Coronavirus vaccines, World Trade Organisation and the global divide

October 28, 2020 5:30 AM

As access to vaccines becomes a global public requirement, how such vaccines can be effectively traded across borders to reach people needs to be discussed. The problem will assume huge proportions if the flexibilities in the current WTO IP rules do not allow producers, particularly from developing countries, to bypass IP restrictions

While nearly hundred vaccines are being developed around the world, nearly ten are in advanced stages of clinical trial with some of these having advanced to human trials too.

By Amitendu Palit

Covid-19 has introduced several far-reaching changes in the global order. Some of these are in management of global trade. The division among countries over flexibilities to be allowed in the World Trade Organisation’s intellectual property rules, for global production and distribution of vaccines, is an indication of the turmoil that global trade management and the WTO would encounter in the days to come.

While nearly hundred vaccines are being developed around the world, nearly ten are in advanced stages of clinical trial with some of these having advanced to human trials too. The race for vaccines has focused attention on which of these will become available for whom, and by how much. In this respect, the issue of national affordability has become significant. There are rising concerns that countries capable of paying more for vaccines will be among the early ones to distribute doses to their national populations.

Concerns over low-income populations in several countries missing out on vaccines have been highlighted by findings of a recent study by Oxfam (https://bit.ly/34w9WJX). Based on five vaccines that are in the most advanced stages of trials—Moderna, Pfizer, AstraZeneca, Gamaleya and Sinovac—and the deals struck by their developers for distribution, just above half of the estimated 5.9 billon doses of the five vaccines have been pledged to developed countries that account for only 13% of the global population.

The fact that richer countries would have an upper hand in accessing vaccines is clear from the fact that most vaccine developers would look to recover development costs fast, and also make profits from early sales. This would lead to vaccines being priced at costs beyond means of several countries. Richer countries would prioritise purchase of vaccines, irrespective of the prices charged by developers.

Much as one appreciates the importance of businesses recovering the high research costs of developing vaccines, Covid-19 is an exceptional situation. It needs to be responded to as a global public health emergency, and calls for balanced distribution of vaccines across the world. This is where the WTO and global trade rules have a major role to play.

The intellectual property rules of the WTO have tried balancing a couple of fundamental, but conflicting, objectives. On one hand, they try to encourage innovation and new knowledge, by pledging protection of intellectual property, through various legal standards for trademarks, industrial designs, copyrights and patents. On the other, they have tried to incorporate operational flexibilities for ensuring less ‘rent-seeking’ by owners of knowledge, and concomitant greater access of poorer countries to major knowledge products at affordable rates. In the process, the rules have driven wedges between specific groups in the domain of international trade.

Rich countries with businesses endowed with large funds to invest in R&D for new knowledge have been wary of the lack of commercial prospects in WTO member markets that have eligible situations for employing flexibilities to deviate from obligatory IP protection. On the other hand, the latter group of members have been suspicious of ulterior commercial motives of businesses of richer countries, intending to ‘exploit’ the poorer ones by earning rents on the IP they hold.

The Covid-19 pandemic and the huge global demand for vaccines have shed new light on these divisions. They have drawn new attention to the ‘rich-poor’, ‘developing-developed’, ‘north-south’ wedge in global trade, largely responsible for patchy progress on the Doha Development Agenda. As access to vaccines become a global public requirement, it has become important to reflect on how such vaccines can be effectively traded across borders to reach people. The problem will assume huge proportions if the flexibilities in the current WTO IP rules do not allow producers, particularly from developing countries, to bypass IP restrictions, and produce branded vaccines for their domestic markets. For a country such as India, which is expected to play a major role in supplying affordable vaccines to the rest of the world, these flexibilities need to be extended to its producers for exporting to other WTO member markets.

The turf battle on the distribution of vaccines is warming up. India and South Africa have appealed to the WTO for temporary relaxation of specific IP rules for ensuring broad-based supply of vaccines and medical equipment. The move has been opposed by the US, the UK, the EU, Switzerland and Brazil. It has been supported by a large number of developing countries including China, Pakistan, Thailand and Indonesia. The World Health Organisation (WHO), which is leading the global effort to make, procure and distribute vaccines as a global public health goal, has supported India and South Africa’s proposal.

There would be implications of the eventual decision of the WTO on this subject. If the waivers are allowed, and ordained to prolong till Covid-19 exigencies persist, it would imply a decisive victory for the developing country agenda. The decision would disenchant richer nations, which might be encouraged to work towards focused and specific distribution of vaccines through regional, or bloc arrangements. On the other hand, a decision by the WTO to turn down the request by India and South Africa would firmly establish the WTO’s disinclination to pursue a prominent development-oriented and inclusive agenda.

Either way, the implications would be significant. Coming at a time when the WTO is electing a new head, the ramifications of the decision would undoubtedly be connected to the leadership change—in a further impact that would reverberate in the world of trade.

(The author is senior research fellow & research lead (Trade & Economics), Institute of South Asian Studies, National University of Singapore. Views are personal)

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