns about a major economic recession in Asia. Some estimates indicate that 29 million people in Latin America could fall into poverty, reversing a decade of efforts to narrow income inequality. Some analysts are also concerned that Africa, after escaping the initial spread of infections, is now facing a sharp increase in rates of infection outside South Africa, Egypt, Nigeria, Algeria, and Ghana, where most of the infections have occurred to date.21

“1 Harris, Shane and Missy Ryan, To Prepare for the Next Pandemic, the U.S. Needs to Change its National Security Priorities, Experts Say, The Washington Post, June 16, 2020. https://www.washingtonpost.com/national-security/to-prepare-for-the-next-pandemic-the-us-needs-to-change-its-national-security-priorities-experts-say/2020/06/16/b99807c0-aa9a-11ea-9063-e69bd6520940_story.html.

“2 Powell, Jerome H. Coronavirus and CARES Act, Testimony before the Committee on Banking, Housing and Urban Affairs, U.S. Senate, May 19, 2020.

“3 ‘Mapping the Spread of the COVID-19 in the U.S. and Worldwide,’ Washington Post Staff, Washington Post, March 4, 2020. https://www.washingtonpost.com/world/2020/01/22/mapping-spread-new-COVID-19/?arc404=true.

“4 ‘The Day the World Stopped: How Governments Are Still Struggling to Get Ahead of the COVID-19,’ The Economist, March 17, 2020. https://www.economist.com/international/2020/03/17/governments-are-still-struggling-to-get-ahead-of-the-COVID-19.

“5 Unemployment Insurance Weekly Claims, Department of Labor, August 20, 2020. https://www.dol.gov/; Romm, Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, The Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-coronavirus/.

“6 This total does not include 10.9 million workers who were working part time not by choice and 9.9 million individuals who were seeking employment.

“7 The Employment Situation-April 2020, Bureau of Labor Statistics, May 8, 2020. https://www.bls.gov/.

“8 This total does not include 10.6 million workers who were working part time not by choice and 9.4 million individuals who were seeking employment.

“9 The Employment Situation-May 2020, Bureau of Labor Statistics, June 5, 2020, https://www.bls.gov/. BLS indicated that some individuals were misclassified in April and May. Instead of being classified as unemployed, they were misclassified as employed, but absent from work due to coronavirus-related business closures. If such individuals had been classified as unemployed, the unemployment rate would have been 5 percentage points higher in April.

“10 The Employment Situation-July 2020, Bureau of Labor Statistics, August 7, 2020. https://www.bls.gov/. The unemployment number does not include 8.4 million workers who were working part time not by choice and 7.7 million individuals seeking employment. In addition, BLS indicated that some workers had been misclassified as employed, but should have been classified as unemployed, which would have raised the rate of unemployment by one percentage point.

“11 Gross Domestic Product, 2nd Quarter 2020 (Advance Estimate) and Annual Update, Bureau of Economic Analysis, July 30, 2020. https://www.bea.gov/news/2020/gross-domestic-product-2nd-quarter-2020-advance-estimate-and-annual-update.

“12 The Beige Book, Federal Reserve System, May 27, 2020. https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm.

“13 Stott, Michael, Coronavirus Set to Push 29m Latin Americans Into Poverty, Financial Times, April 24, 2020. https://www.ft.com/content/3bf48b80-8fba-410c-9bb8-31e33fffc3b8; Hall, Benjamin, Coronavirus Pandemic Threatens Livelihoods of 59m European Workers, Financial Times, April 19, 2020, https://www.ft.com/content/36239c82-84ae-4cc9-89bc-8e71e53d6649, Romei, Valentina and Martin Arnold, Eurozone Economy Shrinks by Fastest Rate on Record, Financial Times, April 30, 2020, https://www.ft.com/content/dd6cfafa-a56d-48f3-a9fd-aa71d17d49a8.

“14 Arnold, Martin, Eurozone Economic Rebound is Losing Steam, Surveys Suggest, Financial Times, August 21, 2020. https://www.ft.com/content/cc4fa3df-40e7-4e19-be9f-9d01efb74f69. Chazan, Guy and Anna Gross, Europe Battles to Contain Surge in Coronavirus Cases. Financial Times, July 29, 2020. https://www.ft.com/content/bcddc297-b7f2-444d-908f-54e8ce6f4f98.

