India

The EU’s response to challenges to its actions on COVID-19 vaccine exports

At the WTO General Council meeting held on March 1-2 this week, agenda item 9 was aimed at the European Union. The agenda item, entitled “Call to Prevent Export Restrictions on COVID-19,” was put on the agenda by Colombia, Costa Rica, Ecuador, Panama and Paraguay. I had reviewed this agenda item as one of 16 agenda items that was likely to draw a fair amount of attention. See February 26, 2021, WTO Director-General Ngozi Okonjo-Iweala’s first week on the job starts with a two day General Council meeting, https://currentthoughtsontrade.com/2021/02/26/wto-director-general-ngozi-okonjo-iwealas-first-week-on-the-job-starts-with-a-two-day-general-council-meeting/ (Agenda item 9 was added by Colombia, Costa Rica, Ecuador, Panama and Paraguay reflecting concerns by them (and presumably many other trading partners) about actions taken by the European Union to exert control over exports of vaccines from the EU in light of EU concerns about its own access to vaccines from manufacturers. See CALL TO PREVENT EXPORT RESTRICTIONS ON COVID-19 VACCINES, WT/GC/818 (18 February 2021)).

The new Director-General, Ngozi Okonjo-Iweala, has stressed the importance of the WTO doing more to address the COVID-19 pandemic and help Members recover. Equitable and affordable access to vaccines is an issue of importance to the membership and stressed by the Director-General. See, e.g., March 3, 2021, WTO Director-General opinion piece in the Financial Times and recent actions by the U.S., https://currentthoughtsontrade.com/2021/03/03/wto-director-general-opinion-piece-in-the-financial-times-and-recent-actions-by-the-u-s/; March 1, 2021, WTO Director-General Ngozi Okonjo-Iweala’s opening statement at the March 1 General Council meeting, https://currentthoughtsontrade.com/2021/03/01/wto-director-general-ngozi-okonjo-iwealas-opening-statement-at-the-march-1-general-council-meeting/

While the EU Ambassador provided comments on various agenda items, agenda item 9 was obviously one of importance to the EU. See EU Statement at the General Council of 2 March 2021 on the “Call to Prevent Export Restrictions on Covid-19Vaccines,” 02 March 2021, https://eeas.europa.eu/delegations/world-trade-organization-wto/94083/eu-statement-general-council-2-march-2021-%E2%80%9Ccall-prevent-export-restrictions-covid-19-vaccines%E2%80%9D_en. EU Ambassador João Aguiar Machado provided a detailed justification for the EU actions in imposing an export licensing/authorization regime on COVID-19 vaccines claiming lack of transparency by pharmaceutical companies and the need to ensure “fair” distribution. The EU program does not affect vaccines for COVAX low- and middle-income countries nor for various neighboring countries. Of note, for countries covered by the export licensing/authorization scheme, there have been 150 export requests all of which have been granted. The statement is embedded below.

EU-Statement-at-the-General-Council-of-2-March-2021-on-the-Call-to-Prevent-Export-Restrictions-on-Covid-19-Vaccines-–-02-March-2021-European-External-Action-Service

The EU stressed that the major problem facing the world was global capacity far below global demand. The EU is working to identify production bottlenecks and to encourage producers to license their products to maximize global production and expressed a willingness to work with other WTO Members and with the Director-General. The part of the statement covering the demand/supply imbalance is copied below.

“However, the root causes of the problem lie elsewhere: the exploding global demand is well above the global production today. As long as this global industrial challenge is not met, and the world population is not vaccinated quickly enough, we will all face a risk of a continuing health emergency including new Covid-19 variants and a prolonged economic crisis.

“The European Union believes there is an important role for public authorities to play and to drive the increase of production, and to facilitate access to the vaccines and other treatments that are in need today. Cooperation must be promoted amongst the different participants along the value chains where necessary to enhance production capacities. A closer, more integrated and more strategic public-private cooperation with the industry is needed. In this spirit, the EU has set-up a Task Force for Industrial Scale-up of COVID-19 vaccines to detect and help respond to issues in real-time. In order to ramp up production, we will, amongst others, work closely with manufacturers to help monitor supply chains and address identified production bottlenecks. Since EU vaccine production is critical for global supply, the benefits of this initiative will extend beyond the EU’s borders.

“Scaling-up of production on a global level requires further actions. It will not happen without increased global collaboration with the pharmaceutical industry, which should facilitate the transfer of the right know-how and technology for the highly complex vaccine production process. We should facilitate this collaboration, while also recognising that intellectual property provides the necessary platform for it to take place. Waiving intellectual property rights would disrupt this collaboration and the transfer of know-how. In conclusion, Mr Chairman, we believe it is legitimate to engage the sector in order to ensure that all complementary production facilities across companies and continents are actively contributing to ramp up production. Companies that have tried and failed to develop a vaccine of their own, for example, should actively consider making their facilities available for the production of vaccines of successful companies. Companies with new vaccines should consider whether they have checked all options for licensing agreements to increase production. The objective should be to ensure they enter into licence agreements with companies around the world that have the necessary production capacities and could export the vaccines to any low middle-income countries without production capacities. At the same time, we should be mindful that the manufacturing campaigns for covid-19 vaccines do not crowd out the production of other life-saving vaccines and therapeutics.

“The EU, working together with other WTO Members and under the leadership of the Director-General Dr. Ngozi Okonjo-Iweala is ready to facilitate a dialogue between the vaccine developers and companies with the production facilities that are ready to step in to help out with the production of vaccines and their delivery to the countries in need. We welcome the DG’s proposal to focus on collaboration among companies to enhance licensing in order to use all the adequate manufacturing capacity, including in developing countries. The EU is ready to facilitate this dialogue and contribute to the efforts on expanding these partnerships.

“The EU remains open to a dialogue with all WTO Members on how to facilitate the collaboration with the pharmaceutical industry on the transfer of know-how and technology. In the same manner, the EU remains open to a dialogue on how to facilitate the use of the TRIPS flexibilities, should the voluntary solutions fail or not be available. The flexibilities offered by the TRIPs Agreement are absolutely legitimate tools for Members in need, as many are in the midst of this pandemic. This includes fast track compulsory licences for export to countries without manufacturing capacity. Administrative burdens should not stand in the way of manufacturing and delivering vaccines to where they are needed.

“We believe that a successful contribution of the WTO to the current pandemic will require all WTO Members to agree on actions that will not only encompass the elements enshrined in the Ottawa Group’s proposal on Trade and Health, such as export restrictions or transparency, but also address the problem of insufficient manufacturing capacity. The EU stands ready to engage in such a dialogue.”

In my post yesterday, I reviewed some of the efforts that have already occurred where pharmaceutical companies are working with other companies to expand production and availability worldwide. See March 3, 2021:  WTO Director-General opinion piece in the Financial Times and recent actions by the U.S., https://currentthoughtsontrade.com/2021/03/03/wto-director-general-opinion-piece-in-the-financial-times-and-recent-actions-by-the-u-s/. But the articles referenced yesterday are just some of the collaborations going on as manufacturers with existing capacity work with companies with COVID-19 vaccines to help expand capacity and production and vaccine manufacturers work with contract producers to expand supply chain capabilities. An additional cooperation agreement was announced today in the press. In addition, some governments, including the U.S. and EU have also worked with manufacturers to ramp up production. See, e.g., Wall Street Journal, Novartis to Help Make CureVac Covid-19 Vaccine, March 4, 2021, https://www.wsj.com/articles/novartis-to-help-make-curevac-covid-19-vaccine-11614859271; Reuters, Poland strikes deal to produce Novavax COVID-19 vaccine, March 3, 2021, https://www.reuters.com/article/us-health-coronavirus-poland-mabion/poland-strikes-deal-to-produce-novavax-covid-19-vaccine-idUSKBN2AV19O (“Polish biotech firm Mabion has signed a preliminary agreement to manufacture Novavax’s COVID-19 vaccine with financial support from a state-run fund, as the government strives to accelerate its vaccination programme.”); PMLive, Novartis, Bayer announce separate agreements to bolster COVID-19 vaccine manufacturing, February 1, 2021, http://www.pmlive.com/pharma_news/novartis,_bayer_announce_separate_agreements_to_bolster_covid-19_vaccine_manufacturing_1362454#:~:text=Novartis%20and%20Bayer%20have%20announced,vaccine%20and%20CureVac’s%20vaccine%2C%20respectively.&text=Novartis%20will%20aim%20to%20begin,its%20site%20in%20Stein%2C%20Switzerland (“Novartis and Bayer have announced separate agreements to aid the manufacturing of Pfizer/BioNTech’s COVID-19 vaccine and CureVac’s vaccine, respectively.”); Pharmaceutical Technology, Pharmaceutical Technology-02-01-2021, Volume 2021
Supplement, Issue 1, Contract Service Tapped to Produce COVID-19 Vaccines, Page Number: s29-s30, https://www.pharmtech.com/view/contract-service-tapped-to-produce-covid-19-vaccines (reviewing actions by Pfizer/BioNTech, Moderna, Johnson & Johnson, AstraZeneca, Novavax). Expanding supply also requires vaccines being approved by governments for use. The EU recently announced it was beginning review of the Russian vaccine Sputnik V. See The Globe and Mail, Europe starts review of Russia’s Sputnik V vaccine to try to overcome shortages as new variants appear, March 4, 2021, https://www.theglobeandmail.com/world/article-europe-starts-review-of-russias-sputnik-v-vaccine-to-try-to-overcome/. And, of course, major producers are expanding where they are producing their vaccines using existing or new facilities. See, e.g., The Globe and Mail, Novavax publishes COVID-19 vaccine contract with Canada, March 4, 2021, https://www.theglobeandmail.com/canada/article-novavax-publishes-covid-19-vaccine-contract-with-canada/ (“American pharmaceutical company Novavax has published its vaccine agreement with Canada for 52 million doses of its COVID-19 vaccine. The company expects to eventually produce some of the vaccine in Canada.”).

Thus, a great deal is going on to expand production capacity globally. Strong intellectual property laws are critical to the developments and resource commitments being made. While many developing countries are pushing to start a process of text drafting for a TRIPS waiver at the WTO, such an effort would be counterproductive to global health needs over the longer term. Washington Trade Daily’s March 2, 2021 edition at pages 5-7 has an article entitled “Call for TRIPS Waiver Negotiations” which presents the views of largely developing countries on the desire to move to negotiating text even though there is not agreement on the proposed waiver. See Washington Trade Daily, March 2, 2021, https://files.constantcontact.com/ef5f8ffe501/ed93e180-7dee-4beb-8629-0e73d4d0ea5c.pdf.

The U.S. Chamber of Commerce released a statement on March 2nd characterizing the effort for a TRIPS waiver being promoted by India, South Africa and others as “misguided”. See U.S. Chamber, U.S. Chamber Statement on Proposed WTO IP Rights Waiver, March 2, 2021, https://www.uschamber.com/press-release/us-chamber-statement-proposed-wto-ip-rights-waiver. The statement is copied below (emphasis added to the third paragraph).

WASHINGTON, D.C. – The U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) issued the following statement from Senior Vice President Patrick Kilbride regarding the World Trade Organization (WTO) General Council’s discussion of a proposed waiver of intellectual property (IP) commitments in the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement. 
 
“‘Vaccine distribution is critical for ending the pandemic and reviving the global economy. The U.S. Chamber of Commerce welcomes the WTO General Council’s discussion of the role of intellectual property rights in defeating the COVID-19 pandemic. During this time, transparent and predictable intellectual property rights have formed the legal and economic basis for an unprecedented level of highly successful collaborations between government, industry, academia and NGOs. 
 
“‘The Chamber supports decisive and bold action to remove regulatory and trade barriers in order to boost the global distribution of treatments and vaccines, including support of global vaccine programs such as COVAX. Proposals to waive intellectual property rights are misguided and a distraction from the real work of reinforcing supply chains and assisting countries to procure, distribute and administer vaccines to billions of the world’s citizens. Diminishing intellectual property rights would make it more difficult to quickly develop and distribute vaccines or treatments in the future pandemics the world will face.  
 
“’The ‘3rd Way’ proposed by incoming WTO Director General Ngozi Okonjo-Iweala to encourage licensing agreements is worthy of further discussion and consistent with the ongoing success of government-industry efforts to bring an end to COVID-19 as rapidly and as safely as possible.’”

Conclusion 

While there has been a lot of concern among trading partners about the EU action in imposing export licensing of COVID-19 vaccines, to date the licensing system does not appear to have caused problems in fact in the distribution of doses ordered by the group of countries covered by the new system. Moreover, with or without government encouragement, vaccine producers have been working to expand production through arrangements with other vaccine producers, through working with contract manufacturers, and by expanding facilities and internal capacities.

There is no doubt that the COVID-19 pandemic presents a once in a century global health pandemic with demand at the beginning far outstripping supply. Governments have a role to play working with producers, suppliers, those involved in distribution and applying the vaccines to address bottlenecks, to provide encouragement and incentives to rapidly expand production and to support the efforts of the WHO, GAVI, CEPI, and UNICEF to fund the needs of COVAX. While concerns in the early days of vaccine rollout are understandable, COVAX has contracts with a number of vaccine producers and others under negotiation or awaiting approval. AstraZeneca, the first vaccine producer with a contract to supply COVAX put out a press release on March 2, 2021 which is copied in part below. See AstraZeneca, AstraZeneca advances mass global rollout of COVID-19 vaccine through COVAX, March 2, 2021, https://www.astrazeneca.com/media-centre/press-releases/2021/astrazeneca-advances-mass-global-rollout-of-covid-19-vaccine-through-covax.html.

Supply to 142 countries underway as part of the unprecedented effort to bring
broad and equitable access to the vaccine

“AstraZeneca with its partner Serum Institute of India
will be the biggest initial supplier to COVAX
 

“The first of many millions of doses of AstraZeneca’s COVID-19 vaccine have begun arriving in low and middle-income countries across the world through the multilateral COVAX initiative, the first steps in fulfilling the Company’s efforts to provide broad and equitable access to the vaccine.

“First COVAX shipments were dispatched late last week to Ghana and Cote D’Ivoire, and more are due to begin arriving this week in countries including the Philippines, Indonesia, Fiji, Mongolia and Moldova. This supply represents the first COVID-19 vaccine for many of these countries.

“Further shipments will arrive in the coming weeks with the aim of supplying a total of 142 countries with hundreds of millions of doses of the vaccine in the coming months. The majority of these doses, manufactured by AstraZeneca and its licence partner Serum Institute of India, will go to low and middle-income countries.

“Pascal Soriot, Chief Executive Officer, Astra Zeneca, said: ‘These first steps towards fulfilling our broad, equitable and no-profit emergency response to the pandemic mean millions of people, irrespective of their country’s income level, will soon be protected against this deadly virus. This is a moment of great pride for us at AstraZeneca and I am extremely grateful to our partners including Gavi, CEPI and Oxford University for their hard work and dedication in order to make this humanitarian ideal a reality for many millions of people around the world.’

“Seth Berkley, Chief Executive Officer, Gavi, said: ‘Global, equitable access to COVID-19 vaccines is only possible when the public and private sectors work together. When we launched the Gavi COVAX Advance Market Commitment in June 2020, our first Agreement was with AstraZeneca. Nine months later, the first doses are already being delivered to those that need them most. This is the beginning of COVAX’s effort to end the acute phase of the pandemic, not the end, but we can all take strength from this moment and I thank AstraZeneca and the University of Oxford for their support and partnership at every step of our journey.’

“Vaccine shipments have been allocated according to the COVAX Allocation Framework which determines volume per participating country based on a number of factors, including country readiness, national regulatory authorisations and national vaccination plans in place. The supply through COVAX follows the recent Emergency Use Listing by the World Health Organization (WHO) for active immunisation in individuals 18 years of age and older, which provides a vital and accelerated pathway to enable supply.

“AstraZeneca was the first global pharmaceutical company to join COVAX in June 2020 in line with the Company’s shared commitment to global, equitable access to vaccines.

“The vaccine can be stored, transported and handled at normal refrigerated conditions (2-8 degrees Celsius/36-46 degrees Fahrenheit) for at least six months and administered within existing healthcare settings.”

The “third way” sought by the WTO Director-General has been underway for some time and is picking up speed as vaccines start to be approved. There are an increasing number of announced agreements among producers to work together to expand production of particular vaccines. Thus, collaboration and cooperation among producers has and is occurring. Governments can help by identifying bottlenecks in all areas relevant to raw materials, intermediate products, finished vaccine doses, distribution and resources to apply the vaccines and helping to resolve the bottlenecks; by encouraging increased ramp ups of capacity and production, including through licensing.

A broad waiver of TRIPS obligations as being pursued by India, South Africa and many other developing and least developed countries is unwise, unlikely to be agreed to, and if implemented, will backfire in terms of global cooperation in getting the world’s population vaccinated and will destroy the likelihood of private sector engagement to solve future pandemics. The EU’s approach as laid out in EU Ambassador João Aguiar Machado’s statement on March 2 is likely the best course forward whether through the WTO or otherwise.

WTO Director-General opinion piece in the Financial Times and recent actions by the U.S.

WTO Director-General Ngozi Okonjo-Iweala on her second day on the job in Geneva had an opinion piece in the Financial Times taking to the public her message to the WTO membership that “WTO members must intensify co-operation”. Financial Times, Opinion, Ngozi Okonjo-Iweala: WTO members must intensify co-operation, March 2, 2021, https://www.ft.com/content/0654600f-92cc-47ad-bfe6-561db88f7019. To a large extent, the opinion piece reflects her opening statement to the General Council on March 1st. See March 1, 2021, WTO Director-General Ngozi Okonjo-Iweala’s opening statement at the March 1 General Council meeting, https://currentthoughtsontrade.com/2021/03/01/wto-director-general-ngozi-okonjo-iwealas-opening-statement-at-the-march-1-general-council-meeting/. The opinion piece starts with the challenges posed by the COVID-19 pandemic and the need for equitable and affordable access to vaccines and other medical goods. The Director-General (DG) then goes through the reforms and ongoing negotiations that need to be addressed. The topics include completion of the fisheries subsidies negotiations, dispute settlement reform, updating the rule book to include topics like digital trade and other Joint Statement initiatives, restarting negotiations on environmental goods and services, various topics in agriculture (market access, domestic subsidies, removal of export restrictions on farm products purchased for humanitarian purposes by the World Food Programme) and rules to address distortions flowing from industrial subsidies to state-owned enterprises.

For this post, I will focus on the access to vaccines issue and recent actions by the United States (but also others) on this topic.

Two paragraphs from the opinion piece lay out the views of the Director-General on access to vaccines. They are copied below.

“However, for the global economy to return to sustained growth, we must intensify co-operation to ensure equitable and affordable access to vaccines, therapetics and diagnostics. The WTO can and must play a more forceful role in encouraging members to minimise or remove export restrictions and prohibitions that hinder supply chains for medical goods and equipment.

WTO members have a further responsibility to reject vaccine nationalism and protectionism while co-operating on promising new treatments and vaccines. We must find a ‘third way’ on intellectual property that preserves the multilateral rules that encourage research and innovation while promoting licensing agreements to help scale-up manufacturing of medical products. Some pharmaceutical companies such as AstraZeneca, Johnson & Johnson, and the Serum Institute of India are already doing this.”

While India and South Africa have sought a waiver for all WTO Members from most TRIPS Agreement obligations during the pandemic, that proposal has not received the backing from various developed countries with pharmaceutical industries, a fact the new DG saw first hand during the General Council meeting of March 1-2 where the TRIPS Council reported that there was not yet agreement on what to recommend on the proposal. Rather through the WHO, GAVI and CEPI and the creation of COVAX to buy vaccines for low- and middle-income countries and others wishing to participate, the expectation has been that some 2 billion doses would be available through COVAX in 2021 starting in February and ramping up, with 1.3 billion doses going to 92 countries needing assistance.

In her opening statement to the General Council, DG Ngozi Okonjo-Iweala indicated that COVAX would not be enough even though shipments had started. The latest COVAX interim distribution forecast is embedded below and dates from February 3 and shows the number of doses from the AstraZeneca/Serum Institute, from AstraZeneca’s own facilities and from Pfizer/BioNTech.

COVAX-Interim-Distribution-Forecast

Press accounts identify Ghana as the first recipient from COVAX, but other countries have already received the vaccines as well. See, e.g., World health Organization, First COVID-19 COVAX vaccine doses administered in Africa, March 1, 2021,https://www.who.int/news/item/01-03-2021-first-covid-19-covax-vaccine-doses-administered-in-africa; Pan American Health Organization, Colombia receives the first vaccines arriving in the Americas through COVAX, March 1, 2021, https://www.paho.org/en/news/1-3-2021-colombia-receives-first-vaccines-arriving-americas-through-covax. The Financial Times vaccine tracker shows that by March 3, 2021, 268.6 million doses had been administered in 128 locations/countries. Financial Times, Covid-19 vaccine tracker: the global race to vaccinate, March 3, 2021, https://ig.ft.com/coronavirus-vaccine-tracker/?areas=gbr&areas=isr&areas=usa&areas=eue&cumulative=1&populationAdjusted=1.

In recent weeks, the United States confirmed it was contributing $4 billion to COVAX ($2 billion immediately and $2 billion over the rest of 2021 and 2022). Other countries and the EU increased contributions as well and some countries have agreed to send some vaccine doses as well. See February 19, 2021, COVAX’s efforts to distribute COVID-19 vaccines  to low- and middle income countries — additional momentum received from G-7 virtual meeting, https://currentthoughtsontrade.com/2021/02/19/covaxs-efforts-to-distribute-covid-19-vaccines-to-low-and-middle-income-countries-additional-momentum-from-g-7-virtual-meeting/

From a recent WHO release it is clear that GAVI and the other COVAX partners are working at expanding available vaccines and seeking additional funding beyond what has already been provided or promised. Vaccines from Johnson & Johnson and potentially from Novavax were identified. See UN News, Equitable vaccine delivery plan needs more support to succeed: COVAX partners, March 2, 2021, https://news.un.org/en/story/2021/03/1086142. The release is embedded below.

Equitable-vaccine-delivery-plan-needs-more-support-to-succeed_-COVAX-partners-_-_-UN-News

“intensify co-operation”

There have been efforts at co-operation from the beginning as AstraZeneca’s licensing of its product to India’s Serum Institute demonstrated.

In the United States, President Biden on March 2 announced co-operation between Merck and Johnson & Johnson where Merck will convert two facilities to help in the production of the Johnson & Johnson vaccine. This has been supported by the United States through use of the Defense Production Act to speed access to equipment needed for the conversion. Merck is a major vaccine producer but doesn’t have a viable COVID-19 vaccine of its own. See NPR, How The White House Got 2 Pharma Rivals To Work Together On COVID-19 Vaccine, March 3, 2021, https://www.npr.org/2021/03/03/973117712/how-the-white-house-got-2-pharma-foes-to-work-together-on-covid-19-vaccine. This is the type of co-operation that DG Okonjo-Iweala referenced in her opinion piece yesterday.

Johnson & Johnson in late February had struck an arrangement with Sanofi in France for similar cooperation at one of Sanofi’s facilities in France. Similarly, Sanofi had earlier struck a deal with Pfizer-BioNTech. See Sanofi, Sanofi to provide manufacturing support to Johnson & Johnson for their COVID-19 vaccine to help address global supply demands, February 22, 2021, https://www.sanofi.com/-/media/Project/One-Sanofi-Web/Websites/Global/Sanofi-COM/Home/media-room/press-releases/2021/20200222-Sanofi-statement-EN.pdf.

The world’s largest vaccine producer, GlaxoSmithKline, has entered an agreement to help produce CureVac produce some of CureVac’s first generation COVID-19 vaccine in 2021 and “to jointly develop next generation mRNA vaccines for COVID-19 with the potential for a multi-valent approach to address multiple emerging variants in one vaccine.” See GSK, GSK and CureVac to develop next generation mRNA COVID-19vaccines, 3 February 2021, https://www.gsk.com/en-gb/media/press-releases/gsk-and-curevac-to-develop-next-generation-mrna-covid-19-vaccines/.

There are, of course, other vaccine producers — China has multiple vaccines developed, Russia, India, Cuba has two in development — including companies who do not have a COVID-19 vaccine in development. Thus, additional opportunities for co-operation should exist for those producers as well.

Conclusion

There is understandably great focus within the WTO and its Members in getting past the COVID-19 pandemic and getting economies back on growth paths. The rapid development of vaccines has been critical and has seen extraordinary success in the 15 months since COVID-19 was first identified. The R&D efforts globally have been stunning and have received some government support which has undoubtedly been important particularly in giving pharmaceutical companies an assist in early efforts to ramp up production. There is no question that the R&D efforts would not have occurred at the level that has taken place without strong intellectual property protections.

