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TWN Info Service on Health Issues (Dec20/12)
21 December 2020
Third World Network

EU-led initiative on trade and health suffers major setback
Published in SUNS #9258 dated 21 December 2020

Geneva, 18 Dec (D. Ravi Kanth) -  The trade and health initiative proposed by the European Union and the Ottawa Group of countries suffered a major setback on 17 December, after several developing countries as well as the United States argued that the proposal fails to address the health crisis arising from the COVID-19 pandemic, trade envoys told the SUNS.

Meanwhile, a joint proposal by the US, Brazil, and Japan on the importance of market-oriented conditions to the multilateral trading system received a somewhat frosty response, as many developing countries, including China, South Africa, and India, sharply questioned the underlying intentions of the joint proposal, said participants, who asked not to be quoted.

The US also faced intense opposition to its proposal on the procedures to strengthen the negotiating function of the WTO by introducing differentiation among developing countries for availing of special and differential treatment (S&DT).

The proposal has already been successively blocked more than three times at previous General Council meetings, the participants said.

The US, the European Union and other developed countries raised questions on the LDC proposal for availing of all the flexibilities to be extended to those LDC graduating members for another period of 12 years, until 2033.

At another day-long General Council (GC) meeting on 17 December, the WTO members remained sharply divided on all these issues, as the mood seems to be sullen and downbeat, according to participants who spoke at the meeting.

As regards the EU proposal on the trade and health initiative in the face of the COVID-19 pandemic that has claimed almost 1.6 million lives, the EU trade envoy, Ambassador Joao Aguiar Machado, made a strong pitch about the specific actions proposed in the proposal covering "export restrictions, trade facilitation, technical regulations, tariffs, transparency and review, and call for the WTO to enhance its cooperation with other relevant international organizations, such as WHO, WCO, OECD as well as G20, given the context of the on-going evaluations of the global response to COVID-19."

The EU trade envoy insisted that the proposed "actions are not intended to be prescriptive and do not cover the universe of possible measures that could support trade in essential medical goods," suggesting that they "reflect emerging best practices and should provide sufficient flexibility to be adapted to differing national circumstances."

Emphasizing that "multilateral outcomes generate the greatest possible common good," the EU proposed a two- step process in the form of joint statement of all members to be adopted in early 2021, and the second step being starting negotiations on "new WTO commitments, which, ideally, could be concluded at the 12th Ministerial Conference."

The EU said that some of the signatories to its proposal have "signalled an interest in exploring commitments relating to tariffs in the healthcare sector and liberalization of relevant logistics, distribution and transport services, among others."

The Ottawa Group members such as Canada, Australia, New Zealand, Switzerland, Korea and Norway among others, strongly supported the proposal.

Intervening in the discussion, the US challenged the proponents led by the EU, saying that the latest Trade Monitoring Report by the Secretariat, which was discussed in the Trade Policy Review Body (TPRB) last week, included these assessments:

i. "Members have generally expressed and followed a commitment to ensure that trade could flow freely during the pandemic."

ii. "Most of the COVID-19 related measures taken on goods since the outbreak of the pandemic were trade- facilitating."

iii. "In the services sectors heavily impacted by the pandemic, most of the 124 COVID-19 related measures adopted by WTO Members appeared to be trade-facilitating."

Against this backdrop, the US trade envoy, Ambassador Dennis Shea, said that "it's not clear what problem the co-sponsors aim to solve, nor how the proposed measures would solve that problem."

The US called for "deeper reflection," suggesting that "supply chain resiliency doesn't seem to be about lowering tariffs, or increasing Secretariat monitoring, or encouraging vague cooperation between the WTO and other IOs (international organizations)."

Against the backdrop of the worsening COVID-19 pandemic, the US questioned "the prudence of asking Members to put new constraints on their rights under the WTO Agreement - not to mention on their duty - to undertake measures to protect human health and life."

The US asserted that "WTO rules may not have been drafted with a pandemic at front of mind, but our initial observation is that the WTO Agreement seems fit for purpose," arguing that "its (WTO rules') balance of rights and obligations, if adhered to by Members, will continue to provide stability and predictability as we navigate this very difficult period and, finally, recover."