“15 Arnold, Martin, Eurozone Industrial Production Falls by Record 17.1% in April, Financial Times, June 12, 2020. https://www.ft.com/content/e3301cd6-27ce-35f0-829a-c6613849b378.

“16 European Economic Forecast Summer 2020, European Commission, July 8, 2020.

“17 Newsrelease, Eurostat, August 14, 2020.

“18 Ben Hall, Ben, Delphine Strauss, and Daniel Dombey, Millions of European Jobs at Risk When Furlough Support Ends, Financial Times, August 14, 2020. https://www.ft.com/content/0f01a9ed-5b15-4e2d-921c-6eed7a80d0bd.

“19 Quarterly Estimates of GDP for April – June 2020 (First Preliminary Estimates), Cabinet Office, August 17, 2020.

“20 Arnold, Martin, Coronavirus Hit to Eurozone Economy Set to Dwarf Financial Crisis, Financial Times, May 27, 2020. https://www.ft.com/content/a01424e8-089d-4618-babe-72f88184ac57.

“21 Pilling, David, The Pandemic is Getting Worse: Africa Prepares for Surge in Infections, Financial Times, July 20, 2020.” https://www.ft.com/content/1b3274ce-de3b-411d-8544-a024e64c3542.

The complete CRS report is embedded below.

CRS-8-21-2020-Global-Economic-Effects-of-COVID-19

Conclusion

The world is going through the worst economic contraction since World War II. The pandemic has affected the health of people around the world, with close to 24 million confirmed cases and likely a multiple of that considering the extent of infections in people without symptoms. More than 800,000 people have died, a number which is also likely to be low based on the number of people who die but never are hospitalized and thus not likely reported as COVID-19 related in many countries.

Most developed countries have followed the tried and true methodology of aggressive testing, tracing, and quarantining to slow the spread of the pandemic and then drastically reduce the number of new cases. For most developed countries this included some form of stay at home orders, social distancing, mask wearing with severe negative effects on many economic sectors. The United States has largely been alone among developed countries in having a generally poor, unorganized and mixed message response to the spread of the coronavirus. Yet other developed countries, as they have reopened, have experienced some of the rebound in cases that the United States experienced on steroids these last three months. The result has been deep economic contraction in the second quarter of 2020 and slower economic recovery likely in the third and fourth quarters of 2020.

At the same time, developing countries have become the center of the pandemic in recent months and may face greater health care challenges because of their infrastructure. These countries are facing severe economic contractions as well both from internal demand declines and from international market contractions.

While the billions being poured into development of vaccines and therapeutics will hopefully result in tools to reduce and then stop the spread of the pandemic, 2021 is the early side of likely massive amounts of vaccines and therapeutics being available.

With the ongoing economic challenges, worsening debt structure of nearly all countries and the collapse of many businesses and employment (e.g., travel and tourism employment is projected to drop by 100-120 million jobs in 2020), the world needs greater coordination of recovery strategies, increased attention on keeping global markets open (and limiting export restraints) and renewed attention to see that vaccines and therapeutics are equitably available to all at affordable prices as new products become available.

The race to become the next WTO Director-General — where the candidates stand on important issues: convergence vs. coexistence of different economic systems; possible reform of rules to address distortions from such economic systems – Part 1, Background on issues

Background

When China acceded to the World Trade Organization in 2001, it had had a long working party process as WTO Members focused on the wide array of changes to laws, regulations and practices that China would need to undertake to have an economic system and policies that were consistent with WTO norms. China made many changes to its policies ahead of accession. However, the extent of modifications needed to the Chinese system that were still not accomplished by 2001 meant that the Protocol of Accession and the Working Party Report that China and WTO Members agreed to were unprecedented in terms of the number of additional changes that needed to be made for China’s system to be compatible with WTO norms. Indeed, periodic reviews over a decade were included of China’s actions to permit other WTO Members to understand the extent of compliance with the wide ranging modifications still needed. As China was moving from a state-controlled economy towards a market economy, WTO Members insisted on special rules to address some of the likely distortions a large economy like China with significant state controls was anticipated to create. A country-specific safeguard and special recognition of nonmarket economy provisions in trade remedies were included in the Protocol of Accession. While China accepted all three provisions to obtain membership in the WTO, China always expressed its views that these additional provisions were discriminatory and an effort to hold China back in terms of economic growth.