There has been great efforts by the WHO along with GAVI and CEPI to prepare to be able to get large quantities of vaccines to low- and middle-income countries when vaccines are available including by contracting with multiple companies pursuing a vaccine, reserving capacity, etc. There have been efforts by many countries to help build support for the COVAX approach and to provide funding for the purchase of vaccines for those in need. The effort is having success and can be more successful as 2021 moves into the second quarter and as countries, NGOs, businesses and individuals contribute to see that there is adequate funding for the effort being undertaken.

In addition to COVAX, a number of countries have been sending some of their production of vaccines to other countries. These include China, Russia and India. The U.S. has been in discussions with Japan, Australia and India for helping in getting vaccines to some countries as well. See Financial Times, US and Asia allies plan Covid vaccine strategy to counter China, March 3, 2021, https://www.ft.com/content/1dc04520-c2fb-4859-9821-c405f51f8586. These efforts are likely to accelerate as 2021 moves into the 3rd and 4th quarters.

Moreover, many of the major Western pharmaceutical companies engaged in vaccine production have partnered with other companies around the world to expand capacity and production of vaccines that have proven successful. So cooperation is already occurring. The Biden Administration’s efforts in recent weeks with Johnson & Johnson and Merck show that government involvement to encourage cooperation for expanding capacity and production and providing assistance in terms of availability of supplies can be an important assist to ramping up production.

Thus, the track record to date does not support a waiver of most TRIPS obligations as has been requested by the world’s largest producer of vaccines (India) and South Africa. Private companies have worked with partners on developments and in a number of cases on producing vaccines. Early success vaccines like Pfizer/BioNTech and Moderna have led to significant increases in plans for production by those companies through their own operations or through partnering with others. A number of other vaccines are now approved in major markets or are close to being approved. Significant funding has been provided or promised to make vaccines available to those in need at no cost.

All of the above is “the third way” sought by the new Director-General. It is already working. The WTO should focus its efforts on export restraints on medical goods and collaborate with other multilateral organizations to understand bottlenecks in capacity expansions, supply chain issues, distribution challenges and other aspects to determine if there are matters requiring WTO attention.

WTO Director-General Ngozi Okonjo-Iweala’s opening statement at the March 1 General Council meeting

Dr. Ngozi Okonjo-Iweala took the helm of the WTO today, March 1, as Director-General and outlined at the beginning of the first day of a two day General Council meeting the need for change at the organization and how Members address the many challenges before them. In a post last week, I had looked at some of the challenging issues confronting the WTO and the new Director-General (DG), some within the General Council agenda. See February 26, 2021, WTO Director-General Ngozi Okonjo-Iweala’s first week on the job starts with a two day General Council meeting, https://currentthoughtsontrade.com/2021/02/26/wto-director-general-ngozi-okonjo-iwealas-first-week-on-the-job-starts-with-a-two-day-general-council-meeting/.

The statement by DG Okonjo-Iweala can be found on the WTO webpage. See WTO, DG Okonjo-Iweala: WTO can deliver results if members “accept we can do things differently”, 1 March 2021, https://www.wto.org/english/news_e/spno_e/spno1_e.htm. Her comments started with thanks to the Members, to the troika of Chairs that had worked the DG selection process, to the four Deputy Directors-General who had managed the organization since the end of August and to the WTO Secretariat staff. Dr. Okonjo-Iweala reviewed the need for doing things differently, the fact that in a Member driven-organization, movement would require efforts by all, and her view based on discussions that the WTO was viewed as less relevant since it has been unable to deliver results. Her comments on the challenges to relevance are copied below.

“I have said it. It cannot be business as usual. We have to change our approach from debate and rounds of questions to delivering results. Excellencies, many of you put in long hours and a great deal of effort to do good work much of which goes unnoticed. There are excellent people in the capitals doing good work. We have talented staff in the Secretariat. But the world is no longer cognizant of this, does not recognize the effort because we are not delivering results at the pace required by our fast-changing environment. Last week at the TNC, several Ambassadors said that You Excellencies talk past each other. You don’t talk to each other. This approach has to change. We have to be more accountable to the people we came here to serve — the ordinary women and men, our children who hope that our work here to support the MTS, will result in meaningful change in their lives, will improve their standard of living, and create decent jobs for those who seek work.

“Excellencies, coming from the outside I have noticed that the world is leaving the WTO behind. Leaders and decision makers are impatient for change. Several Trade Ministers said to me that if things don’t change, they will no longer attend the Ministerial because it is a waste of their time. I have noticed that more and more of the work and decision making that should be undertaken at the WTO is being done elsewhere because there is an increasing loss of confidence in the ability of the WTO to produce results. But there is hope. If we all accept that we can no longer do business as usual, that will help us create the parameters for success.”

DG Okonjo-Iweala then reviewed the long list of issues of importance to various parts of the WTO Membership and the need to achieve deliverables by the 12th Ministerial Conference. After her speech, the date and venue of the 12th Ministerial Conference were taken up as agenda item 4 and a decision taken to hold the Ministerial Conference the week of November 29 in Geneva with the Kazakhstan trade minister chairing the Ministerial Conference (Kazkhstan had offered to host in 2020 and again in 2021 including in December). See WTO, Twelfth Ministerial Conference to take place in Geneva in late 2021, 1 March 2021, https://www.wto.org/english/news_e/news21_e/minis_01mar21_e.htm.

For DG Okonjo-Iweala it is important that the WTO membership have an achievable agenda for the upcoming Ministerial Conference (MC), which means not attempting too much. However, the list of “deliverables” DG Okonjo-Iweala outlined is significant as well as the group of issues on which agreed work programs should be ready for adoption at the MC. Here is what DG Okonjo-Iweala outlined as the hoped-for focus.

“Therefore, we must work hard to complete a few deliverables before MC12 so that Ministers can focus on ratifying agreements and agreeing best methods for implementation. In this regard, we need to prioritize action on COVID-19 both for the immediate and longer term and focus on completing Fisheries Subsidies negotiations before the middle of the year. We must agree the road map for reform of the Dispute Settlement System and prepare a work program to achieve this which can be endorsed at MC12. On Agriculture, let us identify a few things we can deliver such as PSH, SSM, Cotton, and the WFP Humanitarian waiver which is material to our Pacific Island economies as we heard a few days ago. We must put forward a subsidies work program both on domestic support and industrial subsidies which can be agreed on at MC12. We must sharpen our approach to SDT bearing in mind how crucial this is to the policy space of Least Developed Countries in particular. For the rest, let us review the work on e-commerce, investment facilitation, Services Domestic Regulation, MSMEs, Women in Trade, and Trade and Climate to see what aspects of these important work programs we can advance at MC12. So in short, I am suggesting three or four clear deliverables finalized before MC12 and work programs for the rest to be agreed at MC12.”

DG Okonjo-Iweala then turned to the challenges of the COVID-19 pandemic, more specifically getting the world vaccinated. She noted the proposal by India and South Africa (supported by many developing countries) for a waiver from TRIPS obligations for medical goods during the pandemic. A status report from the TRIPS Council on the proposed waiver is agenda item 6. DG Okonjo-Iweala argues that time is of the essence and that while WTO Members deal with the waiver proposal, efforts should be made to ramp up global production and distribution, noting the challenges facing COVAX in delivering vaccines to low- and middle-income countries and the gross shortfall between global vaccine capacities and global vaccine needs. It is not clear what direct role the WTO has or should have in working with companies to expand production or to encourage additional licensing, but certainly there is a role for governments collaborating on the issue and for multilateral organizations to collaborate and develop information on current and planned capacities, existing licensing arrangements (as there are some in existence already). Here is what DG Okonjo-Iweala said.

“Permit me Ladies and Gentlemen to spend just a little time on COVID-19. We have a demand for a TRIPS waiver by a growing number of developing countries and the dialogue is intensifying. Whilst this is happening, I propose that we ‘walk and chew gum’ by also focusing on the immediate needs of dozens of poor countries that have yet to vaccinate a single person. People are dying in poor countries. We just had our first COVAX shipment to Ghana last week and others will follow but it will not be enough. There is serious supply scarcity and some countries are out bidding COVAX and diverting supplies. The world has a normal capacity of production of 3.5 billion doses of vaccines and we now seek to manufacture 10 billion doses. This is just very difficult, so we must focus on working with companies to open up and license more viable manufacturing sites now in emerging markets and developing countries. We must get them to work with us on know how and technology transfer now. There will soon be a world manufacturing convention where we can seek to build this partnership. I also hope we can initiate a dialogue and information exchange between us and representatives of manufacturers associations from developing and developed countries. Excellencies, this should happen soon so we can save lives. As I said at the beginning, this will be an interim solution whilst we continue the dialogue on the TRIPS waiver.”

The General Council meeting runs through tomorrow March 2. While much of a General Council meeting is simply reporting developments in various areas, it is also an opportunity for Members to stake out positions and measure the sense of openness to agenda items by the WTO membership. There is no doubt that WTO Members expressed great enthusiasm and hope for the new Director-General. Whether that will translate into Members working differently to obtain solutions and find compromises is unknown at this point but seems unlikely with the deep divisions and differences of views on objectives for the WTO held by Members. The new DG clearly will be pushing Members to proceed in a more collaborative and solution-finding mode. Her own list of objectives for MC12 is quite ambitious and includes items that are very controversial to many. Her wanting WTO involvement in considering vaccine production and distribution levels is more consistent with her prior role at GAVI and her background as a development economist than her current role as WTO DG. Finding a comfort zone for WTO Members to act within the WTO, other than the consideration of the waiver proposal, on such issues may prove to be challenging. What is clear is that the new DG is looking forward to working with Members to return the WTO to greater relevance. Her opening statement at the General Council meeting says she will be urging Members to get out of their comfort zones. Fingers crossed that she is successful.

WTO Director-General Ngozi Okonjo-Iweala’s first week on the job starts with a two day General Council meeting

While the WTO’s General Council, in special session, appointed Dr. Ngozi Okonjo-Iweala to be the next Director-General on February 15, 2021, her term starts on Monday, March 1. The challenges facing the WTO membership and the incoming Director-General are many and complex. At the same time, there is a lot of useful work that is done within the WTO including efforts of non-members to join the WTO (accessions).

In speaking to an informal Trade Negotiations Committee and Heads of Delegation meeting on February 25, Deputy Director-General Alan Wolff spoke in part on “The Ngozi Okonjo-Iweala Era”. See WTO, DDG Wolff calls on members to work with new Director-General to reform WTO, 25 February 2021, https://www.wto.org/english/news_e/news21_e/ddgaw_25feb21_e.htm. Part of the section of his statement on the new DG’s era is copied below.

“The Ngozi Okonjo-Iweala Era

“The landmark event of the last six months was the appointment of the new Director-General ten days ago after what turned out to be a lengthy process.  91 member delegations spoke last week to congratulate the new Director-General. The DDGs and the Secretariat join you in welcoming Dr Okonjo-Iweala’s appointment with great enthusiasm.

“Of course, member enthusiasm, optimism and hope need to be translated into concrete action.  

“There is much that needs to be done at this critical juncture for the WTO. World trade must contribute to a more effective pandemic response as well as a strong and sustainable economic recovery. Climate issues are demanding more urgent attention. WTO reform is overdue, having been called for repeatedly by you, by your ministers and by many heads of government. 

“The challenges are many but so are the opportunities. Dr Ngozi’s remarks at the Special General Council meeting last Monday, subsequently circulated to delegations in document JOB/GC/250, presented a worthy and ambitious agenda for the members of this organization.

“What did she say?

“To act with a sense of urgency to assist in controlling the COVID-19 pandemic through the nexus of trade and public health:

“First, by playing a more forceful role in exercising the WTO’s monitoring function. Part of this would involve encouraging members to minimise or remove export restrictions that hinder supply chains for medical goods and equipment. WTO monitoring suggests that as of yesterday, 59 members and 7 observers still had pandemic-related export restrictions or licensing requirements in place, mostly for personal protective equipment, disinfectants and to a lesser extent, for medicines and food. This represents a significant level of rollback compared to the 81 members and 10 observers that had implemented such measures over the past year. A welcome development — but there is much room to improve this record.  

“And second, by broadening access to new vaccines, therapeutics, and diagnostics by facilitating technology transfer within the framework of multilateral rules.

“Beyond these immediate responses to the pandemic, Dr Ngozi set out a number of other, also vitally important, challenges:

“To swiftly conclude the fisheries subsidies negotiations, and thus pass a key test of the WTO’s multilateral credibility while contributing to the sustainability of the world’s oceans.

“To build on the new energy in the multilateral trading system from the joint statement initiatives attracting greater support and interest, including from developing countries.

“To address more broadly the nexus between trade and climate change, using trade to create a green and circular economy, to reactivate and broaden negotiations on environmental goods and services, to take the initiative to address the issue of carbon border adjustments as they may affect trade.

“To level the playing field in agricultural trade though improving market access and dealing with trade distorting domestic support, exempting from export restrictions World Food Programme humanitarian purchases.

“To strengthen disciplines on industrial subsidies, including support for state-owned enterprises. 

“To defuse the divisions over Special and Differential Treatment (SDT).

“And to develop a work programme for restoring two-tier dispute resolution, to be agreed no later than MC12.

“I sense from my discussions with members that you chose this leader, Ngozi Okonjo-Iweala, because she has shown herself during her career to be fearless in the face of daunting challenges — and is experienced in knowing how to work with others to make progress toward solutions. 

“Each of the challenges the WTO faces, I am sure, can be met and overcome.  Echoing Dr Ngozi’s words, the trading system that we inherited, now only three-quarters of a century old, is about people.  This is inscribed in the opening section of the Marrakech agreement: ‘to raise living standards, ensure full employment, increase incomes, expand the production of and trade in goods and services, and seek the optimal use of the world’s resources in accordance with the objective of sustainable development.”’

DDG Wolff’s summation correctly lays out many of the issues needing to be addressed by the WTO membership. The vast majority of the issues are highly controversial among at least some Members.

The first major order of business is a two day General Council meeting on March 1-2 which has several agenda items that lay out controversies on important potential deliverables by the WTO in 2021. The agenda for the two day meeting contains sixteen items. See WT/GC/W/820 (26 February 2021) embedded below.

W820

General Council meetings deal with updates on ongoing work at the WTO and address issues teed up by particular Members for consideration at the meeting. This post does not take up all agenda items but highlights a few of possible interest. Because DDG Wolff’s statement on February 25 reviews many of the activities of the WTO in the last six months which shows some of the positive developments, the full statement is embedded below.

WTO-_-2021-News-items-Speech-DDG-Alan-Wolff-DDG-Wolff-calls-on-members-to-work-with-new-Director-General-to-reform-WTO

The 12th WTO Ministerial Conference

Agenda item 4 deals with the 12th WTO Ministerial Conference. It is expected that there will be a decision on the timing and location of the twelfth Ministerial Conference at the General Council session on Monday-Tuesday. The 12th MC was postponed from June 2020 because of the COVID-19 pandemic. With the continued challenges from the pandemic the likely date will be the end of 2021. Kazakhstan which had offered to host the conference in 2020 and again in the summer of 2021 has recently indicated a willingness to host in December of this year as well. The ministerial had originally been scheduled for June because of challenging weather conditions in Kazakhstan in December. See TWELFTH SESSION OF THE MINISTERIAL CONFERENCE, COMMUNICATION FROM KAZAKHSTAN, 8 February 2021, WT/GC/229 (24 February 2021)(embedded below).

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Report on WTO Accessions

Deputy Director-General Wolff will provide a statement on the annual report on WTO accessions. The report is WTO ACCESSIONS, 2020 ANNUAL REPORT BY THE DIRECTOR-GENERAL, WT/ACC/38, WT/GC/228 (18 February 2021). Activity on accessions was challenged by the pandemic and inability to travel/hold in person meetings. More technical assistance and virtual meetings were held. Accessions are important for acceding governments in terms of promoting reforms at home and obtaining increased certainty in their international trade relations. Accessions are also an important benefit of membership for existing Members as acceding Members reduce tariffs and various non-tariff barriers to gain accession. The first eight paragraphs of the report provide an overview of activities in 2020 and are copied below.

Overview of activities in 2020

“1. 2020 was an unprecedented year in recent history due the COVID-19 pandemic outbreak and its consequences which have touched upon every single aspect of our lives in every corner of the world. It was a challenging year for the WTO, not least because the pandemic disrupted its core activities, especially during the first half of the year, and it also disrupted the international trade of Members, except for supplies of essential goods critical to combatting the health crisis as trade in these goods expanded dramatically. The difficulties and challenges arising from the pandemic were particularly pronounced in acceding governments due to the uncertainties of being outside of the multilateral trading system. In fact, the desire and urgency to be part of the WTO was never felt stronger than in the pandemic year. This was reflected in the level of accession activities in 2020, which was sustained vis-à-vis previous years, with a significant increase in technical assistance and outreach activities.

“2. The year for accessions started with the establishment of a new Working Party for the accession of Curaçao, a constituent country within the Kingdom of the Netherlands (WTO Member), following its application for an independent membership as a separate customs territory pursuant to Article XII of the Marrakesh Agreement. This constituted the 59th request by a state or separate customs territory for membership since the establishment of the Organization in 1995. In July, Turkmenistan was granted observer status in the WTO, with the understanding that it would apply for accession no later than in five years. This brought the total number of observer governments with the intention to accede to the WTO to 24, an increase by five since 2016 when Afghanistan and Liberia became the Organization’s most recent Members. The continuing interest to become part of the multilateral trading system is a testament to the attraction and relevance of its values and principles for all economies, regardless of their size or level of development.

“3. The COVID-19 pandemic undoubtedly hampered or delayed the technical work by acceding governments, Members and the Secretariat to prepare for, engage in and follow up on Working Party meetings. However, thanks to the firm commitment of the acceding governments to advance their work, four Working Parties met, including through the use of virtual platforms that connected the acceding governments which were unable to travel to Geneva. One acceding government had to cancel its already scheduled meeting due to the suspension of all WTO meetings in March. Out of the four accession Working Party meetings held in 2020, three were on LDC accessions (Ethiopia, Comoros and Timor-Leste). In two cases – the Working Parties of Ethiopia and Uzbekistan – this also represented the formal resumption of accession processes after several years of inactivity (8 and 15 years, respectively), signalling their desire to use WTO membership negotiations to drive domestic economic reforms, which have broader implications in the regions where they are located.

“4. When the pandemic halted planned missions, technical assistance, and outreach activities which required air travel, the Secretariat rapidly shifted the mode of operation to virtual format and took advantage of the opportunities provided thereby. In addition to the formal accession Working Party meetings which took place via Interprefy, the Accessions Division organised virtual technical meetings and briefing sessions with acceding governments, Working Party Chairpersons and partners in support of accessions. Moreover, the Division delivered a number of technical assistance, training and outreach activities in response to articulated needs of acceding governments, using various virtual platforms, such as MS Teams, Zoom and WebEx. In fact, the number of activities delivered by the Division and of participants who attended or were trained in 2020 exceeded considerably the numbers in previous years.

“5. One of the novel outreach programs developed in 2020 was two week-long activities which consisted of a series of webinars combining lectures, training and panel discussions. The first Accessions Week was organised from 29 June to 3 July, and the first edition of the Trade for Peace Week took place from 30 November to 4 December. These virtual events brought together a large number of resource persons and panellists from around the world and reached out to a larger number of participants, in a highly cost-effective manner, in comparison with traditional in-person activities. While the full values and benefits of in-person interaction cannot be replaced or replicated, the Accessions Week enabled the Secretariat to remain engaged with acceding governments and Members, experts and partners, beyond Geneva and around the world. The Trade for Peace Week provided an effective networking platform to expand the WTO’s partnership with the peace and humanitarian communities in support of fragile and conflict affected (FCA) countries in accession.

“6. The importance of collaboration and cooperation with partners was never felt more strongly than in 2020. The Secretariat made concerted efforts to enhance and expand the “Trade for Peace through WTO Accession” Initiative to support FCA countries in accession and those recently acceded to the WTO. In 2020, nine acceding governments were identified as being in a FCA situation according to the World Bank’s classification1, while conflicts emerged or resurged in some others. The pandemic hit hardest countries which had already been suffering from years of conflict, political crises, drought and other natural disasters, compounded by declines of the price of oil and other commodities. Nonetheless, some FCA acceding LDCs showed remarkable resilience in sustaining their engagement in accession. The Working Party on the Accession of the Union of Comoros resumed its work with determination to finalise the process as soon as possible. The Working Party on the Accession of Timor-Leste activated the Working Party by holding its first meeting nearly four years after its establishment, despite various challenges faced on the domestic front. Moreover, Somalia submitted its Memorandum on the Foreign Trade Regime, the base document to start its accession engagement with Members. Furthermore, the Secretariat continued to provide support to the g7+ WTO Accessions Group, which was coordinated by Afghanistan.

“7. The year 2020 marked the 25th anniversary of the WTO. The Secretariat used its annual flagship event, the China Round Table on WTO Accessions, to review the contributions made by accessions to the multilateral trading system since 1995. The event also provided an opportunity for an exchange of ideas to explore the future expansion of WTO membership towards universality, including through possible improvements in the accession process. The year also marked a significant anniversary milestone for five Article XII Members2 – Albania, Croatia, Georgia, Jordan and Oman which joined the WTO in 2000, the year with the largest number of new members to date. Other anniversary milestones included the fifth anniversaries of Membership of Kazakhstan and Seychelles and the fifteenth anniversary for the Kingdom of Saudi Arabia. In recent years, membership anniversaries have become an important occasion to reflect on the benefits and values of being part of the Organization.

“8. Finally, the thematic focus of the 2020 Annual Report was on the complementarities and synergies in negotiating WTO membership and regional trade agreements. Almost all acceding governments are involved in regional integration initiatives in parallel with their efforts to achieve WTO membership. The highlight of the year was the implementation of the African Continental Free Trade Area (AfCFTA) to which all African WTO applicants are signatories. The Report’s thematic section builds on the rich discussions held on the topic during the 2020 Regional Dialogues on WTO Accessions for Africa and for the Arab Region, as well as other meetings on Central Asia and Eurasia. It aims to explore key opportunities and challenges that may arise in a simultaneous pursuit of regional and global integration efforts and to provide a checklist of issues for trade negotiators to consider in maximising the benefits from the participation in multiple trade arrangements.”

The full report is embedded below.

WTACC38

Waiver of TRIPS Obligations During COVID-19 Pandemic

The sixth agenda item involves the effort from India and South Africa with a number of other developing or least developed countries to obtain a waiver from most TRIPS obligations on medical goods needed for the COVID-19 pandemic. This has been a very controversial issue with developed countries with pharmaceutical companies involved in the production of vaccines and other items opposing the waiver on the basis of existing flexibilities within the TRIPS Agreement and on the global efforts through the WHO, GAVI and CEPI to provide vaccines to low- and middle-income countries through COVAX with financial contributions from many countries, NGOs and others. See, e.g., February 19, 2021, COVAX’s efforts to distribute COVID-19 vaccines  to low- and middle income countries — additional momentum received from G-7 virtual meeting, https://currentthoughtsontrade.com/2021/02/19/covaxs-efforts-to-distribute-covid-19-vaccines-to-low-and-middle-income-countries-additional-momentum-from-g-7-virtual-meeting/

The TRIPS Council received the proposal back in October but has been unable to provide a recommendation to the General Council. A meeting of the TRIPS Council earlier this month continued the lack of agreement. Thus, the agenda item will simply result in the item being continued on the General Council’s future agendas until resolved or dropped. See WTO, Members discuss TRIPS waiver request, exchange views on IP role amid a pandemic, 23 February 2021, https://www.wto.org/english/news_e/news21_e/trip_23feb21_e.htm (” In this context and given the lack of consensus on the waiver request, members agreed to adopt an oral status report to be presented to the General Council at its next meeting on 1-2 March. The report indicates that the TRIPS Council has not yet completed its consideration of the waiver request and therefore will continue discussions and report back to the General Council.”); December 11, 2020, Council for Trade-Related Aspects of Intellectual Property Rights meeting of December 10, 2020 – no resolution on proposed waiver of TRIPS obligations to address the pandemic, https://currentthoughtsontrade.com/2020/12/11/council-for-trade-related-aspects-of-intellectual-property-rights-meeting-of-december-10-2020-no-resolution-on-proposed-waiver-of-trips-obligations-to-address-the-pandemic/; December 6, 2020, Upcoming December 11th Council for Trade-Related Aspects of Intellectual Property Rights meeting – reaction to proposed waiver from TRIPS obligations to address COVID-19, https://currentthoughtsontrade.com/2020/12/06/upcoming-december-11th-wto-council-for-trade-related-aspects-of-intellectual-property-rights-meeting-reaction-to-proposed-waiver-from-trips-obligations-to-address-covid-19/; 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/.