INTERVENTIONS BY INDIA & SOUTH AFRICA

In a sharp response to the EU's joint proposal, India suggested that the "co-sponsors take concrete steps in ensuring that pharmaceutical companies who own the IP rights and related know-how in C-TAP (COVID-19 technology access pool) to share (them) without any hurdles."

India's trade envoy Ambassador Brajendra Navnit said while India encourages the use of TRIPS flexibilities and voluntary license initiatives, members need to recognize that they fall short of addressing the massive demand for therapeutics and vaccines.

Commenting on eliminating export restrictions, India said that it ensured equitable access to medicines during the COVID-19 pandemic.

Responding to the EU's joint proposal, South Africa's deputy trade envoy Mustaqeem Da Gama cited the analysis of the WTO Secretariat that shows that "Germany, the United States (US), and Switzerland supply 35% of medical products," while "China, Germany and the US export 40% of personal protective products."

Further, "breathing apparatus, including respirators and ventilators, are supplied by a small number of Members, notably, Singapore which has 18% market share, followed by the US with 16%, Netherlands 10% and China 10%," Da Gama said, suggesting that "trade in the products to be liberalized is concentrated among a few players."

While agreeing with the proponents that a global health crisis requires a coordinated global response for the common good, the South African trade negotiator argued that "the actions advanced by the proponents will not result in equitable outcomes in the long run."

Da Gama argued that "the effective global cooperation that will promote a common good is one that ensures that the treatment for COVID-19 is accessible and affordable to the world as a public good".

He said "the WTO can start by ensuring that IP is not a barrier to this objective," arguing that "over-dependence of Africa on imports of medicinal and pharmaceutical products subject African healthcare systems to serious vulnerabilities, which is further exacerbated by overwhelming social and economic consequences of COVID-19."

From the past experiences, the South African negotiator said that "while in the middle of a health crisis, the critical success factors are speed, sharing knowledge and know-how as well as supporting global solutions that are equitable, inclusive and timely."

He said that "discussions should rather focus on how the WTO can promote within its mandate, equitable access and sharing of vaccines, diagnostics, therapeutics and other technologies and medical products so as to ensure that no one is left behind."

Effectively members must focus on how to foster "cooperation and coordination to ramp up production and promote local manufacturing of essential medical supplies, devices, or technologies, including diagnostics, medicines, and vaccines - on reasonable and affordable terms."

Expressing grave concern over the proponents' goal to advance "trade liberalization agenda in the midst of a crisis, when many countries are grappling with the effects of the crisis that has exposed the strategic vulnerabilities of many developing countries," Da Gama reiterated that "a one-size-fits-all approach is not suitable nor appropriate."

Ultimately, countries should decide what the best course of action should be, based on their needs, he said.

He said that if the EU and the co-sponsors "are concerned with public health, they should support the proposal for the TRIPS Waiver (IP/C/W/669) currently discussed by the TRIPS Council."

"This is the most effective and practical mechanism to deal with COVID-19 expediently," the South African deputy trade envoy argued.

"The biggest constraint to combating COVID-19 is not trade but equitable and timely access to the vaccine and therapeutics to prevent, combat and treat COVID-19," he said.

The South African official emphasized "that sharing of information, technologies and know-how is critical in ramping up production and ensure availability of medical products and vaccines to the 7.8 bn world population."

"For this to happen, the WTO must ensure that IP will not be a barrier by suspending certain provisions of the TRIPS Agreement for the prevention, combating and treatment of COVID-19," he concluded.

Indonesia's trade envoy Ambassador Syamsul Bahri Siregar said that the substantial problems governments faced during these challenging times is the lack of global solidarity in ensuring "equitable, affordable, and timely access" to essential medicines.

Ambassador Siregar said that the joint proposal improperly discusses access to health under the purview of the TRIPS Agreement, and the draft elements in the joint proposal fall short in providing action-oriented initiatives that are related to TRIPS.