While China continued to make progress in its reform program for a number of years after acceding to the WTO, beginning with the financial crisis of 2008-2009 China reversed direction and increased the importance of state-owned and state-invested enterprises, state planning and state control of a wide array of factors of production. A former Director-General of the WTO and former EC Trade Commissioner reviewed the challenges for market economy countries in dealing with a country with a large share of its economy controlled by the state. See July 27, 2020, Pascal Lamy’s recent comments on the challenges facing the WTO, https://currentthoughtsontrade.com/2020/07/27/pascal-lamys-recent-comments-on-the-challenges-facing-the-wto/.

Many major trading partners have worked with China since its WTO accession to address perceived distortions flowing from its economic system and to help China handle the obligations it had undertaken upon joining the WTO. Many commitments for change were made by China with limited actual forward movement achieved in the views of at least some trading partners. Members like the United States undertake their own annual review of China’s compliance with WTO obligations in an effort to chronicle China’s changing economic system and whether there are distortions of concern to China’s trading partners. See, e.g., U.S. Trade Representative, 2019 Report to Congress on China’s WTO Compliance (March 2020)(embedded below). As stated on page 4:

“Over the past nearly two decades, a variety of bilateral and multilateral efforts were pursued by the United States and other WTO members to address the unique challenges presented by China’s WTO membership. However, even though these efforts were persistent, they did not result in meaningful changes in China’s approach to the economy and trade.

“In our past reports, we identified and explained the numerous policies and practices pursued by China that harm and disadvantage U.S. companies and workers, often severely. We also catalogued the United States’ persistent yet unsuccessful efforts to resolve the many concerns that have arisen in our trade relationship with China. We found that a consistent pattern existed where the United States raised a particular concern, China specifically promised to address that concern, and China’s promise was not fulfilled.

“The costs associated with China’s unfair and distortive policies and practices have been substantial. For example, China’s non-market economic system and the industrial policies that flow from it have systematically distorted critical sectors of the global economy such as steel and aluminum, devastating markets in the United States and other industrialized countries. China also continues to block valuable sectors of its economy from foreign competition, particularly services sectors. At the same time, China’s industrial policies are increasingly responsible for displacing companies in new, emerging sectors of the global economy, as the Chinese government and the Chinese Communist Party powerfully intervene on behalf of China’s domestic industries. Companies in economies disciplined by the market cannot effectively compete with both Chinese companies and the Chinese state.”

2019_Report_on_Chinas_WTO_Compliance

The 11th Ministerial Conference and a Joint Statement by EU, Japan and the United States

The challenges of China’s economic system have been felt in many global industries in a number of ways. There has been massive excess capacity created by China’s policies (and those of some other countries). Efforts to address excess capacity in steel proved unsuccessful. But literally dozens of industries faced excess capacity in China which has resulted in flooded global markets and harm to competing producers in other countries.

At the same time there have been major concerns about forced technology transfers for companies wanting to operate in China, a myriad and changing set of barriers (formal and informal) discriminating against imports and foreign owned enterprises in certain sectors.

By the 11th WTO Ministerial Conference, the United States, European Union and Japan had decided more formal action was needed to address the ongoing distortions being created by China and other countries emulating the Chinese model of economic system. At the end of the Conference, the three WTO Members issued a joint statement which stated in large part,

“We shared the view that severe excess capacity in key sectors exacerbated by government-financed and supported capacity expansion, unfair competitive conditions caused by large market-distorting subsidies and state owned enterprises, forced technology transfer, and local content requirements and preferences are serious concerns for the proper functioning of international trade, the creation of innovative technologies and the sustainable growth of the global economy.

“We, to address this critical concern, agreed to enhance trilateral cooperation in the WTO and in other forums, as appropriate, to eliminate these and other unfair market distorting and protectionist practices by third countries.”