Fisheries Subsidies negotiations — Draft Ministerial Decision

The WTO has been pursuing negotiations on fisheries subsidies to address sustainable fishing concerns since the end of 2001. Conclusion of the negotiations were supposed to take place in 2020 but WTO Members were unable to get the job completed in part because of disruptions from the COVID-19 pandemic. While completing the negotiations remains a key objective of Members and the incoming Director-General and such completion is needed to fulfill the UN Sustainable Development Goal 14.6, WTO Members continue to face a large number of challenging issues. See, e.g., WTO press release, WTO members hold February cluster of meetings for fisheries subsidies negotiations, 24 February 2021, https://www.wto.org/english/news_e/news21_e/fish_24feb21_e.htm; February 22, 2021, An early test for the incoming WTO Director-General — helping Members get the Fisheries Subsidies negotiations to a conclusion, https://currentthoughtsontrade.com/2021/02/22/an-early-test-for-the-incoming-wto-director-general-helping-members-get-the-fisheries-subsidies-negotiations-to-a-conclusion/.

Agenda item 7 is entitled “Supporting the Conclusion of Fisheries Subsidies Negotiations for the Sustainability of the Ocean and Fishing Communities — Draft Ministerial Decision — Communication from Brazil (WT/GC/W/815. The draft Ministerial Decision is an effort by Brazil to highlight the critical aspect of the negotiations which is to address environmental sustainability and presumably reflects Brazil’s concerns with the efforts of so many Members to protect their subsidies versus ensuring sustainable fishing. The document is embedded below.

WTGCW815

An attack on Joint Statement Initiatives

As reviewed in the incoming Director-General’s statement on February 15 and the summary of her statement by DDG Wolff on February 25, an important aspect of ongoing work at the WTO is a number of Joint Statement Initiatives that were started at the end of the 11th Ministerial Conference in Buenos Aires, including on e-commerce/digital trade.

Agenda item 10 is a frontal attack on such initiatives by India and South Africa through their paper, “Legal Status of Joint Statement Initiatives and Their Negotiated Outcomes”, WT/GC/819. I had reviewed the submission in an earlier post. See February 20, 2021, Will India and South Africa (and others) prevent future relevance of the WTO?, https://currentthoughtsontrade.com/2021/02/20/will-india-and-south-africa-and-others-prevent-future-relevance-of-the-wto/. The agenda item will like see many delegations take the floor to support the use of joint statement initiatives within the WTO or to oppose them. While there won’t be a resolution of the issue, the challenge to the process could significantly handicap some of the efforts envisioned by the incoming Director-General to help developing and least developed countries take advantage of the e-commerce/digital trade world and eventually participate in talks and/or in an agreement. WT/GC/W/819 is embedded below.

WTGCW819-1

Agenda item 8 is viewed as related to agenda item 10. India has been seeking to limit WTO consideration of e-commerce issues to the multilateral efforts over many years within the existing Councils and Committees of the WTO (but where limited progress has been made).

COVID-19 and possible future pandemics — addressing existing trade restrictions and improving the functioning of the WTO to better handle in the future

The incoming Director-General has as a high priority to work with Members to improve monitoring of export restraints on medical goods and agricultural goods during the pandemic and working with Members to see that the WTO helps Members recover and better handle any future pandemics. The Ottawa Group had put forward a trade and health initiative in November 2020. See COVID-19 AND BEYOND: TRADE AND HEALTH, WT/GC/223 (24 November 2020). The communication was made by Australia, Brazil, Canada, Chile, the European Union, Japan, Kenya, Republic of Korea, Mexico, New Zealand, Norway, Singapore and Switzerland. The document contains an annex reviewing the types of actions Members could take to improve the response to the pandemic and improve conditions going forward. Included in the annex to the communication are sections on export restrictions; customs, services and technical regulations; tariffs; transparency and review; cooperation of the WTO with other organizations. Several paragraphs in the communication review the issue of possible export restrictions on vaccines and are copied below.

“9. We realize that the challenges related to the scarcity of essential medical goods, now alleviated to some extent by the response on the supply side, may be repeated at the moment of the development of a vaccine or new medical treatments. In this context, we welcome the COVID-19 Vaccine Global Access Facility (COVAX), a global pooled procurement mechanism for COVID-19 vaccines, managed by Gavi, the Vaccine Alliance, the Coalition for Epidemic Preparedness Innovations (CEPI) and WHO. This mechanism is critical in securing an equitable share of vaccines for all Members of the international community. As we strongly support the objective of this facility, we call on WTO Members to ensure that any export-restricting measures do not pose a barrier to the delivery of necessary supplies under the COVAX facility.

“10. We recognize the collaborative efforts of private and public stakeholders in the research and development of COVID-19 diagnostics, vaccines and treatments. We encourage the industry to take actions to ensure access at affordable prices to COVID-19 diagnostics, vaccines and treatments for vulnerable populations and support voluntary pooling and licensing of IP rights to accelerate the development of such diagnostics, treatments and vaccines and scaling up their production. We recognize the importance of the IP system in promoting R&D and innovation for access to effective treatments. We note that the flexibilities provided by the TRIPS Agreement and reaffirmed in the Doha Declaration on the TRIPS Agreement and Public Health remain available to protect public health and to promote access to medicines for all.”

The full document is embedded below.

WTGC223

Canada will be providing an update on the initiative at the General Council meeting and will likely see many Members provide comments on the agenda item.

Agenda item 9 was added by Colombia, Costa Rica, Ecuador, Panama and Paraguay reflecting concerns by them (and presumably many other trading partners) about actions taken by the European Union to exert control over exports of vaccines from the EU in light of EU concerns about its own access to vaccines from manufacturers. See CALL TO PREVENT EXPORT RESTRICTIONS ON COVID-19 VACCINES, WT/GC/818 (18 February 2021). The document is embedded below.

WTGCW818

Since the EU is one of the Members who has pushed the trade and health initiative, there is concern by some WTO Members that its actions on vaccines run counter to the initiative it is supporting. Presumably the EU will argue that its actions are consistent with its rights under the WTO and is consistent with the language laid out in paragraphs 9 and 10 above.

The two agenda items are likely to show the concerns of many Members on equitable access to medical goods during the pandemic and the reluctance of at least some Members to reduce their flexibilities under the existing WTO rights and obligations.

Conclusion

DDG Wolff indicated that Members selected the incoming Director-General because she is “fearless in the face of daunting challenges”. There is no shortage of daunting challenges facing the WTO and its new Director-General. A few have been reviewed above.

Some good news is that the EU and the United States are supportive of many of the priorities laid out by DG Ngozi Okonjo-Iweala in her February 15 statement to the Special Session of the General Council as seen in the recent EU revised trade policy and the opening statement of USTR nominee Katherine Tai at yesterday’s Senate Finance Committee confirmation hearing See February 18, 2021, The European Commission’s 18 February 2021 Trade Policy Review paper and Annex — WTO reform and much more proposed, https://currentthoughtsontrade.com/2021/02/18/the-european-commissions-18-february-2021-trade-policy-review-paper-wto-reform-and-much-more-proposed/; February 25, 2021, U.S. Trade Representative nominee Katherine Tai confirmation hearing before the U.S. Senate Finance Committee, https://currentthoughtsontrade.com/2021/02/25/u-s-trade-representative-nominee-katherine-tai-confirmation-hearing-before-the-u-s-senate-finance-committee/.

The challenges the new Director-General and the WTO Members face will be made harder by the lack among Members of a common vision and agreed purpose of the WTO, by the current inability of the WTO system to address fundamentally different economic systems, by the structure of decision making, by the failure of obligations to be updated to match level of economic development and role in global trade and by the related issue of how special and differential treatment is used. These challenges have resulted in a negotiating function that is broken, in a dispute settlement system that has no checks on the reviewers for errors or failures to operate within the bounds of authority granted in the Dispute Settlement Understanding and in the underperformance of the monitoring and implementation function.

Hopefully, DG Okonjo-Iweala will develop a strong personal staff and group of DDGs to help her attempt the seemingly impossible — getting meaningful progress and reform from the 164 current WTO Members. See February 13, 2021, Leadership change at the WTO — with Dr. Ngozi Okonjo-Iweala’s arrival next week, what support team and early changes in the role of the Secretariat could help WTO Members move forward?, https://currentthoughtsontrade.com/2021/02/13/leadership-change-at-the-wto-with-dr-ngozi-okonjo-iwealas-arrival-next-week-what-support-team-and-early-changes-in-the-role-of-the-secretariat-could-help-wto-members-move-forward/

Director-General Ngozi Okonjo-Iweala will get her first reality check at the General Council meeting on March 1-2.


An early test for the incoming WTO Director-General — helping Members get the Fisheries Subsidies negotiations to a conclusion

Dr. Ngozi Okonjo-Iweala in her statement to the WTO membership during the virtual Special Session of the General Council on February 15 after the Members appointed her the next Director-General made clear that an early deliverable for the WTO was completion of the Fisheries Subsidies negotiations which have been going on since the end of 2001 and were due to have been completed in 2020. See February 16, 2021, Special Session of the General Council at WTO appoints Dr. Ngozi Okonjo-Iweala as the seventh Director-General, https://currentthoughtsontrade.com/2021/02/16/special-session-of-the-general-council-at-wto-appoints-dr-ngozi-okonjo-iweala-as-the-seventh-director-general/.

The Chair of the Negotiating Group on Rules, Amb. Santiago Wills of Colombia, has held two sets of meetings so far in 2021, one in January and one just last week. See WTO Negotiations on Fisheries Subsidies, WTO members resume work on fisheries subsidies negotiations using latest revised text, 22 January 2021, https://www.wto.org/english/news_e/news21_e/fish_22jan21_e.htm; Inside U.S. Trade’s World Trade Online, Fisheries talks chair: Divides remain, but members have what they need for a deal, February 19, 2021, https://insidetrade.com/daily-news/fisheries-talks-chair-divides-remain-members-have-what-they-need-deal. The press releases following the meetings indicate that there has been little movement in fact in 2021 on the host of major issues that remain for Members to resolve. A review of the second revision of the draft text that was released on December 18, 2020 and the Chair’s explanatory note that accompanied the second draft make clear that Members remain divided on a huge array of issues. See RD/TN/RL/126/Rev.2 and RD/TN/RL/126/Rev.2/Add.1.

For example, there is still no agreement on whether the scope of the agreement will cover fuel subsidies (Article 1.2).

Similarly there is not currently agreement on whether the definition of “fishing related activities” in Article 2(c) include coverage of provisions “of personnel, fuel, gear and other supplies at sea”.

Article 3 which deals with the “prohibition on subsidies to illegal, unreported and unregulated fishing” (IUU) consists of nine sub-articles, many of which remain bracketed whether it revolves around which entity can make a finding of IUU activity, whether leniency will be provided for non-serious violations and which violations will always be addressed, the length of sanctions, the level of transparency and obligations of Members, and whether there are exceptions (special and differential treatment (S&DT)) from the prohibitions on IUU. As is true throughout the revised draft, there are deep divides on the special and differential treatment provisions reflecting the concerns expressed by Members like the U.S. and EU on the overbreadth of Members seeking such treatment and the views of Members like India who view such S&DT as applicable to all who claim developing country status.

Article 4 addresses prohibition on subsidies concerning overfished stocks, there continues to be disagreement, inter alia, on when a fish stock is overfished (two alternatives provided) and on what S&DT will be provided.

Article 5 addresses the prohibition on subsidies concerning overcapacity and overfishing contains. Article 5 contains seven sub-articles, a number of which maintain brackets including on “non-recovery of payments under government-to-government access agreements” (Art. 5.3.2), for subsidies provided to a vessel “not flying the flag of the subsidizing member” (Art. 5.4) on whether there will be a provision for “capping” (Art. 5.5) or a “list of non-harmful subsidies” (Art. 5.6) or for S&DT language (Art. 5.7). Art. 5.3 also deals in part with subsidies for fishing or fishing activities outside of a Member’s territory, obviously a very important and contentious issue.

Article 6 dealing with “specific provisions for LDC Members” has not been discussed and remains in brackets but reflects the proposal put forward by LDC Members.

Article 7 is for technical assistance and capacity building. While bracketed, the proposal has not received significant opposition at this point and appears to be largely non-controversial.

On Articles 8-10 (notification and transparency, institutional arrangements, dispute settlement), discussions are ongoing as to what needs to be notified and ability of Members to request additional information. Articles 9 and 10 depend on whether the fisheries subsidies agreement is treated as a stand-alone Agreement or is treated as an Annex to the Subsidies and Countervailing Measures Agreement. If an Annex, dispute settlement is already provided for; if treated as a stand alone Agreement, then there will need to be an article providing for dispute settlement.

Article 11 covers final provisions and addresses issues such as whether Members will “exercise due restraint” when providing subsidies to fishing or fishing related activities for stocks where the status of the stock (overfished or not) is unknown (Art. 11.2). It also lays out possible exceptions for responding to disasters (and what limits such response shall have)(Art. 11.3) The article also makes clear that the Agreement (or Annex) is not germane to issues of “territoriality or delimitation of maritime jurisdiction” (Art. 11.4).

While the revised draft consolidated text could result in meaningful reform and limitations on harmful subsidies, much of the ongoing debate amongst Members seems to be about how to create exceptions that will permit continued subsidy practices for many Members both within territorial waters and outside of them. The perennial problem within the WTO that reform should be undertaken by others, not by me, is present in the fisheries subsidies negotiations. Can Members demonstrate the ability to come together for the common good? Hard to know as WTO Members have been negotiating for twenty years on fisheries subsidies reform. The Sustainable Development Agenda item 14.6 is designed to help save fishing for all peoples for generations to come. The WTO and the incoming Director-General have an important opportunity to show that global trade can promote sustainability. Let’s hope that a meaningful agreement is yet achievable.

Afterthought

While the revised draft consolidated text provided to Members on December 18, 2020 is clearly a Chairman’s draft, like many drafts in other areas that have routinely be released publicly, the WTO has been slipping into an increased pretense that such texts are “unofficial room documents” and hence not released publicly. While both documents (RD/TN/RL/126/Rev.2 and RD/TN/RL/126/Rev.2/Add. 1) can be found on the internet for those trying to understand the ongoing negotiations, the WTO does not promote transparency and public understanding by pretending that core negotiating documents or draft texts are “unofficial room documents”. Hopefully, the chairs of Committees and leadership within the WTO will correct course and improve transparency in fact and end the misuse of room documents, job documents and other “unofficial” documents which often are the core documents in a negotiation or Committee work.

Will India and South Africa (and others) prevent future relevance of the WTO?

The WTO has struggled to remain relevant as global technology and trade issues evolve from where they were in the 1980s. Part of the challenge flows from the widely divergent interests of a growing membership (currently 164 countries) which coupled with the consensus principle for decision making means any Member can shut down or prevent progress. Part flows from the failure/inability to update commitments based on changing stages of economic development and share of global trade. Part flows from the increased importance of Members whose economic systems are not market-premised under rules which assume such a market orientation. Part flows from the effort of some to seek new rights through dispute settlement and by ineffective controls to prevent excesses by the panels and Appellate Body system adopted in 1994. Part flows from the crises of the COVID-19 pandemic and climate change and the glacier pace of deliberations within the WTO.

All of these forces have led WTO Members to focus energies on bilateral and plurilateral trade agreements and to start a process of so-called Joint Statement Initiatives to let countries desiring to address new or uncovered issues do so.

With the WTO finally having appointed a new Director-General whose priorities include addressing longstanding issues, but also achieving progress on the Joint Statement Initiatives — including digital trade/e-commerce and others — and with the European Union’s 18 February trade policy paper and Annex dealing with WTO reform and indicating the importance of flexibility for bringing open plurilaterals into the WTO, India and South Africa have filed a communication for discussion at the March 1-2, 2021 General Council meeting challenging the “legal status of Joint Statement Initiatives and their negotiated outcomes”. See WT/GC/W/819, 19 February 2021. The Indian and South African paper is embedded below.

WTGCW819

The paper from India and South Africa raises interesting points about existing WTO provisions for modifications of existing agreements and for adding plurilateral agreements and other issues. But the real question for the WTO is whether updating of rules and coverage of technological change and global developments will happen within or outside of the WTO. No issue describes this better than digital trade. Existing WTO rules don’t really address digital trade which has become increasingly important for all countries. While the WTO has had digital trade on its radar since 1998, there has been no meaningful progress within the WTO on multilateral rules. See WTO, Electronic commerce, https://www.wto.org/english/tratop_e/ecom_e/ecom_e.htm. The Joint Statement Initiative on digital trade started in Buenos Aires in late 2017 is an effort by some WTO Members to develop rules for those willing to participate that address important issues affecting digital trade today. See WTO Ministerial Conference, New initiatives on electronic commerce, investment facilitation and MSMEs, https://www.wto.org/english/news_e/news17_e/minis_13dec17_e.htm; JOINT STATEMENT ON ELECTRONIC COMMERCE,WT/MIN(17)/60, 13 December 2017, https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN17/60.pdf&Open=True. The JSI on e-commerce presently has 86 WTO Members participating in the negotiations and is making progress towards potential results as early as the 12th WTO Ministerial Conference in late 2021. See, e.g., Joint Statement on E-Commerce, 18 December 2020, Coordinators of joint initiatives cite substantial progress in discussions, https://www.wto.org/english/news_e/news20_e/jsec_18dec20_e.htm. Embedded below is the 2017 Joint Statement Initiative, the December 2020 Joint Statement on E-Commerce and the December draft text.

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wto_plurilateral_ecommerce_draft_consolidated_text

Conclusion

The paper from India and South Africa may reflect a desire to have an early discussion of what additional flexibilities are needed in the WTO to permit easier inclusion of plurilateral agreements within the WTO. The paper could also be an effort to add leverage to obtaining focus on issues of importance to India and South Africa. It could also be a signal that two Members who historically have had problems with many liberalization efforts are simply looking to lock the WTO down from timely reform and rule updates at least among the willing. If so, the WTO’s drift to irrelevance will continue and solutions outside of the WTO will become the main focus of global trade rules.

COVAX’s efforts to distribute COVID-19 vaccines to low- and middle income countries — additional momentum from G-7 virtual meeting

With the COVID-19 pandemic affecting populations around the world with more than 110 million people having been infected and with more than 2.4 million deaths, the world is anxiously awaiting vaccines to permit vaccinations for vulnerable populations. The Coalition for Epidemic Preparedness Innovations (CEPI), Gavi, the Vaccine Alliance (Gavi) and the World Health Organization (WHO) are co-leads of the COVAX initiative which seeks to provide equitable global access to COVID-19 vaccines. More than 2 billion vaccine doses have been or are being contracted to supply to 92 low- and middle-income countries as well as other countries who have agreed to buy vaccines through COVAX.

The World Health Organization’s Director-General Dr Tedros Adhanom Ghebreyesus has expressed concern about “vaccine nationalism” as large and wealthier countries have contracted for large amounts of vaccines. In a joint statement with the UNICEF Executive Director on February 10, the WHO DG laid out what is needed in 2021 to achieve vaccine equitable distribution. See In the COVID-19 vaccine race, we either win together or lose together, Joint statement by UNICEF Executive Director Henrietta Fore and WHO Director-General Dr. Tedros Adhanom Ghebreyesus, 10 February 2021, https://www.who.int/news/item/10-02-2021-in-the-covid-19-vaccine-race-we-either-win-together-or-lose-together. The joint statement is embedded below.

In-the-COVID-19-vaccine-race-we-either-win-together-or-lose-together

The problem of vaccine availability can be traced to a number of sources including the inability to predict which development efforts would succeed, efforts by governments to support development through funding and advance contracts which do not always support the early vaccine successes, challenges of approval processes in different countries and more. However, it is clear that in the early days of the vaccine rollout, a handful of countries have been able to obtain the largest amount of vaccine doses and to provide vaccinations to citizens. For example, the Financial Times has an update of its “Covid-19 vaccine tracker: the global race to vaccinate” published today (February 19) that looks at data for 99 countries or territories where vaccinations are reported through mid-February. Of a global total of 194.4 million vaccinations, 91.6% are reported by the following 10 countries or groups of countries: United States, 57.2 million; China 40.5 million; European Union, 24.7 million; United Kingdom, 17.0 million; India, 10.2 million; Israel, 7.1 million; Brazil 6.2 million; Turkey, 5.9 million; United Arab Emirates, 5.4 million; Russian Federation, 3.9 million. Of the 99 countries or territories, 24 reported vaccinations of at least 10/100 residents, an additional 30 reported vaccinations of at least 5.0-9.9/100 residents and an additional 10 reported vaccinations of at least 3.0-4.9/100. Gavi views 3% as the percent of population needed to be vaccinated to address health care workers. See Financial Times, Covid-19 vaccine tracker: the global race to vaccinate, February 19, 2021, https://ig.ft.com/coronavirus-vaccine-tracker/?areas=gbr&areas=usa&areas=eue&areas=ind&cumulative=1&populationAdjusted=0

At today’s G-7 virtual meeting, there were new pledges from G-7 countries to contribute to COVAX to permit the purchase of vaccine doses contracted and with some countries agreeing to share surplus vaccine doses with the world’s poorest countries. The Gavi press release of today is embedded below.

G7-backs-Gavis-COVAX-Advance-Market-Commitment-to-boost-COVID-19-vaccines-in-worlds-poorest-countries-_-Gavi-the-Vaccine-Alliance

In the December 2020 stimulus package, Congress authorized some funding for COVAX. President Biden outlined the U.S. contributions in a Fact Sheet posted on the White House webpage yesterday and at the G-7 virtual meeting today. See White House, Fact Sheet: President Biden to Take Action on Global health through Support of COVAX and Calling for Health Security Financing, February 18, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/02/18/fact-sheet-president-biden-to-take-action-on-global-health-through-support-of-covax-and-calling-for-health-security-financing/; New York Times, Biden Declares ‘America is Back’ on International Stage: Live Updates, February 19, 2021, https://www.nytimes.com/live/2021/02/19/world/g7-meeting-munich-security-conference#global-leaders-chart-a-new-course-in-post-trump-era. The fact sheet is embedded below and reports the U.S. will be contributing $2.0 billion quickly and $2.0 billion more over the remainder of 2021 and 2022.

Fact-Sheet_-President-Biden-to-Take-Action-on-Global-Health-through-Support-of-COVAX-and-Calling-for-Health-Security-Financing-_-The-White-House

Conclusion

Much of the activity at the WTO over the last year has focused on the trade challenges flowing from the COVID-19 pandemic. Trade restrictions on exports of medical goods and agricultural goods have been tracked with various efforts to minimize scope and duration. Efforts at expediting the movement of medical goods and agricultural products have also been pursued, and debates have occurred on whether TRIPS rights should be waived during the pandemic to improve access to medical goods during the pandemic. Most advanced countries with pharmaceutical producers have argued that there are sufficient flexibilities within the WTO TRIPS Agreement to handle the current challenges. At the same time over recent years there have been efforts through the WHO, CEPI and GAVI and with the assistance of UNICEF to provide the infrastructure to permit collective purchasing of vaccines and other medical goods and the collection of funds to permit assisting low- and middle-income countries in terms of vaccine availability. COVID-19 is a truly global pandemic. The pressure on governments to find solutions is obviously enormous. Actions like those by the G-7 today and by other governments, NGOs and others to address the COVID-19 challenge are along the lines of what is needed to have more equitable distribution of vaccines. As the UN and WHO keep saying, no one is safe until all are safe.

The challenges for COVAX are huge and the goal for 2021 is to get 20% of the populations part of the program vaccinated. Developed countries and others able to do so need to continue to cooperate to see that these goals for 2021 are met and that further help is available moving into 2022. A study commissioned by the ICC estimates the global costs of not moving quickly to get all people in the world vaccinated at being more than $8 trillion — a figure that dwarfs the costs to get the vaccines produced, distributed and shots given. Hopefully, the world will cooperate and do what is needed to see that all countries can recover from the current pandemic in a timely manner.

COVID-19 agricultural fall out — higher prices for many consumers and greater food insecurity

The World Bank’s President David Malpass in a February 1st posting on Voices flagged the challenges for many of the world’s poorest people flowing from the COVID-19 pandemic — higher food prices, greater hunger, more people pushed into extreme poverty. See World Bank blog,COVID crisis is fueling food price rises for world’s poorest, February 1, 2021, https://blogs.worldbank.org/voices/covid-crisis-fueling-food-price-rises-worlds-poorest. The post was originally published in the Guardian. The post is copied in its entirety below (emphasis in the original webpost).

“Over the last year, COVID-19 has undone the economic, health and food security of millions, pushing as many as 150 million people into extreme poverty. While the health and economic impacts of the pandemic have been devastating, the rise in hunger has been one of its most tangible symptoms. 

Income losses have translated into less money in people’s pockets to buy food while market and supply disruptions due to movement restrictions have created local shortages and higher prices, especially for perishable food.  This reduced access to nutritious food will have negative impacts on the health and cognitive development of COVID-era children for years to come.

“Global food prices, as measured by a World Bank food price index, rose 14% last year. Phone surveys conducted periodically by the World Bank in 45 countries show significant percentages of people running out of food or reducing their consumption. With the situation increasingly dire, the international community can take three key actions in 2021 to increase food security and help prevent a larger toll on human capital.

“The first priority is enabling the free flow of food. To avoid artificial shortages and price spikes, food and other essential goods must flow as freely as possible across borders.  Early in the pandemic, when perceived shortages and panic generated threats of export bans, the international community helped keep food trade flows open. Credible and transparent information about the state of global food inventories – which were at comfortable levels pre-COVID – along with unequivocal free-trade statements from the G20, World Trade Organization, and regional cooperation bodies helped reassure traders, and led to helpful policy responses. Special rules for agriculture, food workers and transport corridors restored supply chains that had been briefly disrupted within countries.

“We need to remain vigilant and avoid backsliding into export restrictions and hardened borders that make food – and other essentials – scarce or more costly.

“The second priority is bolstering social safety nets. Short-term social safety nets offer a vital cushion for families hit by the health and economic crises. In Ethiopia, for example, households that experienced problems in satisfying their food needs initially increased by 11.7 percentage points during the pandemic, but participants in our long-running Productive Safety Net program were shielded from most of the negative effects.

“The world has mounted an unprecedented social protection response to COVID-19. Cash transfers are now reaching 1.1 billion people, and innovative delivery mechanisms are rapidly identifying and reaching new groups, such as informal urban workers. But ‘large scale’ is not synonymous with ‘adequate’. In a review of COVID-19 social response programs, cash transfer programs were found to be:

“–Short-term in their duration – lasting just over three months on average

“–Small in value – an average of $6 (£4.30) per capita in low-income countries

“–Limited in scope – with many in need remaining uncovered

“The pandemic has reinforced the vital imperative of increasing the world’s investments in social protection systems. Additional measures to expedite cash transfers, particularly via digital means, would also play an important role in reducing malnutrition.

“The third priority is enhancing prevention and preparedness. The world’s food systems endured numerous shocks in 2020, from economic impacts on producers and consumers to desert locust swarms and erratic weather.  All indicators suggest that this may be the new normal. The ecosystems we rely on for water, air and food supply are under threat. Zoonotic diseases are on the rise owing to growing demographic and economic pressures on land, animals and wildlife.

“A warming planet is contributing to costlier and more frequent extreme weather events. And as people pack into low-quality housing in urban slums or vulnerable coastal areas, more are living in the path of disease and climate disaster.

“Development gains can be wiped out in the blink of an eye. Our experience with hurricanes or seismic events shows that it is more effective to invest in prevention, before a catastrophe strikes. That’s why countries need adaptive social protection programs – programs that are connected to food security early warning systems and can be scaled up in anticipation of shocks.

“The time is long overdue to shift to practices that safeguard and increase food and nutrition security in ways that will endure. The to-do list is long and urgent. We need sustained financing for approaches that prioritize human, animal and planetary health; restore landscapes and diversify crops to improve nutrition; reduce food loss and waste; strengthen agricultural value chains to create jobs and recover lost incomes; and deploy effective climate-smart agriculture techniques on a much greater scale.

“The World Bank Group and partners are ready to help countries reform their agriculture and food policies and redeploy public finance to foster a green, inclusive, and resilient recovery.

Focusing on food security would address a basic injustice: almost one in 10 people live in chronic hunger in an age of food waste and plenty.  This focus would also strengthen our collective ability to weather the next storm, flood, drought, or pandemic – with safe and nutritious food for all.”

Food insecurity is an issue for all countries although most pressing for the poorest countries

The challenges noted by the World Bank President also face most other countries. For example, in the United States, there has been a massive increase in the number of people getting food from food banks and estimates are that one in seven Americans needs food assistance. Feeding America, The Impact of Coronavirus on Food Insecurity, October 2020, https://www.feedingamerica.org/research/coronavirus-hunger-research (“Combining analyses at the national, state, county, and congressional district levels, we show how the number of people who are food insecure in 2020 could rise to more than 50 million, including 17 million children.”) The challenges for schools not being able to have in school education has complicated the challenge in the United States as millions of children receive food from their schools but need alternative sources when schools are not able to provide in school classes. See, e.g., Brookings Institution, Hungry at Thanksgiving: A Fall 2020 update on food insecurity in the U.S., November 23, 2020, https://www.brookings.edu/blog/up-front/2020/11/23/hungry-at-thanksgiving-a-fall-2020-update-on-food-insecurity-in-the-u-s/ (reviews the increase in food insecurity and the various safety net programs in the U.S. attempting to address).

World Trade Organization involvement in addressing the problem

The World Trade Organization is directly involved in addressing the first priority identified by World Bank President Malpass — enabling the free flow of food. However, the WTO also monitors government support efforts and has the ability to be tackling trade and environment issues which could affect the third priority by reducing climate change.

WTO Members under WTO rules can impose export restraints under certain circumstances and in the first half of 2020, a number of members imposed export restraints on particular agricultural products and many imposed export restraints on certain medical goods. At the same time, the lockdown of countries had significant effects on the movement of goods and people. Many WTO Members have urged limiting such restraints and the WTO Secretariat has monitored both restraints imposed, when such restraints have been lifted (if they have), and trade liberalization efforts to speed the movement of important goods. See, e.g., WTO, COVID-19 and world trade, https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm; WTO, COVID-19 AND AGRICULTURE: A STORY OF RESILIENCE, INFORMATION NOTE, 26 August 2020, https://www.wto.org/english/tratop_e/covid19_e/agric_report_e.pdf; WTO, COVID-19: Measures affecting trade in goods, updated as of 1 February 2021, https://www.wto.org/english/tratop_e/covid19_e/trade_related_goods_measure_e.htm. The August paper on COVIDE-19 and Agriculture is embedded below.

agric_report_e

There have been a number of proposals by certain WTO Members to forego export restraints on agricultural products during the pandemic. None have been acted upon by the membership as a whole, but the communications often reflect commitments of certain Members to keep agricultural markets open during the pandemic. See, e.g., RESPONDING TO THE COVID-19 PANDEMIC WITH OPEN AND PREDICTABLE TRADE IN AGRICULTURAL AND FOOD PRODUCTS, STATEMENT FROM: AUSTRALIA; BRAZIL; CANADA; CHILE; COLOMBIA; COSTA RICA; ECUADOR; EUROPEAN UNION; GEORGIA; HONG KONG, CHINA; JAPAN; REPUBLIC OF KOREA; MALAWI; MALAYSIA; MEXICO; NEW ZEALAND; NICARAGUA; PARAGUAY; PERU; QATAR; KINGDOM OF SAUDI ARABIA; SINGAPORE; SWITZERLAND; THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU; UKRAINE; UNITED ARAB EMIRATES; UNITED KINGDOM; UNITED STATES; AND URUGUAY, WT/GC/208/Rev.2, G/AG/30/Rev.2, 29 May 2020. The document is embedded below.

208R2-3

More can and should be done, including a WTO-wide agreement to forego agricultural export restraints during the current pandemic or future pandemics. However, there are strong objections to any such limits from a number of WTO Members including large and important countries like China, India and South Africa.

Indeed, efforts to get agreement at the December 2020 General Council meeting that countries would not block agricultural exports to the UN’s World Food Programme for humanitarian purposes was blocked by a number of countries. While 79 WTO Members in January 2021 provided a joint pledge not to prevent agricultural exports to the UN World Food Programme, it is a sign of the sensitivity of food security to many countries that a very limited humanitarian proposal could not obtain the agreement of all WTO Members in a period of hightened need by many of the world’s poorest countries. See January 23, 2021, WTO and the World Food Programme – action by 79 Members after a failed December effort at the General Council, https://currentthoughtsontrade.com/2021/01/23/wto-and-the-world-food-programme-action-by-79-members-after-a-failed-december-effort-at-the-general-council/.

Conclusion

The COVID-19 pandemic has extracted a huge cost from the world economy, has pushed tens of millions of people into extreme poverty, has cost hundreds of millions people employment (full or partial), is complicating the education of the world’s children with likely long lasting effects, has exposed potential challenges to achieving global cooperation on a range of matters including the desirability of limiting or not imposing export restraints on agricultural and medical goods.

While the focus of countries and the media in the last several months has shifted to access to vaccines and ensuring greater equitable distribution of such vaccines at affordable prices, there remains much that needs to be done to better address food insecurity during the pandemic. International organizations like the World Bank, IMF and WTO, countries, businesses and NGOs need to se that both core issues are addressed in the coming months.


Early trade action by Biden Administration — reinstating aluminum duties on imports from the United Arab Emirates

On February 1, 2021, President Biden revoked an action by the Trump Administration on aluminum products from the United Arab Emirates (UAE). The UAE’s exports of aluminum had been subject to additional duties as a result of an investigation of global imports of aluminum under Section 232 of the Trade Expansion Act of 1962, as amended, where the Secretary of Commerce found that imports were a threat to national security and President Trump had imposed additional duties of 10%. Countries with security relationships with the United States were able to seek alternative approaches to addressing U.S. concerns.

The United States and the UAE have a security relationship of importance to the U.S. Specifically, the United States had worked with the UAE in its efforts to secure greater recognition for the state of Israel. The Abraham Accords Peace Agreement: Treaty of Peace, Diplomatic Relations and Full Normalization Between the United Arab Emirates and the State of Israel was agreed by the UAE and Israel on August 13, 2020, signed at the White House on September 15, 2020 and ratified by the two governments in mid-October 2020.

Shortly before leaving office, on January 19, 2021, President Trump through Proclamation 10139 indicated that tariffs would be lifted on imports of aluminum from the UAE with an effective date of 12:01 a.m. on February 3, 2021. In their place, quotas at “historic levels” were agreed to on aluminum exports to the U.S. from the UAE. The Trump Proclamation is found at 86 FR 6,825-31 (January 25, 2021) and is embedded below.

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By proclamation on February 1, 2021, President Biden revoked President Trump’s Proclamation 10139. The discussion contained in President Biden’s Proclamation indicates that his Administration views Section 232 as an important tool, that the aluminum industry is critical to U.S. national security and that the tariffs that were imposed on aluminum were having the desired effect prior to the pandemic and were worth maintaining. The Biden Proclamation is reproduced below. While it is not yet published in the Federal Register, the Proclamation can be found on the White House website in the briefing room. See A Proclamation on Adjusting Imports of Aluminum Into the United States, February 1, 2021, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/01/a-proclamation-on-adjusting-imports-of-aluminum-into-the-united-states/.

BRIEFING ROOM

A Proclamation on Adjusting Imports of Aluminum Into the United States

FEBRUARY 01, 2021 • PRESIDENTIAL ACTIONS

ADJUSTING IMPORTS OF ALUMINUM INTO THE UNITED STATES

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA

A PROCLAMATION

  1. Proclamation 10139 of January 19, 2021 (Adjusting Imports of Aluminum Into the United States), amended Proclamation 9704 (Adjusting Imports of Aluminum Into the United States), as amended, with respect to tariffs on certain imports of aluminum articles proclaimed under section 232 of the Trade Expansion Act, as amended (19 U.S.C. 1862). Proclamation 10139 provides that those amendments will not take effect until 12:01 a.m. on February 3, 2021.
  2. I consider it is necessary and appropriate in light of our national security interests to maintain, at this time, the tariff treatment applied to aluminum article imports from the United Arab Emirates (UAE) under Proclamation 9704, as amended, as they are currently in effect as of this date. Accordingly, and as provided for in clause (6) of Proclamation 10139, I am terminating the modifications contained in that proclamation before they take effect.
  3. Proclamation 9704 applied tariffs to help ensure the economic viability of the domestic aluminum industry — an industry that the Secretary of Commerce had previously identified as essential to our critical industries and national defense. Because robust domestic aluminum production capacity is essential to meet our current and future national security needs, Proclamation 9704 aimed to revive idled aluminum facilities, open closed smelters and mills, preserve necessary skills, and maintain or increase domestic production by reducing United States reliance on foreign producers.
  4. In my view, the available evidence indicates that imports from the UAE may still displace domestic production, and thereby threaten to impair our national security. Proclamation 9704 authorized the Secretary of Commerce to grant exclusions from the aluminum tariffs based on specific national security considerations or if specific imported aluminum articles were determined not to be produced sufficiently in the United States, such that the imports would not diminish domestic production. Tellingly, there have been 33 such exclusion requests for aluminum imported from the UAE, covering 587,007 metric tons of articles, and the Secretary of Commerce has denied 32 of those requests, covering 582,007 metric tons. This indicates the large degree of overlap between imports from the UAE and what our domestic industry is capable of producing.
  5. Since the tariff on aluminum imports was imposed, such imports substantially decreased, including a 25 percent reduction from the UAE, and domestic aluminum production increased by 22 percent through 2019, before the coronavirus pandemic began. In light of that history, I believe that maintaining the tariff is likely to be more effective in protecting our national security than the untested quota described in Proclamation 10139.
  6. Section 232 of the Trade Expansion Act of 1962, as amended, authorizes the President to adjust the imports of an article and its derivatives that are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.
  7. Section 604 of the Trade Act of 1974, as amended (19 U.S.C. 2483), authorizes the President to embody in the Harmonized Tariff Schedule of the United States the substance of statutes affecting import treatment, and actions thereunder, including the removal, modification, continuance, or imposition of any rate of duty or other import restriction.
    Now, Therefore, I, Joseph R. Biden Jr., President of the United States of America, by the authority vested in me by the Constitution and the laws of the United States of America, including section 232 of the Trade Expansion Act of 1962, as amended, section 301 of title 3, United States Code, and section 604 of the Trade Act of 1974, as amended, do hereby proclaim that Proclamation 10139, including the Annex, is revoked.
    IN WITNESS WHEREOF, I have hereunto set my hand this
    first day of February, in the year of our Lord two thousand twenty-one, and of the Independence of the United States of America the two hundred and forty-fifth.

JOSEPH R. BIDEN JR.

___________________________________________________________

Pending WTO disputes; UAE does not have a pending dispute with the U.S.

While China, India, the European Union, Norway, the Russian Federation, Switzerland and Turkey all have ongoing panel proceedings at the WTO challenging the U.S. imposition of duties on steel and aluminum pursuant to Section 232 investigations, the UAE is not a country that has filed a request for consultations on the additional duties on aluminum on its exports to the United States. See WT/DSB 544 (China), WT/DSB547 (India), WT/DSB/548 (European Union), WT/DSB/552 (Norway), WT/DS554 (Russian Federation), WT/DS556 (Switzerland) and WT/DS564 (Turkey); challenges by Canada and Mexico were withdrawn after agreement with the United States (WT/DS550 (Canada) and WT/DS551 (Mexico). The panel reports were to go to parties in the fall of 2020 and released to the public once translations into the official languages was accomplished. But no report has been released to date. With the impasse on the Appellate Body, it is unclear if the Biden Administration will opt to file appeals should the panel reports not recognize the U.S. national security concerns. Thus, absent a decision by the Biden team, should it lose the WTO cases and not appeal, to eliminate the additional duties on imports from all countries, the UAE’s exports will continue to face the additional 10% duties for the foreseeable future.

Broader interest in Biden Administration approach to Section 232

A recent article in Politico reviews contact by the EU with the Biden team last week seeking an immediate end to tariffs on imports from the EU of both steel and aluminum with a corresponding withdrawal of EU retaliatory tariffs if accomplished. As noted in the Politico article, the tariffs are supported by steel producers, unions (e.g., the USW has many workers in both the steel and aluminum industries) and the primary aluminum producers. Politico, Biden, in first trade move, reimposes a Trump tariff, February 1, 2021, https://www.politico.com/news/2021/02/01/biden-aluminum-tariff-uae-464794.

Conclusion

It is unlikely that the U.S. will agree to withdraw the 232 duties at the present time. The Biden team doesn’t have its trade people in place; there are pending WTO disputes; the underlying problems of global excess capacity in both steel and aluminum continue on with no resolution in sight. The main driver of the excess capacity has been China (though others have contributed). There are no WTO rules that permit effective addressing of such problems, and China has largely ignored calls by its trading partners to address the problem in a meaningful manner.

Still the reversal of President Trump’s January 19, 2021 Proclamation is an interesting first step in the trade arena by the Biden Administration to emphasize that restoring economic health to the U.S. economy is an important component of his starting game plan (along with meaningfully addressing the pandemic). Trade issues will likely be seen through that prism even as the U.S. works within multilateral organizations and with allies on a host of issues of common interest and concern.

The WTO Informal Ministerial of January 29, 2021 — hope for progress at the WTO in 2021

Switzerland typically hosts an informal ministerial meeting of WTO trade ministers on the sidelines of the World Economic Forum’s January Davos event. This year both were handled remotely.

The informal ministerial was summarized in ten points by the Swiss Confederation President Guy Parmelin at the end of the event. President Parmelin’s statement is available here, https://www.newsd.admin.ch/newsd/message/attachments/65098.pdf, and is copied below.

Virtual Informal WTO Ministerial Gathering, 29 January 2021

Personal Concluding Remarks by the Chair, President of the Swiss Confederation and Head of the Federal Department for Economic Affairs, Education and Research, Guy Parmelin, Switzerland

“29 Ministers and high officials representing a broad spectrum of the WTO membership attended this year’s Informal World Trade Organization (WTO) Ministerial Gathering in virtual format. In concluding and with warm thanks to all participants for their contributions, I would like to summarise the main points from our discussions as follows:

“• Ministers stressed the urgency of the swift appointment of a new WTO Director-General as well as the confirmation of the date and venue of the 12th Ministerial Conference (MC12).

“• Ministers reiterated their determination to maintain a credible multilateral trading system and to restore a climate of mutual trust.

“• Ministers expressed their concerns about the enormous social and economic impact of the COVID-19 crisis. They highlighted the relevance of trade and the role of the WTO in containing the pandemic and promoting recovery. Many Ministers underlined the importance of ensuring the development of as well as an equitable and affordable access to medical goods, including vaccines. They addressed ways and means to achieve these goals, including the implementation of measures facilitating trade, the role of intellectual property and transparency.

“• Ministers regretted that the negotiations on fisheries subsidies could not be completed in accordance with the end-2020 deadline foreseen in SDG 14.6. In light of the significance of this process for the sustainability of global fisheries, Ministers concurred that a comprehensive and effective agreement on fisheries subsidies should be concluded as soon as possible. Ministers agreed to step up efforts with a view to finding mutually acceptable solutions consistent with all the elements of the negotiating mandate.

“• Ministers highlighted the importance of restoring a fully functional WTO dispute settlement system, which is a key pillar of the rules-based multilateral trading system.

“• Many participants argued for further progress in agricultural trade policy reform at MC12 and asked for an outcome on domestic support and other issues. The issues of public stockholding and the special safeguard mechanism were highlighted by several Ministers.

“• Many Ministers called for tangible outcomes, by MC12, on the Joint Statement Initiatives. Inter alia finalizing the process on Services Domestic Regulation and making substantial progress on E-commerce and Investment Facilitation as well as on Trade and Women’s Economic Empowerment.

“• The need to reform the WTO was widely acknowledged. A number of Ministers insisted on advancing diverse issues related to the special and differential treatment of developing and least developed countries. Some participants proposed to adjust WTO rules to present-day economic and competitive conditions.

“• Several Ministers supported new initiatives launched in response to global challenges such as the structured discussions on Trade and Environmental Sustainability.

“• Ministers reaffirmed their commitment to engage in the preparations for MC12 in order to advance key issues.”


The participants at this year’s informal ministerial included officials from Argentina, Australia, Brazil, Canada, Chad (coordinator for LDC Group), Chile, China, Egypt, European Union, India, Indonesia, Jamaica (Coordinator ACP Group), Japan, Kazakhstan, Kenya, Korea, Mauritius (Coordinator African Group), Mexico, New Zealand, Norway, Russian Federation, Saudi Arabia, Singapore, South Africa, Switzerland (Chair), Thailand, Turkey, United Kingdom, United States and three officials with WTO roles — H.E. Mr. David Walker (New Zealand), WTO General Council Chair; H.E. Mr. Santiago Wills (Colombia), WTO Chair of the Negotiating Group on Rules, H.E. Mr. Alan Wolff, WTO Deputy Director-General. The full list with titles is embedded below.

List-of-participants-at-virtual-informal-ministerial-1-29-2021-65099

The good news for the informal ministerial was the position taken by the United States representative who reportedly indicated that the United States was actively reviewing the issue of the next Director-General and was intent on actively working on WTO reform. See, e.g., Inside U.S. Trade’s World Trade Online, Biden administration strikes ‘constructive’ tone in first word on WTO approach, January 29, 2021, https://insidetrade.com/daily-news/biden-administration-strikes-%E2%80%98constructive%E2%80%99-tone-first-word-wto-approach; Politico, Biden administration joins call for ‘swift appointment’ of new WTO head, January 29, 2021, https://www.politico.com/news/2021/01/29/biden-world-trade-organization-463820. Under the Trump Administration, the United States had blocked the formation of consensus around Dr. Ngozi Okonjo-Iweala based on the U.S. view that Dr. Okonjo-Iweala did not have a sufficient trade background. See, e.g., January 26, 2021, Letter from variety of former U.S. officials to President Biden urges U.S. support for Dr. Ngozi Okonjo-Iweala as next WTO Director General, https://currentthoughtsontrade.com/2021/01/26/letter-from-variety-of-former-u-s-officials-to-president-biden-urges-u-s-support-for-dr-ngozi-okonjo-iweala-as-next-wto-director-general/. Hopefully, the current review of the issue by the Biden Administration, even ahead of President Biden’s trade team being confirmed by the U.S. Senate, will result in the U.S. joining the support for Dr. Okonjo-Iweala, permitting the WTO to approve a next Director-General.

It was also reported that the United States, consistent with the Biden Administration’s focus on the COVID-19 pandemic and climate change, expressed interest in promoting recovery from the COVID-19 pandemic and concluding an ambitious fisheries subsidies agreement. See Inside U.S. Trade’s World Trade Online, Biden administration strikes ‘constructive’ tone in first word on WTO approach, January 29, 2021, https://insidetrade.com/daily-news/biden-administration-strikes-%E2%80%98constructive%E2%80%99-tone-first-word-wto-approach. Fisheries subsidies negotiations have been going on for some twenty years, and many Members have remained more concerned with keeping their subsidies in place than agreeing to disciplines that would create conditions for sustainable fishing going forward. The Interest in the Biden Administration in working within the WTO on joint steps to promote recovery from the pandemic is different from the approach pursued by the Trump Administration which didn’t want to look at actions possible within the WTO (other than limits on export restraints on agricultural goods) while the world was dealing with the pandemic. The U.S. statement should mean more interest in exploring issues like those raised by the Ottawa Group. 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/.

Other issues flagged in the Swiss President’s concluding remarks are issues of particular interest to some or many countries but not topics of clear agreement. For example, while it is likely that the United States will look for ways to resolve its concerns about longstanding problems in the WTO’s dispute settlement system, particularly around the Appellate Body, it is unlikely that there will be a swift resolution of the U.S. concerns, and hence there will likely be a continued impasse for at least much of 2021 on the return of a functioning two-stage dispute settlement system.

Similarly on domestic support in agriculture and other agriculture issues flagged, certain WTO Members have not supported further liberalization in agriculture while pushing for limits on domestic subsidies and rollback of liberalization commitments undertaken in the Uruguay Round. It is unlikely that there will be forward movement on these issues without greater balance in terms of tariff reductions on major agricultural products. Moreover, as noted in a recent post, other major distortions in agriculture that are not presently identified as domestic subsidies include widespread use of child and forced labor on many agricultural products. See January 25, 2021, Child labor and forced labor in cotton production — is there a current WTO mandate to identify and quantify the distortive effects?, https://currentthoughtsontrade.com/2021/01/25/child-labor-and-forced-labor-in-cotton-production-is-there-a-current-wto-mandate-to-identify-and-quantify-the-distortive-effects/; January 24, 2021, Forced labor and child labor – a continued major distortion in international trade for some products, https://currentthoughtsontrade.com/2021/01/24/forced-labor-and-child-labor-a-continued-major-distortion-in-international-trade-for-some-products/. Such practices should be quantified and the level of potential distortion identified so WTO Members can decide how to address them in ongoing agriculture negotiations.

Progress is being made on Joint Statement Initiatives including e-commerce, services domestic regulation, investment facilitation and women’s empowerment. An open issue for these and topics in the sphere of trade and the environment (e.g., environmental goods agreement) is whether benefits provided by participants will be made available on an MFN basis or limited to participants, with the option of other Members to join in the future. See January 18, 2021, Revisiting the need for MFN treatment for sectoral agreements among the willing, https://currentthoughtsontrade.com/2021/01/18/revisiting-the-need-for-mfn-treatment-for-sectoral-agreements-among-the-willing/. For many Members liberalization could be speeded up if benefits in sectoral agreements go to those participating only while leaving the door open for other Members to join later when they see the value for them.