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/december/joint-statement-united-states

There have been a series of meetings of the three trade ministers since then providing an update on their joint efforts. A joint statement in January 2020 outlined the types of industrial subsidies where the three major WTO Members believed greater disciplines were needed and outlined other areas where joint efforts were underway. The 2018, 2019 and 2020 joint statements can be found here, with the 2020 statement embedded after the links. See Joint Statement on Trilateral Meeting of the Trade Ministers of the United States, Japan, and the European Union, 09/25/2018, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/statement-meetings-between-united; Joint Statement of the Trilateral Meeting of the Trade Ministers of the United States, European Union, and Japan, 05/23/2019, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/may/joint-statement-trilateral-meeting; Joint Statement of the Trilateral Meeting of the Trade Ministers of Japan, the United States, and the European Union, 01/14/2020, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2020/january/joint-statement-trilateral-meeting-trade-ministers-japan-united-states-and-european-union.

1-14-2020-Joint-Statement-of-the-Trilateral-Meeting-of-the-Trade-Ministers-of-Japan-the-United-States-and-the-European-Union-_-United-States-Trade-Representative

U.S. Section 301 Investigation of Certain Chinese Policies, U.S. imposition of tariffs and Chinese retaliation

In August 2017, the U.S. Trade Representative initiated an investigation on certain of China’s Acts, Policies and Practices Related to Technology Transfer, Intellectual Property, and Innovation. 82 Fed. Reg. 40,213-40,215 (Aug. 24, 2017). The investigation resulted in a determination by USTR on March 22, 2018 that various Chinese acts, policies and practices violated Section 301 of the Trade Act of 194, as amended. The President authorized the imposition of additional duties to encourage China to address the problems raised. China retaliated and through a series of further escalations, the U.S. has imposed additional duties on some $350 billion of imports from China and China has imposed additional duties on the vast majority of U.S. exports to China. The 301 report and supplement are embedded below.

Section-301-FINAL

301-Report-Update

The United States viewed the Section 301 investigation as necessary to address practices of China not addressed by WTO rules or not adequately addressed. China viewed the investigation as not permitted under WTO rules. The trade conflict and efforts to find a solution, resulted in a Phase 1 Agreement between the United States and China with most additional duties remaining in place, some substantive changes made on some issues of concern to the United States and a Phase 2 negotiation to resolve outstanding issues which has not begun as of mid-August 2020.

China’s effort to be treated as a market economy under trade remedies

China has long felt that nonmarket economy methodology employed by trading partners discriminated against China and was unjustified. On December 12 2016, the day after certain language in China’s Protocol of Accession became ineffective, China filed requests for consultations with each of the European Union (WT/DS/516) and the United States (WT/DS/515). China has not actively pursued the action against the United States. On the action against the European Union, after the matter was fully briefed at the panel stage and it was understood that an interim panel report was released to the parties, China requested on 7 May 2019 the panel to suspend its proceedings in accordance with Article 12.12 of the DSU. The panel proceeding was suspended on 14 June 2019. On 15 June 2020, the Secretariat released a note indicating that the panel’s authority in the dispute had lapsed since China had not requested the resumption of work within one year.

Thus, China remains subject to nonmarket economy methodologies by certain of its trading partners.

Proposed General Council decision submitted by the United States

The United States has raised an issue for WTO Member consideration in the form of a proposed General Council decision. The issue goes to whether the WTO is predicated on market-oriented economic principles and rests on the concern that some large WTO Members (including China) have economic systems that are characterized as non-market and that create various distortions in the global marketplace including creating massive excess capacity and other issues. While the issue has been raised by the United States for the last several years within the WTO, the U.S. permanent representative to the WTO made a strong case at the General Council meeting (Dec. 9, 2019), raised the matter again along with the draft General Council decision at the March 3, 2020 General Council meeting and raised it again at the July 22-23, 2020 General Council meeting. The proposal was opposed by China at each General Council meeting. Many Members provided comments either supporting, opposing, raising questions with the proposal or indicating the matter was being considered in capital (minutes for the July General Council meeting are not yet available). Members besides the U.S. and China who spoke include the European Union, Japan, Canada, Australia, United Kingdom, Switzerland, Norway, Mexico, Brazil, Colombia, Chinese Taipei, Uruguay, Indonesia, Nigeria, South Africa, India, Pakistan, Russian Federation, and Sri Lanka. See, e.g., Minutes of General Council Meeting, 9-10 December, 2019, WT/GC/M/181 at 59-64 (24 February 2020); The Importance of Market-Oriented Conditions to the World Trading System, Draft General Council Decision, Communication from the United States, WT/GC/W/796 (20 February 2020)(embedded below); Minutes of General Council Meeting, 3 March 2020, WT/GC/M/182 at 35-44 (16 April 2020); General Council Meeting of 22-23 July 2020, Proposed Agenda, WT/GC/W/802 (item 11)(20 July 2020).