And on the important topic of WTO reform beyond the items listed above, there is little current agreement on how to deal with industrial subsidies and other practices that lead to massive global excess capacity, or on how to address access to special and differential treatment and many other areas of importance to some or many WTO Members.

Deputy Director-General Alan Wolff provided a statement during the virtual informal ministerial urging WTO Members to make 2021 a year of accomplishments. The WTO press release can be found here. WTO News, DDG Wolff urges WTO ministers to address the pandemic and make 2021 a year of action, 29 January 2021, https://www.wto.org/english/news_e/news21_e/igo_29jan21_e.htm. DDG Wolff’s statement is copied below.

“My thanks to our Swiss hosts and to President Parmelin both for his remarks today and for his very thoughtful address on the occasion of the 25th anniversary celebration of the WTO last November.

“Ministers, you can make 2021 a year of substantial accomplishments at the WTO.

“There has already been a beginning.  In the first action of the year, Members accounting for most of the world’s agricultural exports committed to refrain from imposing export restrictions on purchases made by the World Food Program.

“The anticipated appointment of a new Director-General will bring needed leadership in moving toward concrete results.  But she can succeed only with your active engagement.

“I urge you not to wait for the Twelfth Ministerial Conference, delayed by the pandemic, to move negotiations forward to positive outcomes. 

“There is no reason why the twenty-year negotiation on fisheries subsidies cannot be concluded successfully — without a sacrifice of ambition — in the next few months.  Success hinges on Members’ willingness to accept a significant level of discipline on their own subsidies.  Political decisions and your active engagement will be required to bring about success.

“I urge you to address ‘trade and health’ forcefully and immediately.  Last year, trade made a vitally important contribution in supplying needed medical supplies to deal with COVID-19.  Proposals as to what more can be done must be deliberated now.  Cooperation on trade can accelerate access to vaccines.  There can be no higher priority.

“Consider how the WTO can further contribute to the economic recovery.  Members can take steps to ensure enhanced transparency, work to eliminate unnecessary barriers and agree that new restrictions will not be imposed.  Trade finance must be restored.  The WTO convened the major international financial organizations and banks to address this need in the aftermath of the financial crisis and it can do so now again.

“’Trade and climate’ must be on the WTO agenda.  Carbon border adjustment measures will likely result in conflicts unless Members engage in joint efforts to find mutually beneficial solutions.  The heightened interest of Members in a broad range of other environmental issues such as plastics pollution and the circular economy can be reflected in new agreements.   The WTO can be more visible as a steward of the planet by reviving and concluding the Environmental Goods Agreement

“The Joint Statement Initiatives on e-commerce, investment facilitation, and services domestic regulation can bear fruit this year, building on what was achieved with respect to small businesses last year.  In addition, more progress can be made on the economic empowerment of women through international trade.  

“Concerns over income inequality have been growing.  The WTO’s rules-based system needs to be seen not only among countries but also within countries, as responsive to the needs of workers, farmers and all who wish to engage in international trade.  But international trade rules cannot substitute for domestic policy actions to make growth more inclusive.  When large numbers of people are unhappy with how the economy is working for them, trade will often receive undeserved blame.  The WTO is about fairness.  Its work will never be done in pursuit of that objective, but further progress can be made this year.

“There can be an outcome on agriculture — at least a down-payment and a defined work program going forward.

“During 2021, the WTO can likely welcome new WTO Members, as it continues to move towards universal coverage.  Comoros and Bosnia-Herzegovina may be ready, and over a dozen others are making progress.

“Last but not least, ‘WTO reform’ can become a reality, with actions taken to —

“- facilitate rule-making with wide participation,

“- achieve heightened enforcement through binding dispute settlement in a manner agreed by all, and

“- provide a strong mandate for a Secretariat to deliver all needed support to Members and to achieving the mission of the WTO. 

“We should greet this year with optimism and re-dedication.  With your strong engagement, 2021 can be a year to remember for what is achieved.

“Thank you.”

A presentation from the WTO Secretariat to Ministers needs to be positive, forward looking, aspirational and inspirational. DDG Wolff’s statement yesterday provides all of that. The first item mentioned, the joint pledge from 79 WTO Members not to restrict agricultural exports to the UN World Food Programme for humanitarian purposes is a positive for the world but follows the December failure of the WTO General Council to agree to the same by all WTO Members. See January 23, 2021, WTO and the World Food Programme – action by 79 Members after a failed December effort at the General Council, https://currentthoughtsontrade.com/2021/01/23/wto-and-the-world-food-programme-action-by-79-members-after-a-failed-december-effort-at-the-general-council/.

The challenge for the WTO in 2021 will be whether Members can come together in fact to achieve many of the important opportunities and needs in front of the Membership. While the history of the WTO since 1995 and the major divisions among Members at the present time would strongly suggest that 2021 will not achieve many of the things that are needed and possible, hope springs eternal.

U.S. perspective

The Trump Administration did an excellent job of identifying problems with the operation of the WTO whether from the longstanding failures of the dispute settlement system, to the existential challenges to the viability of the WTO from major Members whose economies have not converged to a full market orientation, to the out-of-date rules around special and differential treatment to all who claim developing country status regardless of economic development of individual members, to the need for greater transparency in many areas, including importantly subsidies, to the failure of the WTO to update rules to address changing technology and trade issues.

The Biden Administration has indicated its intention to work within multilateral institutions, including the WTO. Early action by the United States on the Director-General selection issue could provide positive energy to WTO Members in the coming months. There are topics where success can be made in 2021 either multilaterally or plurilaterally. But a lot of what is needed for meaningful WTO reform will be difficult, if not impossible, to achieve in the short term. Hopefully, the Biden team will stay the course to achieve reform that both returns the WTO playing field to the level agreed at the time of concluding the Uruguay Round, finds ways to deal with the massive distortions not presently covered by WTO rules, works with others to bring the WTO into the 21st century and addresses the critical issues for global prosperity and sustainable development.

Child labor and forced labor in cotton production — is there a current WTO mandate to identify and quantify the distortive effects?

In yesterday’s post (January 24), I reviewed the continued widespread human rights issue of child labor and forced labor in the production of a wide range of products (agricultural, manufactured, mined products) in many countries around the world. Such actions raise trade concerns by distorting the costs of production of products made with such labor and hence potentially skewing trade flows towards producers “benefitting” from the use of such labor. See January 24, 2021:  Forced labor and child labor – a continued major distortion in international trade for some products, https://currentthoughtsontrade.com/2021/01/24/forced-labor-and-child-labor-a-continued-major-distortion-in-international-trade-for-some-products/. In the United States, imports of products made with such labor are supposed to be banned. I had concluded by arguing that the WTO should develop information that would help Members understand the quantity of products that are made with child or forced labor and permit Members to then decide what actions were needed to eliminate or offset such practices.

I received a comment on yesterday’s post from Amb. Dennis Shea, the Former Deputy United States Trade Representative and Chief of Mission on international trade issues in Geneva and the Permanent Representative of the U.S. to the WTO (2017-January 2021). Amb. Shea’s comment focused on cotton. He said, “The WTO’s Committee on Agriculture in Special Session (COA-SS) and its Cotton Subcommittee are charged with examining all trade-distorting policies affecting the cotton sector in order to discharge its mandate properly. It seems to me that the COA-SS and Cotton Subcommittee should examine recent reports of widespread forced labor in the picking of cotton in the Xinjiang Province of China. It is my understanding that Xinjiang accounts for nearly 20 percent of global cotton exports, so it’s probably not a stretch to say that forced labor practices there (horrific from a human rights standpoint) are also distorting global cotton prices.”

While cotton is but one of many products believed to be produced by child and/or forced labor, it is an important product globally. The fact that there may be an existing WTO mechanism for developing the relevant information is potentially important.

In yesterday’s post, I had referenced an upcoming WITA virtual webinar, The U.S. Moves Against Forced Labor in Xinjiang, being held this Wednesday, January 27. One of the speakers at the event is Dr. Adrian Zenz, Senior Fellow in China Studies, Victims of Communism Memorial Foundation, Washington, D.C. One of the papers referenced in a recent WITA note is by Dr. Zenz for the Center for Global Policy entitled “Coercive Labor in Xinjiang: Labor Transfer and the Mobilization of Ethnic Minorities to Pick Cotton” (December 2020), https://cgpolicy.org/wp-content/uploads/2020/12/20201214-PB-China-Zenz-1-3.pdf. The paper confirms that Xinjiang produces 20% of global cotton and nearly 84.9% of all cotton produced in China. Id. at 3. The Executive Summary of the paper states in part (page 3) —

“The evidence shows that in 2018, three Uyghur regions alone mobilized at least 570,000 persons into cotton-picking operations through the government’s coercive labor training and transfer scheme. Xinjiang’s total labor transfer of ethnic minorities into cotton picking likely exceeds that figure by several hundred thousand.

“Despite increased mechanization, cotton picking in Xinjiang continues to rely strongly on manual labor. In 2019, about 70 percent of the region’s cotton fields had to be picked by hand – especially the high-quality
long-staple cotton predominantly grown in southern Xinjiang’s Uyghur regions, where mechanized picking shares are low. State policies have greatly increased the numbers of local ethnic minority pickers, reducing
reliance on outside Han Chinese migrant laborers. The intensive two- to three-month period of cotton picking represents a strategic opportunity to boost rural incomes, and therefore plays a key role in achieving the state’s poverty alleviation targets. These targets are mainly achieved through coercive labor transfers.

“Cotton picking is grueling and typically poorly paid work. Labor transfers involve coercive mobilization
through local work teams, transfers of pickers in tightly supervised groups, and intrusive on-site surveillance by government officials and (in at least some cases) police officers. Government supervision teams monitor pickers, checking that they have a “stable” state of mind, and administer political indoctrination sessions. Some regions put Uyghur children and elderly persons into centralized care while working-age adults
are away on state-assigned cotton-picking work assignments. While not directly related to the campaign of mass internment, these labor transfers can include persons who have been released from internment camps.

“The data presented in this report provides strong evidence that the production of the majority of Xinjiang’s cotton involves a coercive, state-run program targeting ethnic minority groups.”

China is not the only country where the U.S. Department of Labor has identified production of cotton is likely done with child labor, forced labor or child labor and forced labor. See USDOL, 2020 List of Goods Produced by Child Labor or Forced Labor, September 2020, https://www.dol.gov/sites/dolgov/files/ILAB/child_labor_reports/tda2019/2020_TVPRA_List_Online_Final.pdf. Indeed many of the world’s largest cotton producers are listed in the report as likely producing cotton with child labor, forced labor or both child labor and forced labor:

Child labor: Argentina, Azerbaizan, Brazil, Egypt, India, Kyrgyz Republic, Mali, Turkey, Zambia.

Forced labor: Pakistan, Uzbekistan

Child labor and forced labor: China, India (cottonseed), Turkmenistan.

In the past there has been one WTO dispute on subsidies to cotton producers in the United States. See UNITED STATES – SUBSIDIES ON UPLAND COTTON, WT/DS267 (case brought by Brazil). I have been unable to find information on the WTO webpage that indicates the question of child or forced labor as a subsidy or other form of nontariff barrier has ever been examined at the WTO whether on cotton or more broadly.

For the last seventeen years, there has been concern about distortions to the cotton trade and the harm to countries for which cotton is a major export product. The breakout of cotton occurred at the request of the so-called Cotton Four — Benin, Burkina Faso, Chad and Mali. See Cotton, https://www.wto.org/english/tratop_e/agric_e/cotton_e.htm.

“Cotton is discussed at the WTO on two tracks: 1) the trade reforms needed to address subsidies and high trade barriers for cotton, and 2) the assistance provided to the cotton sector in developing countries.

“The trade aspects of cotton are handled by the Committee on Agriculture in Special Session including through dedicated discussions on trade in cotton. The development assistance aspects of cotton are discussed in the meetings of the ‘Director-General’s Consultative Framework Mechanism on Cotton’.

“These various tracks of discussion have been developed over the years as a response to a series of proposals to address the sector tabled by four African countries — Benin, Burkina Faso, Chad and Mali — known as the Cotton Four or C4.”

While WTO Members are supposed to be reporting information on various categories of data (including domestic support) on cotton and on non-tariff barriers affecting trade in cotton, the latest WTO Secretariat compilation of information does not indicate that Members were asked about or provided information on the benefits to domestic cotton production from child labor and/or forced labor. See COTTON — BACKGROUND PAPER BY THE SECRETARIAT, TN/AG/GEN/34/Rev.13, TN/AG/SCC/GEN/13/Rev.13, 2 November 2020 (and Add.1 and Add.2); COTTON — MINISTERIAL DECISION OF 7 DECEMBER 2013, WT/MIN(13)/41, WT/L/916, 11 December 2013 (“3. In this context, we therefore undertake to enhance transparency and monitoring in relation to the trade-related aspects of cotton. To this end, we agree to hold a dedicated discussion on a biannual basis in the context of the Committee on Agriculture in Special Session to examine relevant trade-related developments across the three pillars of Market Access, Domestic Support and Export Competition in relation to cotton. 4. The dedicated discussions shall be undertaken on the basis of factual information and data compiled by the WTO Secretariat from Members’ notifications, complemented, as appropriate, by relevant information provided by Members to the WTO Secretariat. 5. The dedicated discussions shall in particular consider all forms of export subsidies for cotton and all export measures with equivalent effect, domestic support for cotton and tariff measures and non-tariff measures applied to cotton exports from LDCs in markets of interest to them.”); COTTON — MINISTERIAL DECISION OF 19 DECEMBER 2015, WT/MIN(15)/46, WT/L/981, 21 December 2015. The background paper (without addenda) is embedded below.

TNAGGEN34R13

Thus, there is an existing forum for developing information on all distortions to the cotton market. Yet, to date, the WTO subcommittee on Cotton is not examining the widespread issue of child labor and forced labor as part of its information gathering. This is unfortunate but could be addressed if there is a will to in fact flag all distortions.

There can be arguments pro and con on whether all child labor and forced labor constitutes actionable subsidies under the Agreement on Subsidies and Countervailing Measures. While I believe that the practices identified as being used in Xinjiang constitute actionable subsidies (government action which provides inputs (labor) at rates lower than market), there can be no doubt that the failure of governments to eliminate child labor and forced labor distorts competition between those obtaining products through the use of such labor and others who are not using such labor. The use of child labor and forced labor are universally condemned and supposed to be eliminated by 2025 (child labor) or 2030 (forced labor) pursuant to the UN Sustainable Development Goals.

The WTO can and should develop the factual basis for an understanding of the trade distortions flowing from child labor and forced labor. The existence of a current program at the WTO on cotton to develop information on all forms of subsidies and all forms of non-tariff barriers is a good place to start the exercise. My thanks to Amb. Shea for flagging the potential existing vehicles within the WTO to address at least cotton.

Forced labor and child labor — a continued major distortion in international trade for some products

In recent years, the United States has paid more attention to the trade distortions flowing from forced labor and child labor in other countries, particularly in China. While there has been significant progress in the last twenty years in reducing forced labor and child labor globally according to the International Labor Organization (“ILO”), the COVID-19 pandemic has seen some retrenchment and efforts by China to address minorities in country have created an international backlash and concern.

The ILO webpage on forced labor reflects the global nature of the problem. The webpage states in part,

“Although forced labour is universally condemned, ILO estimates show that 24.9 million people around the world are still subjected toit. Of the total number of victims of forced labour, 20.8 million (83 per cent) are exploited in the private economy, by individuals or enterprises, and the remaining 4.1 million (17 per cent) are in State-imposed forms of forced labour. Among those exploited by private individuals or enterprises, 8 million (29 per cent) are victims of forced sexual exploitation and 12 million (64 per cent) of forced labour exploitation. Forced labour in the private economy generates some US$ 150 billion in illegal profits every year: two thirds of the estimated total (or US$ 99 billion) comes from commercial sexual exploitation, while another US$ 51 billion is a result from forced economic exploitation in domestic work, agriculture and other economic activities (Note 1).

“Vestiges of slavery are still found in some parts of Africa, while forced labour in the form of coercive recruitment is present in many countries of Latin America, in certain areas of the Caribbean and in other parts of the world. In numerous countries, domestic workers are trapped in situations of forced labour, and in many cases they are restrained from leaving the employers’ home through threats or violence. Bonded labour persists in South Asia, where millions of men, women and children are tied to their work through a vicious circle of debt. In Europe and North America, a considerable number of women and children are victims of traffickers, who sell them to networks of forced prostitution or clandestine sweat-shops. Finally, forced labour is still used as a punishment for expressing political views.

“For many governments around the world, the elimination of forced labour remains an important challenge in the 21st century. Not only is forced labour a serious violation of a fundamental human right, it is a leading cause of poverty and a hindrance to economic development. ILO standards on forced labour, associated with well-targeted technical assistance, are the main tools at the international level to combat this scourge.”

ILO, International Labour Standards on Forced labour, https://www.ilo.org/global/standards/subjects-covered-by-international-labour-standards/forced-labour/lang–en/index.htm. See also ILO and Walk Free, 2017, Global Estimates of Modern Slavery, Forced Labor and Forced Marriage, https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/documents/publication/wcms_575479.pdf.

Child labor involves more people – an estimated 152 million of which 73 million are involved in hazardous work. See ILO, International Programme on the Elimination of Child Labour and Forced Labour (IPEC+), https://www.ilo.org/global/about-the-ilo/how-the-ilo-works/flagships/ipec-plus/lang–en/index.htm.

While the incidence of forced labor and child labor is declining, the COVID-19 pandemic has complicated trends as these populations are most vulnerable. See, e.g., ILO, The International Labour Organization
and the US Department of Labor partnership to eliminate child labour and forced labour, 2019, https://www.ilo.org/wcmsp5/groups/public/@ed_norm/@ipec/documents/publication/wcms_710971.pdf (“The ILO’s most recent global estimates of child labour indicate, however, that significant progress is
being made. From 2000 to 2016, there was a net reduction of 94 million children in child labour and
the number of children in hazardous work was halved. In parallel, the ILO Worst Forms of Child
Labour Convention (No. 182) was ratified by 186 countries, reaching almost universal ratification.
The challenges ahead, however, remain formidable: in 2016, 152 million girls and boys were in child
labour and 25 million men, women and children were trapped in forced labour.”); ILO, COVID-19 impact on
child labour and forced labour: The response of the IPEC+ Flagship Programme, 2020, https://www.ilo.org/wcmsp5/groups/public/—ed_norm/—ipec/documents/publication/wcms_745287.pdf (“COVID-19 has plunged the world into a crisis of unprecedented scope and scale. Undoubtedly, restoring global health remains the first priority, but the strict measures required are resulting in massive economic and social shocks. As lockdown, quarantine, physical distancing and other isolation measures to suppress transmission continue, the global economy has plunged into a recession. The harmful effects of this pandemic will not be distributed equally. They are expected to be most damaging in the poorest countries and in the poorest neighbourhoods, and for those in already disadvantaged or vulnerable situations, such as
children in child labour and victims of forced labour and human trafficking, particularly women and girls.
These vulnerable groups are more affected by income shocks due to the lack of access to social protection,
including health insurance and unemployment benefits. * * * Experience from previous crisis situations, such as the 2014 Ebola epidemic, has shown that these factors play a particularly strong role in exacerbating the risk to child labour and forced labour.”).

In China, the government’s efforts to “reeducate” minority populations (e.g., Uyghurs from the western region of Xinjiang) has led to allegations of forced labor on a range of products and actions by the United States to restrict certain imports from China from the region. The Washington International Trade Association is holding a virtual webinar on January 27 looking at the challenges in China and the forced labor problem of the Xinjiang Uyghur Autonomous Region and the resulting U.S. ban on cotton and tomato products. See WITA, WITA’s Friday Focus on Trade, Vol. 206, January 22, 2021 (containing various articles on the China forced labor issue and referencing the webinar on January 27, WITA Webinar: The U.S. Moves Against Forced Labor in Xinjiang).

The U.S. Department of Labor in September released its 2020 list of products believed to be produced in foreign countries with forced labor or with child labor. See USDOL, 2020 List of Goods Produced by Child Labor or Forced Labor, September 2020, https://www.dol.gov/sites/dolgov/files/ILAB/child_labor_reports/tda2019/2020_TVPRA_List_Online_Final.pdf. The report provides the following statement of purpose:

“The U.S. Department of Labor (USDOL or the Department) has produced this ninth edition of the List of Goods Produced by Child Labor or Forced Labor in accordance with the Trafficking Victims Protection Reauthorization Act (TVPRA), as amended. The TVPRA requires USDOL’s Bureau of International Labor Affairs (ILAB or the Bureau) to “develop and make available to the public a list of goods from countries that
[ILAB] has reason to believe are produced by forced labor or child labor in violation of international standards” (TVPRA List or the List; 22 U.S.C. § 7112(b)(2)(C)). It also requires submission of the TVPRA List to the United States Congress not later than December 1, 2014, and every 2 years thereafter (22 U.S.C. § 7112(b)(3)).

“The Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018 expanded ILAB’s mandate to require the TVPRA List to include, ‘to the extent practicable, goods that are produced with inputs that are produced with forced labor or child labor’” (22 U.S.C. 7112(b)(2)(C)).

“The TVPRA directs ILAB ‘to work with persons who are involved in the production of goods on the list … to create a standard set of practices that will reduce the likelihood that such persons will produce goods using [child labor or forced labor],’ and ‘to consult with other departments and agencies of the United States Government to reduce forced and child labor internationally and ensure that products made by forced labor and child labor in violation of international standards are not imported into the United States’ (22 U.S.C. § 7112(b)(2)(D)–(E)).” (pages 1 and 3).

This year’s publication lists 77 countries that have one or more products believed to be produced with child labor, with forced labor or with both child and forced labor. Fourteen countries are listed as having products believed to be produced with forced labor. Thirty-six countries are listed as believed to produce products with child and forced labor. Sixty-four countries produce some products with child labor. The 77 countries are listed below along with whether products are believed produced with child labor, forced labor, or child labor & forced labor.

Afghanistan — child larbor; child labor & forced labor

Angola — child labor & forced labor

Argentina — child labor; child labor & forced labor

Azerbaijan — child labor

Bangladesh – child labor; child labor & forced labor

Belize — child labor

Benin — child labor; child labor & forced labor

Bolivia — child labor; forced labor; child labor & forced labor

Brazil — child labor; forced labor; child labor & forced labor

Burkina Faso — child labor; child labor & forced labor

Burma — child labor; forced labor; child labor & forced labor

Cambodia — child labor; child labor & forced labor

Cameroon — child labor

Central African Republic — child labor

Chad — child labor

China — forced labor; child labor & forced labor

Colombia — child labor; child labor & forced labor

Costa Rica — child labor

Cote d’Ivoire — child labor & forced labor

Democratic Republic of the Congo — child labor; child labor & forced labor

Dominican Republic — child labor; child labor & forced labor

Ecuador — child labor

Egypt — child labor

El Salvador — child labor

Eswatini — child labor

Ethiopia — child labor; child labor & forced labor

Ghana — child labor; child labor & forced labor

Guatemala — child labor

Guinea — child labor

Honduras — child labor

India — child labor; child labor & forced labor

Indonesia — child labor; child labor & forced labor

Iran — child labor

Kazakhstan — child labor & forced labor

Kenya — child labor

Kyrgyz Republic — child labor

Lebanon — child labor

Lesotho — child labor

Liberia — child labor

Madagascar — child labor

Malawi — child labor; child labor & forced labor

Malaysia — forced labor; child labor & forced labor

Mali — child labor; child labor & forced labor

Mauritania — child labor

Mexico — child labor; child labor & forced labor

Mongolia — child labor

Mozambique — child labor

Nepal — child labor & forced labor

Nicaragua — child labor

Niger — child labor; forced labor

Nigeria — child labor; child labor & forced labor

North Korea — forced labor

Pakistan — child labor; forced labor; child labor & forced labor

Panama — child labor

Paraguay — child labor; child labor & forced labor

Peru — child labor; forced labor; child labor & forced labor

Philippines — child labor

Russia — forced labor; child labor & forced labor

Rwanda — child labor

Senegal — child labor

Sierra Leone –child labor; child labor & forced labor

South Sudan — child labor & forced labor

Sudan — child labor

Suriname — child labor

Taiwan — forced labor

Tajikistan — child labor & forced labor

Tanzania — child labor

Thailand — child labor; forced labor; child labor & forced labor

Turkey — child labor

Turkmenistan — child labor & forced labor

Uganda — child labor

Ukraine — child labor

Uzbekistan — forced labor

Venezuela — forced labor

Vietnam — child labor; child labor & forced labor

Yemen — child labor

Zambia — child labor

Zimbabwe — child labor

While the number of products obviously vary by country and category, the report categorized agriculture as having 68 child labor listings and 29 forced labor listings. This compares to manufacturing with 39 child labor and 20 forced labor listings; mining showed 32 child labor and 13 forced labor listings and pornography showed one each.

Looking at specific products for individual countries provides the most information.

As an example, China is shown as having the following products believed to be produced with forced labor — Artificial Flowers, Christmas Decorations, Coal, Fish, Footwear, Garments, Gloves, Hair Products, Nails, Thread/Yarn, and Tomato Products. China is also shown as having the following products believed to be produced with child labor and forced labor — Bricks, Cotton, Electronics, Fireworks, Textiles, and Toys. As a USDOL separate post notes, gloves, hair products, textiles, thread/yarn and tomato products were added in 2020 because of research on the forced labor situation in Xinjiang. See USDOL, Bureau of International Labor Affairs, Against Their Will: The Situation in Xinjiang, Forced Labor in Xinjiang, 2020, https://www.dol.gov/agencies/ilab/against-their-will-the-situation-in-xinjiang. The document is embedded below.

Against-Their-Will_-The-Situation-in-Xinjiang-_-U.S.-Department-of-Labor

Looking at India, products believed to be produced with child labor include the following — Bidis (hand-rolled
cigarettes), Brassware, Cotton, Fireworks, Footwear, Gems, Glass Bangles, Incense (agarbatti), Leather Goods/
Accessories, Locks, Matches, Mica, Silk Fabric, Silk Thread, Soccer Balls, Sugarcane, Thread/Yarn. Products believed produced with child labor & forced labor include the following — Bricks, Carpets, Cottonseed (hybrid), Embellished Textiles, Garments, Rice, Sandstone, Stones.

While the USDOL reports don’t estimate the portion of exports from any country of individual products that are produced with child and/or forced labor, the trade consequences can be significant as such labor is artificially valued creating distortions in competitiveness and resulting trade flows. For example, the list of products for China are either important export products for China or important inputs into exported products. The same would true for India and for many other of the 77 countries on the list.

Conclusion

The U.S. has in place statutory provisions which permit the exclusion from entry into the United states of products produced with forced labor. The Trump Administration did a somewhat better job enforcing U.S. law on imports of products produced with child or forced labor. Much more can be done and should be done domestically.

Similarly, the ILO is working to eliminate forced labor and child labor consistent with UN Sustainable Development Goals. “The objective of the IPEC+ Global Flagship Programme – in line with Target 8.7 of the 2030 Sustainable Development Agenda, adopted by the United Nations in 2015 – is to provide ILO leadership in global efforts to eradicate all forms of child labour by 2025 and all forms of contemporary slavery and human trafficking by 2030. It also aims to ensure that all people are protected from – and can protect themselves against – these gross human rights violations.” ILO, IPEC+ Global Flagship Programme Implementation, Towards a world free from child labour and forced labour, page 4, 2020, https://respect.international/wp-content/uploads/2020/01/wcms_633435.pdf.

The WTO could play a role in the fight against forced labor and child labor. Such labor practices distort global trade flows in addition to the challenges created for countries engaged in such practices in terms of poverty and human rights abuses. The WTO could gather information from Members on the volume of production and exports of products produced with child and forced labor both as finished products and as inputs into other products. Such an exercise would facilitate an understanding of the extent of global trade represented by such products and help focus attention on trade actions that could be taken to help Members eliminate such harmful practices. While it is unlikely that Members will agree to such a data gathering undertaking, one is surely needed and would add transparency to a source of an important global issue with trade as well as non-trade dimensions.

WTO and the World Food Programme — action by 79 Members after a failed December effort at the General Council

The WTO issued a press release on Jnauary 21, 2021 entitled “Group of members issue joint pledge on humanitarian food purchases”. https://www.wto.org/english/news_e/news21_e/agri_21jan21_e.htm. As the press release notes,

“A group of nearly 80 WTO members issued a joint statement on 21 January pledging not to impose export restrictions on foodstuffs purchased by the UN’s World Food Programme (WFP) for humanitarian aid.

“’We recognize the critical humanitarian support provided by the World Food Programme, made more urgent in light of the COVID-19 pandemic and other crises,’ the group said in their statement, available here. ‘We therefore commit to not impose export prohibitions or restrictions on foodstuffs purchased for non-commercial humanitarian purposes by the World Food Programme.’

“Discussions regarding export restrictions on food purchases by the WFP have been taking place in the WTO’s Committee on Agriculture in Special Session as well as the General Council.

“The WFP is the United Nations agency charged with delivering food assistance in emergencies and combatting hunger.”

The submission by the 79 WTO Members is embedded below (WT/L/1109).

1109-1

While the pledge by the 79 WTO Members is a significant event, the fact that the full WTO membership was not willing at the December 2020 General Council meeting to commit to such action is problematic and a reflection of the inability of WTO Members to come together on a broad array of issues. This has reduced the relevance of the WTO as a negotiating forum and prevented the updating of multilateral rules. It has led to a proliferation of free trade agreements and actions outside of the WTO. Considering the role that the World Food Programme plays and the list of beneficiaries, it is also quite extraordinary that there wasn’t an agreed General Council Decision adopted in December.

The UN World Food Programme

The UN’s World Food Programme (“WFP”) has for fifty years supplied food to those in need around the world. Consider the overview from the WFP’s webpage, https://www.wfp.org/overview (emphasis in original).

“The World Food Programme (WFP) is the leading humanitarian organization saving lives and changing lives, delivering food assistance in emergencies and working with communities to improve nutrition and build resilience

“As the international community has committed to end hunger, achieve food security and improved nutrition by 2030one in nine people worldwide still do not have enough to eat. Food and food-related assistance lie at the heart of the struggle to break the cycle of hunger and poverty. 

“For its efforts to combat hunger, for its contribution to bettering conditions for peace in conflict-affected areas and for acting as a driving force in efforts to prevent the use of hunger as a weapon of war and conflict, WFP was awarded the Nobel Peace Prize in 2020

“In 2019, WFP assisted 97 million people – the largest number since 2012 –  in 88 countries. 

“On any given day, WFP has 5,600 trucks, 30 ships and nearly 100 planes on the move, delivering food and other assistance to those in most need. Every year, we distribute more than 15 billion rations at an estimated average cost per ration of US$ 0.61. These numbers lie at the roots of WFP’s unparalleled reputation as an emergency responder, one that gets the job done quickly at scale in the most difficult environments.

“WFP’s efforts focus on emergency assistancerelief and rehabilitationdevelopment aid and special operationsTwo-thirds of our work is in conflict-affected countries where people are three times more likely to be undernourished than those living in countries without conflict. 

“In emergencies, WFP is often first on the scene, providing food assistance to the victims of war, civil conflict, drought, floods, earthquakes, hurricanes, crop failures and natural disasters. When the emergency subsides, WFP helps communities rebuild shattered lives and livelihoods. We also work to strengthen the resilience of people and communities affected by protracted crises by applying a development lens in our humanitarian response.

“WFP development projects focus on nutrition, especially for mothers and children, addressing malnutrition from the earliest stages through programmes targeting the first 1,000 days from conception to a child’s second birthday, and later through school meals.

“WFP is the largest humanitarian organisation implementing school feeding programmes worldwide and has been doing so for over 50 years. In 2019, WFP provided school meals to more than 17.3 million children in 50 countries, often in the hardest-to-reach areas.

“In 2019, WFP provided 4,2 million metric tons of food and US$2.1 billion of cash and vouchers. By buying food as close as possible to where it is needed, we can save time and money on transport costs, and help sustain local economies. Increasingly, WFP meets people’s food needs through cash-based transfers that allow the people we serve to choose and shop for their own food locally.

“WFP also provides services to the entire humanitarian community, including passenger air transportation through the UN Humanitarian Air Service, which flies to more than 280 locations worldwide.

Funded entirely by voluntary donations, WFP raised a record-breaking US$8 billion in 2019. WFP has 20,000 staff worldwide of whom over 90 percent are based in the countries where the agency provides assistance.

“WFP is governed by a 36-member Executive Board. It works closely with its two Rome-based sister organizations, the Food and Agriculture Organization of the United Nations and the International Fund for Agricultural Development. WFP partners with more than 1,000 national and international NGOs to provide food assistance and tackle the underlying causes of hunger.”

The countries in which WFP provides assistance are shown in the list from the WFP webpage, https://www.wfp.org/countries, and include many important trading countries like China, India, Indonesia, Pakistan and many more in Africa, the Middle East, Asia, Central and South America. Beneficiary countries include the following:

Afghanistan, Algeria, Angola, Armenia, Bangladesh, Benin, Bhutan, Bolivia (Plurinational State of), Burkina Faso, Burundi, Cambodia, Cameroon, Central African Republic, Chad, China, Colombia, Congo, Côte d’Ivoire, Cuba, Democratic People’s Republic of Korea, Democratic Republic of the Congo, Djibouti, Dominican Republic, Ecuador, Egypt, El Salvador, Eswatini, Ethiopia, Gambia, Ghana, Guatemala, Guinea, Guinea-Bissau, Haiti, Honduras, India, Indonesia, Iran (Islamic Republic of), Iraq, Jordan, Kenya, Kyrgyzstan, Lao People’s Democratic Republic, Lebanon, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Namibia, Nepal, Nicaragua, Niger, Nigeria, Pakistan, Palestine, Peru, Philippines, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, South Sudan, Sri Lanka, Sudan, Syrian Arab Republic, Tajikistan, Tanzania, The Caribbean, The Pacific, Timor-Leste, Togo, Tunisia, Turkey, Uganda, Yemen, Zambia, Zimbabwe.

The December 2020 General Council meeting and proposed General Council Decision

During the December 2020 General Council meeting, there was an effort to adopt a General Council Decision entitled “PROPOSAL ON AGRICULTURE EXPORT PROHIBITIONS OR RESTRICTIONS RELATING TO THE WORLD FOOD PROGRAMME DRAFT GENERAL COUNCIL DECISION,” WT/GC/W/810, TN/AG/46 (4 December 2020). The draft document was modified three times to add cosponsors. WT/GC/W/810/Rev.1, Rev.2, Rev.3. Concerns were raised by India, Pakistan and some African countries (from the above list, at least India and Pakistan and most, if not all others, were beneficiaries of assistance from the the WFP). Hence there was no agreement on adopting the draft General Council Decision. See Washington Trade Daily, December 16, 2020, pages 3-4, WTO Members Talk Food Procurement, https://files.constantcontact.com/ef5f8ffe501/1b51b4fa-b0a3-4a60-9165-8c5f6d7977a4.pdf; Washington Trade Daily, December 18, 2020, pages 5-6, India Questions WFP Exemption, https://files.constantcontact.com/ef5f8ffe501/ec47c599-5c0c-47fd-80cf-a46244c5af8b.pdf.

While WTO Members always have multiple concerns and agenda items being pursued, the failure of the membership as a whole to agree to something so limited in nature and so critical for addressing global hunger was disappointing to many and reflects the seeming inability of the WTO Membership to move forward as one on the vast majority of issues before the WTO.

Conclusion

In a post earlier this month, I argued for the need for the WTO to move to liberalization by the willing without benefits for non-participants but with agreements open to all to join. See January 18, 2021, Revisiting the need for MFN treatment for sectoral agreements among the willing, https://currentthoughtsontrade.com/2021/01/18/revisiting-the-need-for-mfn-treatment-for-sectoral-agreements-among-the-willing/. While the MFN issue doesn’t come into play for the 79 Member pledge not to restrict exports to the WFP, the failure of the full WTO membership to agree to the draft General Council Decision is a further manifestation of the need for new approaches to promote expanded trade liberalization.

In recent speeches, Deputy Director-General Alan Wolff has expressed both the lack of unity at the WTO on an issue of importance like the draft General Council Decision and also welcomed the joint pledge by the 79 WTO Members not to impose restrictions on exports to the WFP. See WTO press release, DDG Wolff outlines possible responses to calls for WTO reform, 13 January 2020, https://www.wto.org/english/news_e/news21_e/ddgaw_13jan21_e.htm (“Less than a month ago, a General Council meeting took place which lasted over 15 hours (over two and a half days), a recent record for length. It had only one substantive trade policy item on its agenda for decision, the consideration of which produced no agreement. The issue was whether Members would agree to forego a modicum of the policy space they now have by agreeing not to impair procurements by the Nobel-Prize-winning World Food Program. A witness to the proceeding could be forgiven for perceiving drift of the organization in its not living up to its potential. Viewed through a different lens, this was no more than sovereigns reaffirming that they could not be bound without their consent.”); WTO press release, DDG Wolff stresses need to make progress in WTO negotiations to enhance resilience of farm sector, 22 January 2021, https://www.wto.org/english/news_e/news21_e/ddgaw_22jan21_e.htm (“I welcome the pledge this week of WTO members accounting for most of world agricultural exports to refrain from imposing export restrictions on foodstuffs purchased by the World Food Programme for non-commercial humanitarian purposes.”).

If there is to be a WTO capable of reform, the Members will need to reconfirm core principles and find ways to agree instead of searching for excuses to oppose. The membership seems far from sharing a common vision or accepting core principles. Too often, Members are engaged in a search for blocking progress. While all Members undoubtedly share blame for the current challenges, on the topic of blocking the minor proposal to ensure the workings of the WFP, one can look to the Members who remain non-participants in the joint pledge as the problem on this particular issue.

Specifically, the list of those WTO Members pledging not to impose export restrictions on foodstuffs to the WFP is made up of 79 WTO Members, meaning 85 Members did not join the pledge (at least not yet). Some of the major Members who are not participating in the pledge include the following — Argentina, China, India, Indonesia, Pakistan, South Africa, the Philippines, Malaysia. the Russian Federation, Hong Kong (China), Turkey. In the WTO’s World Trade Statistical Review 2020, China, Indonesia, Argentina and India are among the top 10 exporters of agricultural products and of food in 2019; China, the Russian Federation and Hong Kong (China) are among the top ten importers in 2019. WTO, World Trade Statistical Review 2020, Tables A-13 and A-14, https://www.wto.org/english/res_e/statis_e/wts2020_e/wts2020_e.pdf. China, India, Indonesia, Pakistan, the Philippines and Turkey are all beneficiaries of assistance from the WFP.

While there is much that needs to be done for the restoration of the WTO’s relevance, the pledge by 79 Members suggests that liberalization by the willing may be the only road forward.

Continued surge of COVID-19 cases results in extended restrictions in many countries affecting trade and economic growth

The latest data from the European Centre for Disease Prevention and Control (ECDC) show the global growth in new cases and deaths accelerating in many parts of the world with resulting extensions of restrictions on activities which harms international trade and global economic growth prospects. The control of the outbreak of new cases is being complicated by new strains in the U.K., South Africa and elsewhere that are proving to be more easily spread than initial strains and rapidly spreading around the world.

Specifically, the ECDC in a report released on January 14 covering data through the first week of 2021 (assumed to be through January 6), shows the last two weeks as generating 9,487,913 new reported cases of COVID-19 — the first time, more than nine million new cases has been found in a two week period. Data on global cases to this morning (January 15) show total global cases at 93.2 million with deaths at 2 million. These are up from the 89.8 million cases through the first week of 2021 and 1.94 million deaths. The world is likely to top 100 million COVID cases by the end of January.

The United States had its worst two weeks — 3,271,355 new cases (34.48% of global new cases) and 41,116 deaths (24.07% of last week global) — and its totals since the beginning of 2020 at 22.4 million cases and 374,442 deaths (24.97% and 19.30% of global totals) dwarf its 4.3% of global population.

Many countries in Europe are continuing to struggle with new cases and deaths and hence have extended restrictions. So, for example, the United Kingdom, has had the largest number of new cases in the last two weeks(742,619) it has ever recorded and the highest number of deaths since spring in the last two weeks (10,322). The result has been continued tightening of restrictions within the United Kingdom. See, e.g., BBC, Covid-19: UK daily deaths at record high and Scotland rules tightened, January 14, 2021, https://www.bbc.com/news/uk-55652431; BBC, Covid: What are the lockdown rules across the UK?, January 13, 2021, https://www.bbc.com/news/explainers-52530518.

In Italy, following a second surge in the fall, restrictions helped lower the number of new cases and deaths but there have been upward trends in new cases in recent weeks with potential increases in deaths likely, leading to the introduction of some new restrictions. See, e.g., The Local, Italy declares three regions red zones as restrictions tighten, January 15, 2021, https://www.thelocal.it/20210115/italy-declares-three-regions-red-zones-as-restrictions-tighten.

Other countries in Europe are also seeing rising cases after drops in cases and deaths following introduction of restrictions and are often imposing or maintaining restrictions to address recent increases. See, e.g., The Local, French government extends 6pm curfew to whole country as Covid cases rise, January 14, 2021 (updated January 15), https://www.thelocal.fr/20210114/latest-french-government-to-announce-extra-restrictions-as-covid-cases-rise; France 24, France introduces tougher Covid-19 restrictions for non-EU travellers, January 15, 2021, https://www.france24.com/en/france/20210115-france-introduces-tougher-covid-19-restrictions-for-non-eu-travellers; DW, Coronavirus: German Chancellor Angela Merkel urges ‘significantly’ tougher curbs — reports, January 15, 2021, https://www.dw.com/en/coronavirus-german-chancellor-angela-merkel-urges-significantly-tougher-curbs-reports/a-56230751; El Pais, Spain reports 35,878 new coronavirus infections and 201 deaths, as third wave progresses, January 15, 2021, https://english.elpais.com/society/2021-01-15/spain-reports-35878-new-coronavirus-infections-and-201-deaths-as-third-wave-progresses.html (“Simón is taking for granted that the epidemiological curve will continue to rise for several more days, but he is hoping that the more restrictive measures that have been put in place after the Christmas holidays will put the brakes on the rhythm of infections.”).

Even in parts of Asia where there have been relatively few COVID-19 cases, recent increases have led to restrictions imposed in particular areas. See, e.g., NPR, Millions In China Under New Restrictions Amid COVID-19 Spike Near Beijing, January 9, 2021, https://www.npr.org/sections/coronavirus-live-updates/2021/01/09/955298826/millions-in-china-under-new-restrictions-amid-covid-19-spike-near-beijing; the Japan Times, Japan bars entry for new arrivals and business travelers due to new COVID-19 strains, January 14, 2021, https://www.japantimes.co.jp/news/2021/01/14/national/japan-bars-new-arrivals-business-travelers/; japan-guide.com, Travel Alerts and Disaster Updates, updated January 15, 2021, https://www.japan-guide.com/news/alerts.html (“Domestic Situation Although the virus has not spread in Japan at a rate seen in Europe and North America, infection numbers have increased considerably in recent weeks, and a state of
emergency was declared in 11 of Japan’s 47 prefectures, including in the greater Tokyo, Osaka, Nagoya and Fukuoka regions, to last until February 7.”); NPR, South Korea Tightens Restrictions During Holiday Period, December 22, 2020, https://www.npr.org/sections/coronavirus-live-updates/2020/12/22/949155094/south-korea-tightens-restrictions-during-holiday-period (“The new measures, which will be in effect through Jan. 3, follow the capital Seoul’s ban earlier in the week on private assembly of five or more people. The capital area, which accounts for more than 70% of last week’s new infections in South Korea, upped the regional alert level three times in the past month. But case numbers have yet to demonstrate a downward trend.”).

In India, where the government has worked hard to bring down the number of new cases in recent months and has had some significant success, many restrictions remain in place. See GardaWorld, India: Authorities extend domestic coronavirus disease controls through Jan. 31, 2021; international travel restrictions continue, December 29, 2020, https://www.garda.com/crisis24/news-alerts/422756/india-authorities-extend-domestic-coronavirus-disease-controls-through-jan-31-2021-international-travel-restrictions-continue-update-33.

Some governments have reduced economic recovery projections for 2021 because of the second wave of cases in the fall of 2020. See, e.g., Euronews, What does 2021 hold for jobs and businesses in Europe?, December 16, 2020, https://www.euronews.com/2020/12/16/what-does-2021-hold-for-jobs-and-businesses-in-europe (“The second wave of lockdowns devastated businesses across Europe and led the European Commission to downgrade its economic growth forecast for 2021 for the Eurozone from 6.1% down to 4.2%. It’s expected to be two years until the European economy comes close to its pre-pandemic level.”).

While other government 2021 projections show greater growth than was projected in the fall of 2020, the rebound is built on assumptions about stimulus funding, timing and effectiveness of vaccines and other elements. See, e.g., CNBC, Fed raises its economic outlook slightly, sees 4.2% growth next year and 5% unemployment rate, December 16, 2020, https://www.cnbc.com/2020/12/16/fed-raises-its-economic-outlook-slightly-sees-4point2percent-growth-next-year-and-5percent-unemployment-rate.html#:~:text=The%20Federal%20Reserve%20expects%20real,to%204.2%25%20from%204.0%25; The Conference Board, The Conference Board Economic Forecast for the US Economy, January 13, 2021, https://www.conference-board.org/research/us-forecast (“Our base case forecast yields 1Q21 real GDP growth of 2.0 percent* (annualized rate), and an annual expansion of 4.1 percent for 2021, following an annual contraction of 3.5 percent for 2020. We view this scenario as the most probable. It assumes: a) new cases of COVID-19 peak in early 1Q21 but no widespread lockdowns are implemented, b) vaccines are deployed gradually in 1Q21 but volumes accelerate into 2Q21, c) the December 2020 stimulus package is fully deployed in 1Q21 and an additional stimulus package is deployed in 2Q21, d) labor markets and consumption weaken slightly in 1Q21 but rebound in 2Q21 and 3Q21, and e) the political transition does not result in a hit to consumer or business confidence. These assumptions yield a lull in the recovery in 4Q20 and early 1Q21, but a steady acceleration of economic activity that peaks in the summer months as consumers eagerly spend on services and goods that they had forgone in 2020. In this scenario US monthly economic output returns to pre-pandemic levels in August 2021.”).

Growing concern over new strains of the COVID-19 and mounting new cases will be putting strain on many governments and keeping downward pressure on trade in services which the WTO has estimated as being down 30% globally in 2020. Travel and tourism have been decimated in 2020 and will continue to face major hurdles for at least the first half of 2021. International arrivals are down 70% for the year and more than 90% for the period since April 2020. See UNWTO, TOURISM BACK TO 1990 LEVELS AS ARRIVALS FALL BY MORE THAN 70%, 17 December 2020, https://www.unwto.org/news/tourism-back-to-1990-levels-as-arrivals-fall-by-more-than-70.

In the EU, a $2.1 trillion budget and coronavirus recovery package has been approved. See KFF, E.U. Leaders Agree To $2.1T Budget, Pandemic Recovery Fund; Main Science Research Program Receives Less Than Expected, Jul 21, 2020, https://www.kff.org/news-summary/e-u-leaders-agree-to-2-1t-budget-pandemic-recovery-fund-main-science-research-program-receives-less-than-expected/; Politico, EU leaders back deal to end budget blockade by Hungary and Poland, December 10, 2020, https://www.politico.eu/article/deal-reached-to-unblock-eu-budget-and-recovery-fund/.

In the United States, the recent $900 billion stimulus package was viewed as a temporary measure that would need to be supplemented in 2021. President-elect Biden announced on January 14, 2021 that he will be seeking a $1.9 trillion additional stimulus package to address the human costs of the pandemic, provide funding for people and businesses, strengthen efforts at vaccine distribution and vaccinations and other purposes. See, e.g., New York Times, Biden Outlines $1.9 Trillion Spending Package to Combat Virus and Downturn, January 14, 2021 (updated January 15), https://www.nytimes.com/2021/01/14/business/economy/biden-economy.html.

The stimulus packages by the EU (and member governments) and U.S. and other countries have kept demand higher than would otherwise have been possible but at the cost of significant increases in national debt which will reduce national flexibilities in later years.

In prior posts, I pointed out that the vaccine rollout, while promising, was facing a series of problems both at producers and in the ability of many governments to ramp up vaccinations. Moreover, the rapidity of the global economic rebound would depend on the speed of global vaccinations. See January 3, 2021, 2021 – how quickly will COVID-19 vaccines bring the pandemic under control?, https://currentthoughtsontrade.com/2021/01/03/2021-how-quickly-will-covid-19-vaccines-bring-the-pandemic-under-control/; January 5, 2021,  Global economic rebound in 2021 will be affected by rate of vaccinations against COVID-19 – World Bank’s January 5, 2021 release of its World Economic Prospects report, https://currentthoughtsontrade.com/2021/01/05/global-economic-rebound-in-2021-will-be-affected-by-rate-of-vaccinations-against-covid-19-world-banks-january-5-2021-release-of-its-world-economic-prospects-report/.

There is also the question of whether variants of COVID-19 will be treatable as effectively by the currently approved vaccines. See, e.g., National Geographic, Existing vaccines should work against new coronavirus variants for now, January 15, 2021, https://www.nationalgeographic.com/science/2021/01/existing-vaccines-should-work-against-new-coronavirus-variants-for-now/; VOX, How the new Covid-19 variants could pose a threat to vaccination, January 7, 2021, https://www.vox.com/22213033/covid-19-mutation-variant-vaccine-uk-south-africa.