WTGCW796

Conclusion

The crisis at the WTO has many elements but a central concern of many is whether the current WTO can be effective in ensure competitive markets when one or more major Members have an economic system largely at odds with that of most Members. The tensions created by the distortions caused by different systems has led both to increasing use of trade remedies, efforts to identify changes or additions to rules needed if convergence is not required of Members, and actions outside of the WTO where long term discussions have not resulted in the level of changes needed by countries working from market-oriented economies.

While the U.S. has reviewed provisions of the WTO that indicate the system is premised on market economy principles, a number of Members disagree that the WTO can address different economic systems. One of the Deputy-Directors General has identified core principles of the WTO and opined that the system supports convergence not coexistence. See Remarks before the Korean International Trade Association. 27 May 2020, https://www.wto.org/english/news_e/news20_e/ddgaw_27may20_e.htm back to text

It is against this complex background that candidates for the Director-General post of the WTO will be evaluated by many Members. In the next post, I turn to how the eight candidates have addressed these complex issues in terms of their prepared statements to the General Council, press conference after the General Council meeting and in the WITA webinars.

Stay tuned.

Is the world at the peak of the COVID-19 pandemic? Last two weeks suggest a peaking of the growth of global infections may be at hand

Much of the world recorded sharp contractions in GDP during the second quarter as countries restricted travel, issued mandatory stay at home orders and took other steps to try to control the spread of the COVID-19 pandemic. Many countries have been easing restrictions in the last several months that were imposed typically in March. The hoped for revival of the global economy is being slowed by the continued high incidence of new COVID-19 cases, the resurgence of cases (albeit so far at low levels) following reopening actions in many of the countries who had gotten control of the virus. In a number of countries, schools are reopening presenting additional challenges for governments in trying to control the spread of the COVID-19 virus. News reports continue to be promising that one or more vaccines may be approved by the end of 2020 or early 2021, and the Russian Federation has gone into production of a vaccine which reportedly has not undergone a phase three trial.

One question of potential importance in mid-August is has the world gotten to the peak of the number of new cases during the last two weeks or will the number of new cases resume an upward trajectory in the coming weeks?

The world has seen a rapid growth of new cases during the March – July period. As recently as the two week period of May 11-May 24, the total new cases globally in the two week period was 1.28 million. The next two weeks (May 25-June 7) showed new cases of 1.57 million. June 8-June 21 recorded 1.93 million new cases; June 22 – July 5 added 2.46 million. July 6-July 19 added 3.02 million new cases. July 20-August 2 added 3.57 million new cases. The data for the last two weeks, August 3-16 added 3.62 million new cases. So the rate of growth is slowing. While the number of new cases in the most recent two weeks was nearly three times as many as recorded in mid-May, in the last two weeks, the growth was only 1.4%.

The United States for the first time since early June has seen the number of new cases fall from the prior two weeks, although the new cases in August 3-16 were still the second largest (740,721) after only India (838,959) and remain two and a half times as high as the May 25-June 7 period (297, 391) and were 81.5% higher than the original peak figure (409,102) in the latter part of April. Complicating the picture going forward for the United States are the early problems with school reopenings in certain states with most school districts working to open in person, remotely or in some combination in the coming weeks. The U.S. also has a very high incidence of affirmative tests in large parts of the country which is problematic particularly as testing (while large in number) continues to have problems in timeliness of results. Despite the need for even larger numbers of tests (that are timely), the number of tests has been declining in the U.S. despite the continued high level of new cases on a daily basis. In addition, the U.S. continues to suffer from mixed messages from government officials on actions needed to control the virus, and from a general fatigue by large parts of the public with the efforts to minimize the spread. This past week’s Sturgis motorcycle rally, where some 250,000 bikers from around the country were expected to attend, is an example of a huge social gathering where limited safety precautions have been seen at least at some events with unknown consequences for the spread of the virus not just in South Dakota (Sturgis is a small town in South Dakota) but across the United States.