There continue to be problems with the rate of vaccinations in many countries who have access to vaccines although all governments area working on ways to speed up the vaccination process. There are also problems in terms of the ramp up of production and the slower than expected approval of some vaccines. See, e.g., Politico, Germans vexed as coronavirus vaccine rollout lags, January 12, 2021, https://www.politico.eu/article/coronavirus-story-kiel/; Politico, France rejects criticism of EU coronavirus vaccine procurement, January 10, 2021, ; Financial Times, Pfizer to limit vaccine deliveries temporarily to Europe, January 15, 2021,https://www.ft.com/content/e8177df6-04ae-4d20-8e62-ca76589c7653?desktop=true&segmentId=d8d3e364-5197-20eb-17cf-2437841d178a; BBC News, Coronavirus: Dutch shocked to be EU vaccination stragglers, January 6, 2021, https://www.bbc.com/news/world-europe-55549656; USA Today, Tracking COVID-19 vaccine distribution by state: How many people in the US have received a shot?, January 14, 2021, https://www.usatoday.com/in-depth/graphics/2021/01/14/covid-vaccine-distribution-by-state-how-many-covid-vaccines-have-been-given-in-us-how-many-people/6599531002/ (“About 63.6% of the vaccines distributed haven’t been used yet.”).

Finally, while 49 countries have started to vaccinate their populations according to a recent article from Politico, the largest number of countries continue to wait for vaccines which will be helped when more vaccines are approved. See, e.g., Politico, Coronavirus vaccination in Europe — by the numbers, January 11, 2021, https://www.politico.eu/article/coronavirus-vaccination-europe-by-the-numbers/.

Conclusion

The COVID-19 pandemic continues to rage globally and is becoming more concerning because of faster spreading variants that are showing up around the world. Since many western countries continue to have very high numbers of new cases, hospitalizations and deaths, enormous pressure is on governments to get effective vaccines in large quantities as quickly as possible and get their populations vaccinated. Many countries with access to vaccines are having early problems in ramping up vaccinations. Some of the approved vaccinations are struggling with the production ramp up and being pressed to provide more volumes of vaccines in the absence of alternative vaccines from other producers. The main vaccines intended for broad distribution to many developing and least developed countries are either just starting to receive approvals for distribution or are still working through final trials. In a world quickly approaching 100 million reported cases and more than 2 million deaths and having suffered significant economic dislocations with services trade down an estimated 30 percent, with as many as 100 million people pushed into poverty, and 100-120 million people in the tourism sector having lost jobs, a global solution cannot occur soon enough. While 2021 will show significant improvements for many countries, the continuing challenges from COVID-19 will be with the world community for the foreseeable future.

U.S. Section 301 investigations on digital services taxes by trading partners — USTR releases additional reports on January 14, 2021

On January 8, 2021, I reviewed in a post the release of the first three of ten reports on investigations under Section 301 of the Trade Act of 1974, as amended, on countries’ digital services taxes (DSTs). See January 8, 2021, U.S. Section 301 investigations on digital service taxes by trading partners – an update, https://currentthoughtsontrade.com/2021/01/08/u-s-section-301-investigations-on-digital-service-taxes-by-trading-partners-an-update/ (release of reports on India, Italy and Turkey). The release of the three reports was accompanied by a decision to postpone indefinitely the imposition of additional duties on France for its DST to permit a coordinated response on all eleven countries following the completion of all investigations. The Federal Register notices on the India, Italy and Turkey investigations and the postponement of imposition of duties on France for its DST were published on January 12. See 86 FR 2477-78 (Italy); 86 FR 2478-79 (India); 86 FR 249-80 (France); 86 FR 2480 (Turkey).

On January 14, USTR released three additional reports on the DSTs of Austria, Spain and the United Kingdom and released a status report on the remaining four investigations on Brazil, the Czech Republic, the European Union, and Indonesia. See USTR press release, USTR Releases Findings and Updates in DST Investigations,
01/14/2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/january/ustr-releases-findings-and-updates-dst-investigations. The press release is embedded below but, similar to the earlier reports, found that “each of the DSTs discriminates against U.S. companies, is inconsistent with prevailing
principles of international taxation, and burden or restricts U.S. commerce.”

USTR-Releases-Findings-and-Updates-in-DST-Investigations-_-United-States-Trade-Representative

The press release notes that “’The taxation of companies that engage in international trade in goods and services is an important issue,’ stated U.S. Trade Representative Robert E. Lighthizer. ‘The best outcome would be for countries to come together to find a solution.’” As noted in the January 8 post, there is an ongoing process through the OECD/G20 Integrated Framework to find a solution by mid-2021.

For the four investigations where USTR has not yet published reports, USTR released a status report yesterday, reflecting the reality that the Trump Administration is in its final week and such unfinished investigations and issuance of reports will await the incoming Biden Administration. See Office of the United States Trade Representative, Section 301 Investigations, Status Update on Digital Services Tax Investigations of Brazil, the Czech Republic, the European Union, and Indonesia, https://ustr.gov/sites/default/files/files/Press/Releases/StatusUpdate301InvestigationsBEUIndCR.pdf. The twenty page status report is embedded below.

StatusUpdate301InvestigationsBEUIndCR

The status update is organized as reviewed in the opening paragraph of the update.

“In this Status Update, USTR reports on the progress of the four investigations, offers brief descriptions of the four jurisdictions’ approach to digital services taxes, and describes our preliminary, high-level concerns. In the sections that follow, we address: the procedural developments in the four investigations (Section I); a description and preliminary analysis of Brazil’s DST proposal (Section II); a description and preliminary analysis of the Czech Republic’s DST proposal (Section III); a description and preliminary analysis of the EU’s
approach to digital services taxes (Section IV); and a description and preliminary analysis of Indonesia’s DST proposal (Section V).”

There is little doubt that when the four pending investigations are completed, there will be similar findings to those in the prior seven completed investigations.

As reviewed in the January 8 post, the OECD was to hold a virtual meeting on January 14-15, 2021 in an effort to obtain public input to refine the draft documents released in October and to help resolve remaining issues. The 11th plenary meeting of the 137 participating countries of the OECD/G20 Integrated Framework will be held virtually on January 27-29.

For the incoming Biden Administration, it will be facing in the early months of the new Administration critically important negotiations on the OECD/G20 proposals as well as the need to complete the investigations on the four unfinished 301 investigations on DSTs. The outcome and interplay of both will have significant implications for global trade and for fairness in international taxation.

Below are the reports on Austria, Spain and the United Kingdom and the notices sent to the Federal Register on each of the three investigations.

AustriaDSTSection301Report

AustriaDSTFRN

SpainDSTSection301Report

SpainDSTFRN

UKDSTSection301Report

UKDSTFRN

U.S. Section 301 investigations on digital service taxes by trading partners — an update

For all countries the question of tax base erosion and profit shifting during a period of tremendous growth in e-commerce has been important as countries struggle to secure funding sources in a rapidly changing global marketplace. Concerns about tax revenue sources has grown during the COVID-19 pandemic as e-commerce has surged and may countries tax revenues have shrunk which stimulus outlays have soured.

For a number of years the OECD and the G20 have been working with many other countries in what is called an integrated framework to examine how international taxation needs to change to reflect the changed economic environment. The U.S. unhappiness with many trading partners on the question of digital service taxes is the early adoption of taxes on digital services before the completion of international negotiations and, in particular, taxes which appear to the U.S. to discriminate against U.S. companies who often are major global players in e-commerce and digital services.

In a post from early June, I reviewed the actions of the United States in response to actions by trading partners to introduce digital services taxes (DST), including a first investigation under section 301 of the Trade Act of 1974, as amended (“section 301”) on France on their DST and the initiation of investigations under section 301 on nine other countries and the European Union. While USTR had identified additional tariffs of 100% on a variety of French products, the imposition of duties was postponed until January 6, 2021 to give negotiators time to reach an agreement within the OECD. See June 3, 2020:  Digital Services Taxes – New U.S. Section 301 Investigations on Nine Countries and the European Union, https://currentthoughtsontrade.com/2020/06/03/digital-services-taxes-new-u-s-section-301-investigations-on-nine-countries-and-the-european-union/.

Earlier this week, USTR issued three reports on three countries from the 2020 investigations — on India, Italy and Turkey. Parts of the USTR press release are copied below and, similar to the report on France, found the DSTs of the three countries were discriminatory to U.S. companies, contrary to international tax principles and burden or restrict U.S. commerce. See USTR press release, USTR Releases Findings in DST Investigations,
01/06/2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/january/ustr-releases-findings-dst-investigations.

“Washington, DC – The U.S. Trade Representative has issued findings in Section 301 investigations of Digital Service Taxes (DSTs) adopted by India, Italy, and Turkey, concluding that each of the DSTs discriminates against U.S. companies, is inconsistent with prevailing principles of international taxation, and burden or restricts U.S. commerce.

“The findings on each of the DSTs are supported by comprehensive reports, which are being published today on USTR’s website.

“USTR is not taking any specific actions in connection with the findings at this time but will continue to evaluate all available options.

“The Section 301 investigations of the DSTs adopted by India, Italy, and Turkey were initiated in June 2020, along with investigations of DSTs adopted or under consideration by Austria, Brazil, the Czech Republic, the European Union, Indonesia, Spain, and the United Kingdom. USTR expects to announce the progress or completion of additional DST investigations in the near future.”

Similarly, on January 7, 2021, USTR announced that it was postponing introduction of tariffs on French products that were due to kick in on January 6 to provide the agency with the ability to coordinate its actions based on the results of the other ongoing investigations. See USTR press release, Suspension of Tariff Action in France Digital Services Tax Investigation, 01/07/2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/january/suspension-tariff-action-france-digital-services-tax-investigation. The press release is copied below.

“Washington, DC – The U.S. Trade Representative has determined to suspend the tariff action in the Section 301 investigation of France’s Digital Services Tax (DST). The additional tariffs on certain products of France were announced in July 2020, and were scheduled to go into effect on January 6, 2021. The U.S. Trade Representative has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions. Those investigations have significantly progressed, but have not yet reached a determination on possible trade actions. A suspension of the tariff action in the France DST investigation will promote a coordinated response in all of the ongoing DST investigations.

“The suspension of the France DST tariffs is set out in a notice sent for publication in the Federal Register.”

The three notices on the India, Italy and Turkey investigations were sent to the Federal Register on January 6 and will appear in the Federal Register next week. The same is true on the postponement of tariffs on France which was forwarded yesterday to the Federal Register and which should appear next week as well.

The three USTR reports released on January 6 and the four notices sent to the Federal Register by USTR on January 6 or 7 are embedded below.

Report-on-Indias-Digital-Services-Tax

Report-on-Italys-Digital-Services-Tax

Report-on-Turkeys-Digital-Services-Tax

IndiaDSTFRNJLB

ItalyDSTFRNJLB

TurkeyDSTFRNJLB

FRN-France-DST-Modification-2021.01.07

The OECD/G20 Integrated Framework talks

The OECD/G20 Integrated Framework negotiations on arriving at tax policies for an increasingly digitalized global economy have been ongoing for a number of years and include 137 countries.

The OECD/G20 Integrated Framework project released a series of reports on policy issues and approaches to address international taxation in the age of digitalisation in early October to address base erosion profit shifting (“BEPS”) and have moved the target date for completion from the end of 2020 to mid-2021. The reports released attempt to address at least some of the U.S. concerns. The OECD has sought public comments, received more than 270 comments and is holding a virtual meeting on January 14-15 in an effort to obtain public input to refine the draft documents and help resolve remaining issues. The 11th plenary meeting of the 137 participating countries of the OECD/G20 Integrated Framework will be held virtually on January 27-29.

A series of documents released in October that permit a better understanding of the complexities involved in seeking a way forward are listed next. For non-tax readers, the “Top 10 Frequently Asked Questions” is a good primer on the issues and challenges. See OECD/G20 Inclusive Framework on BEPS, Addressing the Tax Challenges Arising from the Digitalisation of the Economy, HIGHLIGHTS, October 2020, https://www.oecd.org/tax/beps/brochure-addressing-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2020.pdf; OECD/G20 Base Erosion and Profit Shifting Project, Tax Challenges Arising
from Digitalisation – Report on Pillar One Blueprint, October 2020, https://www.oecd.org/tax/beps/tax-challenges-arising-from-digitalisation-report-on-pillar-one-blueprint-beba0634-en.htm; OECD/G20 Base Erosion and Profit Shifting Project, Tax Challenges Arising from Digitalisation – Report on Pillar Two Blueprint, October 2020, https://www.oecd.org/tax/beps/tax-challenges-arising-from-digitalisation-report-on-pillar-two-blueprint-abb4c3d1-en.htm; OECD/G20 Inclusive Framework on BEPS, PUBLIC CONSULTATION DOCUMENT, Reports on the Pillar One and Pillar Two Blueprints, 12 October 2020 – 14 December 2020, https://www.oecd.org/tax/beps/public-consultation-document-reports-on-pillar-one-and-pillar-two-blueprints-october-2020.pdf; OECD/G20 Base Erosion and Profit Shifting Project, Tax Challenges Arising from Digitalisation – Economic Impact Assessment, October 2020, https://www.oecd.org/tax/beps/tax-challenges-arising-from-digitalisation-economic-impact-assessment-0e3cc2d4-en.htm; OECD, Tax Issues Arising from Digitalisation, Top 10 Frequently Asked Questions, October 2020, https://www.oecd.org/tax/beps/top-10-frequently-asked-questions-tax-challenges-digitalisation.pdf; Public consultation meeting on the Reports on the Pillar One and Pillar Two Blueprints (Date 14-15 January 2021), https://www.oecd.org/tax/beps/public-consultation-meeting-reports-on-the-pillar-one-and-pillar-two-blueprints.htm; 11th meeting of the OECD/G20 Inclusive Framework on BEPS (Date 27-28 January 2021 (Inclusive Framework plenary); 29 January 2021 (Tax and Development briefings)), https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-on-beps-meeting-january-2021.htm.

To understand some of the concerns of U.S. businesses or business groups with actions of particular trading partners, a review of several comments to the OECD/G20 may be useful. I embed below comments from the American Chamber of Commerce Ireland, Amazon and the Business Roundtable. The Amcham Ireland paper comments on non-discrimination, multilateralism, administrability and certainty, avoiding double taxation, durability, efficiency, scope, safe harbour, segmentation and the interaction with the US’s Global intangible low-taxed income (GILTI). Amazon explores issues in the two pillar blueprints dealing with segmentation, sourcing, user location/IP address, business-to-business sales, reasonable steps/evidence requirements, double tax relief, dispute prevention and resolution, marketing and distribution safe harbour, GILTI Co-existence, framework for implementation, double-tax relief, application of STTR, and additional areas for simplification. The Business Roundtable (BR) has an overview section in which they “affirm certain principles of international income taxation” as being critical to a strong and growing global economy. One of the principles is that taxation should be of net business profits, not gross revenue. BR also provides seven comments on specific aspects of Pillar One and/or Two which are similar to concerns raised by the other U.S. interests. Comment 4 states “An agreement on Pillar One must include repeal of existing unilateral measures and a commitment to refrain from imposing any new unilateral measures aimed at profit reallocation or the digital economy.” It is the unilateral actions of trading partners that are perceived to discriminate against U.S. companies, often base tax on revenue versus profit and deviate from other established international taxation principles that is causing concern in the U.S. business community and resulting in U.S. investigations under Section 301 of the Trade Act of 1974, as amended.

American-Chamber-of-Commerce-Ireland

Amazon

Business-Roundtable-BRT

Conclusion

With the Trump Administration in its last twelve days, it is unknown if USTR will be able to complete the remaining seven 301 investigations on Austria, Brazil, the Czech Republic, the European Union, Indonesia, Spain, and the United Kingdom to accompany the three reports released on the 6th of January dealing with India, Italy, and Turkey and the earlier report and proposed action on France. My guess is that this will be a primary focus of USTR in the next week and a half so that a full set of reports is available and possibly a recommendation for action on all eleven reports. Whether the remaining investigations are completed by January 20 or not, the Biden Administration will be confronted with the ongoing OECD/G20 process with a target completion in the front half of 2021 and a host of governments implementing DSTs unilaterally ahead of any agreement among the Integrated Framework members. Action under 301 is an option should trading partners pursue approaches to DSTs that in fact discriminate against U.S. companies or deviate from what the OECD/G20 process is likely to generate as a final package.

2021 – how quickly will COVID-19 vaccines bring the pandemic under control?

News accounts report many countries starting to receive at least some doses of vaccines. In the United States, two vaccines have received emergency use authorization (“EUA”)(the Pfizer/BioNTech and the Moderna vaccines). The Pfizer/BioNTech vaccine has received approval (emergency use or other) in a number of countries (EU, Canada, United Kingdom, Bahrain) and was the first vaccine to receive an EUA from the World Health Organization. See WHO press release, WHO issues its first emergency use validation for a COVID-19 vaccine and emphasizes need for equitable global access, December 31, 2020, https://www.who.int/news/item/31-12-2020-who-issues-its-first-emergency-use-validation-for-a-covid-19-vaccine-and-emphasizes-need-for-equitable-global-access. As the WHO press releases indicates, “The WHO’s Emergency Use Listing (EUL) opens the door for countries to expedite their own regulatory approval processes to import and administer the vaccine. It also enables UNICEF and the Pan-American Health Organization to procure the vaccine for distribution to countries in need.”

AstraZeneca will likely seek emergency use authorization in the United States in January and Johnson & Johnson in February. AstraZeneca has received an emergency use authorization in the United Kingdom. It has also been given EUA by India (along with a vaccine from Bharat Biotech). See New York Times, India Approves Oxford-AstraZeneca Covid-19 Vaccine and 1 other, January 3, 2021, https://www.nytimes.com/2021/01/03/world/asia/india-covid-19-vaccine.html.

A recent Financial Times article includes a graph showing the number of citizens in various countries who have received a first vaccination shot. See Financial Times, European leaders under pressure to speed up mass vaccination, January 1, 2021, https://www.ft.com/content/c45e5d1c-a9ea-4838-824c-413236190e7e. The countries shown as having started vaccinations include China, the U.S., the U.K., Kuwait, Mexico, Canada, Chile, Russia, Argentina, Iceland, Bahrain, Oman, Israel, and fourteen of the 27 members of the EU).

Similarly an article from CGTN on January 1, 2021 shows a number of countries who are buying COVID-19 vaccines from China including Hungary and a number of others while vaccines from China are in stage 3 trials in a number of countries. CGTN, 1 January 2021, Hungary to focus on EU, Chinese coronavirus vaccine purchases, https://news.cgtn.com/news/2021-01-01/Hungary-to-focus-on-EU-Chinese-coronavirus-vaccine-purchases-WHm11NYjni/index.html. “By the end of 2020, UAE became the first country to roll out a Chinese vaccine to the public. Pakistan also announced on Thursday that they will purchase 1.2 million COVID-19 vaccine doses from China’s Sinopharm after China officially approved the vaccine for general public use. Sinovac’s CoronaVac shot, another candidate vaccine in China, has been signed up for purchase deals with Brazil, Indonesia, Turkey, Chile, and Singapore. The company is also in supply talks with Malaysia and the Philippines.”

So the good news at the beginning of 2021 is that effective vaccines are starting to be distributed. Many others are in late stages of trials, giving hope to a significant number of vaccines approved for use in the coming months. The WHO’s list of vaccines in development and their status can be found on the WHO website at this cite. https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines. How quickly approved vaccines can be produced, distributed and vaccinations given globally will determine when the pandemic will be brought under control. There are many challenges that the world faces in getting to the hoped for situation of a pandemic that is in the past.

For example, even in developed countries, governments are finding that there are significant hurdles in getting production volumes up to promised levels, and much greater challenges in going from production to distribution to vaccinations. In the United States, the Trump Administration had aimed at having 20 million vaccinations accomplished by the end of 2020. Only 13.071 million doses were distributed by the end of the year according to the US CDC and only 4.2 million vaccinations (first shot of two shots) occurred. See Center for Disease Prevention and Control, COVID-19 Vaccinations in the United States, https://covid.cdc.gov/covid-data-tracker/#vaccinations (viewed Jan. 3, 2021). President-elect Biden is talking about an aggressive program to get 100 million vaccinations (as the current vaccines require 2 shots, this means 50 million people) vaccinated in the first 100 days of his Administration (by the end of April). To achieve this objective will require cooperation from Congress in providing sufficient funding to build up the capabilities at the state and local levels. Health care infrastructure has been reduced over the last dozen years with a reduction of some 50,000 health care workers in the U.S. The huge COVID-19 case load in the United States and record hospitalizations also have health care operations across the United States overextended. So despite having sufficient vaccines on order from four companies where EUAs have been or will likely be granted in the near future to permit vaccination of all Americans by fall, there are enormous practical challenges to making the vaccinations happen in fact. And that is before the challenges of convincing portions of the population of the safety of the vaccines and the need for the vast majority of people to be vaccinated to achieve herd immunity.

Similar challenges exist in many other parts of the world as well. For example, in both the EU and India the roll out of vaccines is proceeding slower than desired. See, e.g., The Guardian, BioNTech criticises EU failure to order enough Covid vaccine, January 1, 2021, https://www.theguardian.com/world/2021/jan/01/france-to-step-up-covid-jabs-after-claims-of-bowing-to-anti-vaxxers; Politico, France under pressure to speed up coronavirus vaccine rollout, January 3, 2021, https://www.politico.eu/article/france-under-pressure-to-speed-up-coronavirus-vaccine-rollout/; New York Times, India Approves Oxford-AstraZeneca Covid-19 Vaccine and 1 other, January 3, 2021, https://www.nytimes.com/2021/01/03/world/asia/india-covid-19-vaccine.html (“The Serum Institute, an Indian drug maker that struck a deal to produce the Oxford vaccine even before its effectiveness had been proven, has managed to make only about one-tenth of the 400 million doses it had committed to manufacturing before the end of the year.”).

The WHO/GAVI/CEPI effort to get vaccines to the world on a equitable basis has much of its vaccine commitments in products still in the testing stage although roughly one billion doses can be available for a vaccine currently approved on an emergency use basis in the U.K. and India (the AstraZeneca vaccine) through COVAX agreements with AstraZeneca directly and with an Indian producer who can be asked to produce one of two potential vaccines, including the AstraZeneca one. See WHO, COVAX Announces additional deals to access promising COVID-19 vaccine candidates; plans global rollout starting Q1 2021, 18 December 2020, https://www.who.int/news/item/18-12-2020-covax-announces-additional-deals-to-access-promising-covid-19-vaccine-candidates-plans-global-rollout-starting-q1-2021.

“Geneva/Oslo, 18 December 2020

“COVAX, the global initiative to ensure rapid and equitable access to COVID-19 vaccines for all countries, regardless of income level, today announced that it had arrangements in place to access nearly two billion doses of COVID-19 vaccine candidates, on behalf of 190 participating economies. For the vast majority of these deals, COVAX has guaranteed access to a portion of the first wave of production, followed by volume scales as further supply becomes available. The arrangements announced today will enable all participating economies to have access to doses in the first half of 2021, with first deliveries anticipated to begin in the first quarter of 2021 – contingent upon regulatory approvals and countries’ readiness for delivery.

“Given these are arrangements for 2 billion doses of vaccine candidates which are still under development, COVAX will continue developing its portfolio: this will be critical to achieve its goal of securing access to 2 billion doses of safe and effective, approved vaccines that are suitable for all participants’ contexts, and available by the end of 2021. However, today’s announcements offer the clearest pathway yet to end the acute phase of the pandemic by protecting the most vulnerable populations around the world. This includes delivering at least 1.3 billion donor-funded doses of approved vaccines in 2021 to the 92 low- and middle-income economies eligible for the COVAX AMC.

“The new deals announced today include the signing of an advance purchase agreement with AstraZeneca for 170 million doses of the AstraZeneca/Oxford candidate, and a memorandum of understanding (MoU) with Johnson & Johnson for 500 million doses of the Janssen candidate, which is currently being investigated as a single dose vaccine.. These deals are in addition to existing agreements COVAX has with the Serum Institute of India (SII) for 200 million doses – with options for up to 900 million doses more – of either the AstraZeneca/Oxford or Novavax candidates, as well as a statement of intent for 200million doses of the Sanofi/GSK vaccine candidate.

“In addition to this, COVAX also has – through R&D partnership agreements – first right of refusal in 2021 to access potentially more than one billion doses (based on current estimates from the manufacturing processes under development) that will be produced, subject to technical success and regulatory approval, by candidates in the COVAX R&D Portfolio.”

* * *

“The COVAX Facility currently has 190 participating economies. This includes 98 higher-income economies and 92 low- and middle-income economies eligible to have their participation in the Facility supported via the financing mechanism known as the Gavi COVAX AMC. Of the 92 economies eligible to be supported by the COVAX AMC, 86 have now submitted detailed vaccine requests, offering the clearest picture yet on actual global demand for COVID-19 vaccines.

“In addition to gathering detailed information on participating economies’ vaccine requests, COVAX, through Gavi, UNICEF,WHO, the World Bank, and other partners has been working closely with all countries in the Facility, particularly AMC-eligible participants, to help plan and prepare for the widespread roll out of vaccines. Conditions that determine country readiness include regulatory preparedness as well as the availability of infrastructure, appropriate legal frameworks, training, and capacity, among other factors.

“’Securing access to doses of a new vaccine for both higher-income and lower-income countries, at roughly the same time and during a pandemic, is a feat the world has never achieved before – let alone at such unprecedented speed and scale,’ said Dr. Seth Berkley, CEO of Gavi, the Vaccine Alliance, which leads on procurement and delivery for COVAX. ‘COVAX has now built a platform that offers the world the prospect, for the first time, of being able to defeat the pandemic on a global basis, but the work is not done: it’s critical that both governments and industry continue to support our efforts to achieve this goal’.

Early pledges towards 2021 fundraising targets

“To achieve this ambitious goal, COVAX currently estimates it needs to raise an additional US$ 6.8 billion in 2021 – US$ 800 million for research and development, at least US$ 4.6 billion for the COVAX AMC and US$ 1.4 billion for delivery support.

“Support for the COVAX AMC will be critical to ensuring ability to pay is not a barrier to access. Thanks to the generous support of sovereign, private sector, and philanthropic donors, the AMC has met its urgent 2020 fundraising target of US$ 2 billion, but at least US$ 4.6 billion more is needed in 2021 to procure doses of successful candidates as they come through the portfolio.”

In the United States and in the EU, governments are looking to expand volumes of proven vaccines while awaiting approval of other vaccine candidates. See Pfizer press release, PFIZER AND BIONTECH TO SUPPLY THE U.S. WITH100 MILLION ADDITIONAL DOSES OF COVID-19VACCINE, December 23, 2020, https://www.pfizer.com/news/press-release/press-release-detail/pfizer-and-biontech-supply-us-100-million-additional-doses; Pfizer press release, PFIZER AND BIONTECH TO SUPPLY THEEUROPEAN UNION WITH 100 MILLIONADDITIONAL DOSES OF COMIRNATY®, December 29, 2020, https://www.pfizer.com/news/press-release/press-release-detail/pfizer-and-biontech-supply-european-union-100-million; HHS, Trump Administration purchases additional 100 million doses of COVID-19 investigational vaccine from Moderna, December 11, 2020, https://www.hhs.gov/about/news/2020/12/11/trump-administration-purchases-additional-100-million-doses-covid-19-investigational-vaccine-moderna.html.

Conclusion

The world is anxiously awaiting the resolution of the pandemic through the approval and distribution of effective vaccines on a global basis in 2021. The good news is that a number of vaccines have been approved in one or more countries and billions of doses of approved vaccines will likely be produced in 2021. The efforts of the WHO, GAVI and CEPI and the generosity of many nations, private and philanthropic organizations will mean people in nearly all countries will receive at least some significant volume of vaccines in 2021. As most vaccines require two shots, the number of people vaccinated in 2021 in an optimistic scenario is probably less than two billion. The world population at the beginning of 2021 is 7.8 billion people. Thus, 2021, even under an optimistic scenario, will not likely result in the eradication of the pandemic around the world.

Even in countries like the United States, the United Kingdom and the 27 members of the European Union where advance purchases should result in sufficient doses being available to vaccinate all eligible members of society, there are massive challenges in terms of distribution and vaccinating the numbers of people involved and educating the populations on the safety and benefits of the vaccines. Thus, even in wealthier countries it will be optimistic to achieve the desired levels of vaccination by the end of 2021.

The Director-General of the WHO in his year-end message laid out the likely situation for the world in 2021, the availability of vaccines but the continued need to be vigilant and adhere to preventive measures to control the pandemic and the need to work collectively to ensure equitable and affordable access to vaccines for all. See WHO,COVID-19: One year later – WHO, Director-General’s new year message, December 30, 2020, https://www.who.int/news/item/30-12-2020-covid-19-anniversary-and-looking-forward-to-2021 (Dr Tedros Adhanom Ghebreyesus, WHO Director-General)

“As people around the world celebrated New Year’s Eve 12 months ago, a new global threat emerged.

“Since that moment, the COVID-19 pandemic has taken so many lives and caused massive disruption to families, societies and economies all over the world.

“But it also triggered the fastest and most wide-reaching response to a global health emergency in human history.

“The hallmarks of this response have been an unparalleled mobilization of science, a search for solutions and a commitment to global solidarity.

“Acts of generosity, large and small, equipped hospitals with the tools that health workers needed to stay safe and care for their patients.

“Outpourings of kindness have helped society’s most vulnerable through troubled times.

“Vaccines, therapeutics and diagnostics have been developed and rolled out, at record speed, thanks to collaborations including the Access to COVID-19 Tools Accelerator.

“Equity is the essence of the ACT Accelerator, and its vaccine arm, COVAX, which has secured access to 2 billion doses of promising vaccine candidates.

“Vaccines offer great hope to turn the tide of the pandemic.

“But to protect the world, we must ensure that all people at risk everywhere – not just in countries who can afford vaccines –are immunized.

“To do this, COVAX needs just over 4 billion US dollars urgently to buy vaccines for low- and lower-middle income countries.

“This is the challenge we must rise to in the new year.

“My brothers and sisters, the events of 2020 have provided telling lessons, and reminders, for us all to take into 2021.

“First and foremost, 2020 has shown that governments must increase investment in public health, from funding access to COVID vaccines for all people, to making our systems better prepared to prevent and respond to the next, inevitable, pandemic.

“At the heart of this is investing in universal health coverage to make health for all a reality.

“Second, as it will take time to vaccinate everyone against COVID, we must keep adhering to tried and tested measures that keep each and all of us safe.

“This means maintaining physical distance, wearing face masks, practicing hand and respiratory hygiene, avoiding crowded indoor places and meeting people outside.

“These simple, yet effective measures will save lives and reduce the suffering that so many people encountered in 2020.

“Third, and above all, we must commit to working together in solidarity, as a global community, to promote and protect health today, and in the future.

“We have seen how divisions in politics and communities feed the virus and foment the crisis.

“But collaboration and partnership save lives and safeguard societies.

“In 2020, a health crisis of historic proportions showed us just how closely connected we all are.

“We saw how acts of kindness and care helped neighbors through times of great struggle.

“But we also witnessed how acts of malice, and misinformation, caused avoidable harm.

“Going into 2021, we have a simple, yet profound, choice to make:

“Do we ignore the lessons of 2020 and allow insular, partisan approaches, conspiracy theories and attacks on science to prevail, resulting in unnecessary suffering to people’s health and society at large?

“Or do we walk the last miles of this crisis together, helping each other along the way, from sharing vaccines fairly, to offering accurate advice, compassion and care to all who need, as one global family.

“The choice is easy.

“There is light at the end of the tunnel, and we will get there by taking the path together.

“WHO stands with you – We Are Family and we are In This Together.

“I wish you and your loved ones a peaceful, safe and healthy new year.”

We all want to have the COVID-19 pandemic in the rearview mirror as 2021 progresses. There is hope for significant progress this year. How much progress will depend on the will of governments and peoples to focus on the eradication of the pandemic and to support the dramatic ramp up of production, distribution and vaccination of the world’s people.

In last two weeks, United States adds more than three million new confirmed COVID-19 cases; world approaches nine million new cases; first vaccines start to ship in United Kingdom, Canada, Bahrain, United States and shortly in the European Union; hope for a better 2021

The European Centre for Disease Prevention and Control (ECDC) shifted from a daily report on global cases to a weekly total last week. In today’s report, the United States becomes the only country to record more than three million new cases in a two week period. ECDC, COVID-19 situation update worldwide, as of week 51 2020. It is also the only country to have recorded 2,000,000 in a two week period. The 3,087,841 new cases in weeks 50 and 51 constitute 34.73% of the global total of 8,888,940 new cases in the last two weeks and was 4.68 times the number reported in Brazil (660,079), 8.16 times the number reported in India — the two countries after the United States with the most cases. For the full 2020, the United States has accounted for 23.47% (17,844,839) of global cases (76,046,387) despite being only 4.3% of the global population.

The weekly total for the United States has been an almost uninterrupted surge in new cases for the last three months or so. Below are the data as compiled by the ECDC for weeks 37-51 for the United States. Deaths have also been climbing rapidly but at a slower rate than new cases. The U.S. accounts for 18.75% (317,670) of global deaths (1,693,858) in 2020 from COVID-19 and a higher percentage in recent weeks. Deaths for the same weeks for the U.S. are shown below. The U.S. is seeing deaths approaching 3,000/day with some days as high as 4,000+. With hospitalizations at all time highs, and surging cases and rising deaths, the U.S. is likely to surpass 400,000 deaths by January 20, 2021 when President-elect Joe Biden will be sworn in.

Number of new COVID-19 cases reported by the U.S.Week in 2020No. of deaths reported in the U.S.
             243,5582020-37  5,138               
             284,8352020-38 5,430
             310,2322020-39 5,247
             302,7992020-40 5,038
             344,6992020-41 4,977
             392,0512020-42 4,903
             481,5702020-43 5,556
             571,1972020-44 5,766
             764,2892020-45 6,576
         1,065,4102020-46 8,642
         1,209,8482020-47 10,568
         1,136,4122020-48 10,091
         1,373,6772020-49 15,437
         1,499,7562020-50 16,867
         1,588,0852020-51 18,493

The good news is the approval of the first vaccines in the U.S., approvals in a number of other countries of at least one vaccine (United Kingdom, Canada, Bahrain, European Union) and more vaccines getting close to completing their trials. See, e.g., New York Times, E.U. Approves Pfizer Vaccine, Setting Stage for High-Stakes Rollout, December 21, 2020, https://www.nytimes.com/2020/12/21/world/europe/eu-coronavirus-vaccine.html. These western vaccines are in addition to the ones produced in China and the Russia Federation that were released before all trials were completed.

However, even for countries who have lined up large volumes of vaccines through up-front contracts for delivery in December or the front half of 2021, countries who have approved one or more of the western company vaccines are still months away from having enough people vaccinated to make a significant dent in the levels of new cases or deaths without strong efforts to maintain social distancing, wear masks, minimize size of gatherings, washing hands, etc.

With mutations of the virus having appeared in the U.K. and elsewhere, it is also unclear how efficacious the early vaccines will be on the mutations. Early information on the news today, suggests at least some reduction in effectiveness is likely, which could have implications for the percentage of the population needed to be vaccinated to achieve herd immunity. Many countries are banning travel from the U.K. in an effort to prevent the spread of the mutant variation of COVID-19 identified in the U.K. which is believed to spread much more easily. See Politico, Mutant coronavirus strain: What we know so far, December 21, 2020, https://www.politico.eu/article/mutant-coronavirus-strain-what-we-know-so-far/.

While the short-term future has many challenges, many are hopeful that 2021 will see the COVID-19 pandemic being handled as vaccines are approved and produced and distributed to all peoples around the world to permit a return to greater normalcy. See Time, What Bill Gates Thinks About the State of the Fight Against COVID-19, December 22, 2020, https://time.com/5923916/bill-gates-covid-19-letter/; Bill Gates, YEAR IN REVIEW, These breakthroughs will make 2021 better than 2020, The latest on the innovations that will let us go back to normal, December 20, 2020, https://www.gatesnotes.com/About-Bill-Gates/Year-in-Review-2020.

The WTO has both been monitoring trade restrictive and liberalizing actions taken by Members relating to the pandemic and has also recently put out a paper reviewing trade policy issues that can arise as the world shifts to the production and distribution of vaccines around the world. See WTO, TRIPS, WTO paper explores role of trade policy in the rapid roll-out of COVID-19 vaccines, December 22, 2020, https://www.wto.org/english/news_e/news20_e/trip_22dec20_e.htm. The press release describes the content of the new paper as follows:

“The WTO Secretariat has published a new information note on trade-related issues for COVID-19 vaccine production, manufacturing and deployment. The note, entitled ‘Developing and delivering COVID-19
vaccines around the world,’ explores how trade policy can play its part in ensuring the rapid roll-out of vaccines against COVID-19.

“The paper goes into further detail on key topics included in two documents previously published on the WTO website: ‘Infographic: Developing & delivering COVID-19 vaccines around the world’ (https://www.wto.org/english/tratop_e/covid19_e/vaccine_infographic_e.pdf) and ‘Developing & delivering COVID-19 vaccines around the world: A checklist of issues with trade impact’
(https://www.wto.org/english/tratop_e/covid19_e/vaccine_checklist_e.pdf) .

“The new information note comprises three sections. Section A provides background information on immunization and the urgent search for vaccines against COVID-19. This section points to immunization as a key component of primary health care and highlights the ambitious national and global targets that have been set for COVID-19 vaccines. According to the World Health Organization (https://www.who.int/publications/m/item/fair-allocation-mechanism-for-covid-19-vaccines-through-the-covax-facility) and Gavi, the Vaccine Alliance (https://www.gavi.org/vaccineswork/covax-explained), two billion COVID-19 vaccine doses are to be distributed by the end of 2021, with an allocation for every country equal to 20 per cent of the population so as to cover prioritized target groups.

“Section B provides an overview of the development and delivery of vaccines in the form of an infographic listing seven steps in this process: vaccine development, domestic approval (manufacture), vaccine manufacture, domestic approval (importer), international distribution, border clearance, and domestic distribution and surveillance.

“Finally, Section C identifies where key decisions with trade impact may need to be made along the vaccine value chain and provides a non-exhaustive list of useful resources to help inform decision-making. This section includes a checklist of trade issues to consider along with the COVID-19 vaccine value chain, as well as a world map of clinical trials and partnerships on COVID-19 treatments.

“The report can be found here (https://www.wto.org/english/tratop_e/covid19_e/vaccine_report_e.pdf).”

The report is embedded below.

vaccine_report_e

Conclusion

The COVID-19 pandemic has rocked the world in 2020. Some continents have come through with relatively few cases (Africa) or have often been successful in minimizing outbreaks (significant parts of Asia, Oceania). Europe was hit hard early (March-April) and suffered a much bigger second surge in the September -November period though renewed restrictions have brought case numbers down significantly in December. The Americas has had the highest number of cases and deaths of any region. The United States has gone through a number of surges and is currently exceeding or close to exceeding medical facility capabilities in many parts of the country. So 2020 is ending in a spiraling crisis in the United States. The arrival of vaccines is welcome news for all peoples but will take considerable time to be produced and distributed both within countries with high infection rates and to the rest of the world.

The role of trade in a pandemic is largely focused on keeping markets open for the movement of medical goods and food products. While a large number of countries have introduced some export restrictions on medical goods (and some on food products), many countries have also introduced actions to speed movement of medical goods and to lower costs. While there have not been new multilateral agreements to keep markets open or liberalize trade in medical goods, there have been some efforts at cooperation and coordination by at least some countries.

While the actions taken by governments to try to control the virus led to significant contractions in trade in the second quarter of 2020, much of prior trade flows were restored in the third quarter but will likely see some reductions in the fourth with the second wave of restrictions on activities in many countries in the last month or two. Certain service sectors (travel and tourism generally; air transport, restaurants, hotels specifically) have been very hard hit by the restrictions imposed with many businesses closing, more than 100 million people unemployed or underemployed in the sector and a post-pandemic world likely to be much changed particularly in sectors like restaurants that are dominated by small business operators. Most projections don’t see a restoration of global GDP levels to those achieved in 2019 until at least 2022.

Trillions of dollars have been poured into a number of countries as stimulus to prevent the further collapse of the economies involved. Those actions have reduced the size of the downturn which still is the worst since World War II for much of the world. The size of the stimulus infusions have also greatly increased the level of debts for the countries engaged in the stimulus activities. For countries without the ability to borrow huge sums for stimulus, the contraction in GDP has often been severe with gains from the last decade being wiped out in some cases.

So the world needs 2021 to be better than 2020. How the efforts at vaccine development proceed and the level of commitment and funding for production expansion and global distribution will be major factors in whether 2021 fulfills the promise of equitable and affordable access to vaccines and therapeutics needed to get the world back to a more normal place.

Council for Trade-Related Aspects of Intellectual Property Rights meeting of December 10, 2020 – no resolution on proposed waiver of TRIPS obligations to address the pandemic

On December 10th, the WTO Council for Trade-Related Aspects of Intellectual Property Rights held a meeting to consider a proposed waiver for all countries of various TRIPS Agreement obligations during the COVID-19 pandemic. I have previously looked at the proposed waiver and reactions thereto in two prior posts. See December 6, 2020, Upcoming December 11th Council for Trade-Related Aspects of Intellectual Property Rights meeting – reaction to proposed waiver from TRIPS obligations to address COVID-19, https://currentthoughtsontrade.com/2020/12/06/upcoming-december-11th-wto-council-for-trade-related-aspects-of-intellectual-property-rights-meeting-reaction-to-proposed-waiver-from-trips-obligations-to-address-covid-19/ (date of meeting incorrectly listed as December 11); 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/.

The WTO press release on the meeting indicates that Members will continue to discuss the proposal in future meetings as there was no consensus yet on the proposed waiver. See WTO press release, December 10, 2020, Members to continue discussion on proposal for temporary IP waiver in response to COVID-19, https://www.wto.org/english/news_e/news20_e/trip_10dec20_e.htm. The meeting was held to permit the Council to prepare a report to the General Council ahead of its December 16 meeting. As noted in the press release,

“As a result of the consultations, the chair proposed that the TRIPS Council provide a neutral and factual communication to the General Council reflecting the state of play of discussions and the absence of consensus on the waiver proposal in the TRIPS Council at this time. The communication would indicate that the TRIPS Council has not yet completed its consideration of the waiver request and may not be able to do so within the 90 days stipulated. Therefore, it would propose that the TRIPS Council continues its consideration of the waiver request and reports back to the General Council as stipulated in Article IX:3 of the Marrakesh Agreement.”

The next scheduled TRIPS Council meeting is scheduled for March, but the Chair indicated informal meetings may be held in January and February to work on a path forward.

The press release in its entirety is embedded below.

WTO-_-2020-News-items-Members-to-continue-discussion-on-proposal-for-temporary-IP-waiver-in-response-to-COVID-19

There remains a sharp divide between the proponents and their supporters on the one hand who argue that TRIPS obligations will hinder speedy and equitable distribution of vaccines and other materials needed for handling the pandemic and the range of Members who opposed a waiver on the basis that there hasn’t been a factual showing that TRIPS flexibilities don’t address concerns and that TRIPS provisions are not the only issue that goes to production capacity and production.

As noted in my last post, four WTO Members (Australia, Canada, Chile and Mexico) have proposed a series of questions for Members to consider and respond to in an effort to develop a factual record for what actual problems Members are having so any waiver or other action would respond to actual versus feared potential problems. There was no public indication of whether WTO Members will respond to the questions and/or otherwise cooperate in the establishment of a data base of challenges being experienced in fact by Members in addressing the pandemic.

Trade press have reported on the meeting and the continued disagreement between the two groups of Members. See, e.g., Inside U.S. Trade’s World Trade Online, December 10, 2020, WTO members to continue talks on TRIPS waiver, but no consensus in sight, https://insidetrade.com/daily-news/wto-members-continue-talks-trips-waiver-no-consensus-sight (“The U.S., the European Union and Japan, among others, oppose the waiver, insisting that intellectual property protections are necessary to spur innovation and collaboration. The U.S. on Thursday called instead for members to identify specific problems related to accessing a product and then find targeted solutions. * * * Canada on Thursday argued that the built-in flexibility of the agreement is proven to work, citing the example of Canada’s issuance, in 2017, of a compulsory license granting a Canadian company permission to use nine patents in producing an HIV drug for Rwanda.”); Washington Trade Daily, December 11, 2020, TRIPS Waiver Talks to Continue, https://files.constantcontact.com/ef5f8ffe501/25ec633d-96b4-44cd-8c0d-2eb9108795b9.pdf (pages 2-4).

Look for the proposed waiver to be a topic of continued disagreement within the TRIPS Council in 2021 until such time as there is a much clearer picture of the actual problems to which a much narrower waiver would actually be needed and effective if nonwaiver options are not available. With vaccine approvals starting and with production and distribution being ramped up in 2021, there will be materials delivered to many countries next year either through COVAX or through voluntary licensing arrangements. As noted in an earlier post, there are several billion vaccine doses capacity available through these current options.

Upcoming December 11th WTO Council for Trade-Related Aspects of Intellectual Property Rights meeting — reaction to proposed waiver from TRIPS obligations to address COVID-19

In my post of November 2, 2020, I reviewed a proposed waiver from many TRIPS obligations for all countries to address the COVID-19 pandemic. 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/. While originally filed by India and South Africa (IP/C/W/669), a few other countries have joined the proposal including Eswatini (IP/C/W/669/Add.1), Kenya (IP/C/W/669/Add.1), Mozambique (IP/C/W/669/Add.2) and Pakistan (IP/C/W/669/Add.3). South Africa made a supplemental filing providing what it described as “Examples of IP Issues and Barriers in COVID-19 pandemic”. Communication from South Africa, Examples of IP Issues and Barriers in COVID-19 Pandemic, IP/C/W/670, 23 November 2020. The South African communication is embedded below.

W670

My post of November 2 had raised a number of question presented by the proposed waiver:

” 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?”

The supplemental information provided by South Africa identifies various patent pending matters and identifies what it describes as restrictive actions by some companies and some patent litigation by certain companies. As such the communication provides some information of possible relevance in examining the proposed waiver. However, there is little if any information provided on most questions that seem important to an informed discussion of the proposed waiver.

On November 27, Australia, Canada, Chile and Mexico filed a communication entitled “Questions on Intellectual-Property Challenges Experienced by Members in Relation to COVID-19”. IP/C/W/671. While the entire communication is embedded below, paragraphs 3 and 4 are copied below and present a framework for the consideration of the proposed waiver and seek factual answers to a series of questions which would help understand if there are in fact any significant barriers being confronted by WTO Members in addressing the pandemic.

“3. The co-sponsors of this communication remain of the view that these important, challenging, and complex issues merit further reflection and significant consideration, in order to identify any specific and concrete IP-related challenges faced by Members in addressing COVID-19. In addition, we take note that IP rights are one part of a broad discussion informing the availability and accessibility of treatments for COVID-19. Indeed, as the Doha Declaration on the TRIPS Agreement and Public Health emphasizes, the TRIPS Agreement itself is part of the wider national and international effort to address public health problems. With respect to COVID-19, this broader response includes significant investments through procurement mechanisms like the Access to COVID-19 Tools Accelerator and the COVAX Facility and Advance Market Commitment, as well as work within the WTO and elsewhere to safeguard and protect global supply chains.

“4. The co-sponsors of this communication are actively committed to a comprehensive, global
approach that leverages the entire multilateral trading system in place to supporting the research,
development, manufacturing, and distribution of safe and effective COVID-19 diagnostics, equipment, therapeutics, and vaccines. The co-sponsors also reaffirm their support for the TRIPS Agreement, including the flexibilities it provides, and for the Doha Declaration on the TRIPS Agreement and Public Health. In this context, we invite consideration of how the existing legal framework under the TRIPS Agreement, including the flexibilities affirmed under the Doha Declaration on the TRIPS Agreement and Public Health, have operated thus far in the context of Members’ efforts to address the COVID-19 pandemic. We are also committed to fully understanding the nature and scope of any concrete IP barriers experienced by Members related to or arising from the TRIPS Agreement, and such that would constitute impediments to the fight against COVID-19. To that end, and with a view to facilitating a consensual, evidence-based approach, the co-sponsors of this communication therefore respectfully submit the following questions to Members for their consideration and response.”

The communication from Australia, Canada, Chile and Mexico then provides eight questions designed to develop a factual record of challenges faced on procurement of products, local production, compulsory licenses, as well as copyright-related challenges, industrial-designs-related challenges, and challenges from undisclosed information. The questions also include an inquiry as to “what specific legal amendments or actions would the proponents seek to enact for the prevention, containment, and treatment of COVID-19 that are not – or may not be – consistent with the TRIPS Agreement and its flexibilities?”

W671

There is a meeting of the Council for Trade-Related Aspects of Intellectual Property Rights scheduled for December 11 at the WTO. It is assumed that the only item on the agenda will be the consideration of the proposed TRIPS waiver submitted by India and South Africa and joined by four other countries. A recommendation should be forwarded to the General Council by December 31. While the proposed waiver may receive support from many WTO Members, it will be opposed by many as well as not justified and undermining the existing WTO TRIPS Agreement and built-in flexibilities. The communication from Australia, Canada, Chile and Mexico provides a possible path forward by seeking to gather factual information that would permit Members to identify what challenges actually exist and what existing tools are available for addressing the existing challenges so that the need for any waiver is limited to what is actually needed instead of being the very broad waiver proposal for all countries regardless of actual problems faced.