Brazil was also slightly lower in the last two weeks (609,219) than the preceding two-week period (633,017) but remains a major source of new cases. South Africa showed a significant decline from 152,411 new cases in the July 20-August 2 period to 80,363 new cases in the last two weeks.

India has taken over the top spot for most new cases in the last two weeks, 838,959, more than 160,000 higher than the prior two weeks (673,108).

There have been upticks in the number of new cases in a number of developed countries reflecting presumably the effects of reopening the economy — Germany, France, Spain, Poland, Australia, New Zealand, Japan. The spike of cases (though still small compared to prior volumes) has led for some tightening up on the economic restrictions in particular cities or more broadly.

Continued growth of cases in the developing world

With the number of new cases in the United States declining, the trend to new cases being focused on the developing world continues. While India and Brazil had by far the largest number of new cases from developing countries, they were followed by Colombia (150,508), Peru (103,620), Argentina (91,135), Mexico (83,521), South Africa (80,363) and then dozens of other countries with smaller numbers of new cases.

Deaths/100,000 population

The United States has the largest number of deaths of any country to date and in the last two weeks. If one looks at deaths/100,000 population, in the lats two weeks, the countries with the highest number of deaths per 100,000 population were the following: Peru (20.91), Colombia (8.90), Bolivia (8.16), Mexico (7.11), Panama (6.99), Brazil (6.48), South Africa (6.02), United States (4.57). All other countries (including all other developed countries) had lower rates of death per 100,000 population. For all countries, the death rate over the last two weeks was 1.06 deaths/100,000 population.

If looking at the entire period since the end of December 2019 through August 16, the average number of deaths for all countries per 100,000 of population has been 10.09 deaths. The seven countries (of 71 which account for 98% of total deaths) with the highest death rates/100,000 for the full period are: Belgium (86.73), Peru (80.20), United Kingdom (62.06), Spain (60.97), Italy (58.54), Sweden (which did not impose any restrictions)(56.53), the United States (51.50). With the exception of Peru and the United States, each of the other top countries overall has shown a drastic reduction since their peaks in April and as reflected in the experience in the last two weeks (all the European countries were less than 1 death per 100,000).

Conclusion

The world in the first seven and a half months of 2020 has not managed to get the COVID-19 pandemic under control. While many countries in Europe and some in Asia and the major countries in Oceania have greatly reduced the number of new cases over time, that has not been true for the Americas (other than Canada), for parts of Asia and for parts of Africa where the pandemic has turned its attention or where the pandemic has not been brought under control.

That said, the last two weeks suggest the global total of new cases in a two week period may have just peaked in August. There are major challenges ahead as reopening of economies gets tested against possible resurgence of cases, schools reopen in many countries, and greater indoor months approach. So there are potentially unwelcome scenarios that could see the huge number of new cases resume an upward trend. But with effort, the world may see the backside of the growth curve.

With the sharpest global economic contraction since World War II, with slumping global trade, with even the wealthier countries struggling to maintain the needed stimulus to reduce the severity of the economic contraction and with potentially hundreds of millions of people around the world losing their jobs, and food insecurity rising with increasing poverty, the world needs to see the pandemic receding and needs breakthroughs in both vaccines and therapeutics, although realistically, 2021 is more likely than the rest of 2020 for the medicaL breakthroughs.

The WTO webpage has a page dedicated to COVID-19, and the WTO Secretariat has generated a host of information notes reviewing the range of challenges that the pandemic is presenting to nations. The most recent looks at the increased costs of trade that flow from the travel and other restrictions. My post from yesterday, looked at the rising food insecurity for dozens of countries facing rising extreme poverty because of the economic contraction being experienced around the world. Stated differently, the trade, economic, health and humanitarian challenges flowing from the COVID-19 pandemic are extraordinary. Stemming the number of new cases is an important step to reduce the pressures on governments, companies and citizens.