Pakistan and Fiji opposed the EU's joint proposal, saying that it simply fails to address the central problems arising from the pandemic.

Pakistan, which is a co-sponsor of the TRIPS waiver proposal, told the EU that the waiver could address the main problems arising from the COVID-19 pandemic.

The EU failed to gain consensus on its proposal at the meeting, but Brussels and its partners will have another go to promote their proposal, said participants present at the meeting.

PROPOSAL ON LDC GRADUATION

On the LDC proposal (WT/GC/W/807), Chad, on behalf of the Least Developed Countries (LDCs), called for a decision on the "need to establish an effective procedure supporting the smooth transition of graduated LDCs towards their new status, through the gradual phasing out of LDC-specific trade-related support measures over a reasonable period of time."

The LDC proposal, introduced by Chad, calls on members to approve the following measures:

1. Support measures available to least developed countries shall be extended to a least developed country Member for a period of twelve years after the entry into force of a decision of the UN General Assembly to exclude the Member from the least developed country category.

2. The support measures covered under this decision shall include:

i. All special and differential treatment measures and exemptions available to a least developed country under existing and future WTO Agreements, Understandings, Ministerial, General Council and other relevant Decisions;

ii. All LDC-specific technical assistance and capacity building programmes and facilities provided under the WTO system;

iii. Any other relevant measure in favour of LDCs.

3. If a decision of the UN General Assembly to exclude a least developed country Member from the least developed country category enters into force during a transition period for LDCs provided under any existing or future WTO Agreements, Understandings, Ministerial, General Council or other relevant Decisions, the Member shall be entitled to utilize the remaining period of delay provided for LDCs.

4. Developed and developing countries granting unilateral trade preferences to least developed countries shall establish procedures for extending and gradually phasing out their preferential market access scheme over a period of twelve years after the entry into force of a decision of the UN General Assembly to exclude a country from the least developed countries category.

5. After the transition period provided under paragraph 1, a graduated LDC Member shall automatically benefit from the most favourable special and differential treatment granted to other developing countries Members.

In response to the LDC proposal, the developed countries, led by the US, raised several questions and clarifications.

The outgoing US trade envoy Ambassador Dennis Shea called for more clarity from the LDC group about the "mechanics of the twelve-year extension in Paragraph 1."

The US sought to know from the LDC group whether "the twelve-year period in Paragraph 1 of the draft Decision overlaps with the nine-year graduation process at the UN, or would the twelve-year extension begin after the nine-year graduation process?"

Ambassador Shea said Washington "would like to better understand whether the LDC Group is pursuing changes to the graduation process that would address its goals."

Finally, the US wanted to know, "under the proposal, a newly graduated LDC could have similar or even higher development indicators than some non-LDC developing countries," suggesting that "the graduating LDC would receive more benefits at the WTO than the similarly situated non-LDC developing countries. Has the LDC Group considered this scenario?"

The European Union and Switzerland among others raised several questions on the LDC proposal, seeking more consultations next year.

However, many developing countries, including China, supported the proposal, according to participants present at the meeting.

China lent its support to the LDC proposal, saying that the LDCs "are still facing tremendous challenges and high vulnerability even after graduation, and their economic and social development cannot be accomplished overnight."

China's outgoing trade envoy Ambassador Zhang Xiangchen said that Beijing "acknowledges the significant importance of the principle of smooth transition of graduated LDCs introduced by the UN General Assembly," arguing that "the WTO has a central role to play in providing a sound policy environment and regulatory framework for the sustainable development of the vast number of developing countries, especially the least- developed ones."

China, he said, "supports that more care and greater attention should be given to developing countries suffering difficulties in fostering development and economy transformation, including exploring a way forward to realize smooth transition of the graduated LDCs and further integrate into the multilateral trading system, as requested by the LDC group" in their proposal.

In a long intervention, the African Group said that it fully supports the LDC proposal for a WTO ministerial conference decision "to allow LDCs 12 years after graduation to continue with the LDC-specific support measures and special and differential treatment and flexibilities in all WTO Agreements, Understandings, and any Ministerial, General Council or other Relevant decisions."

The African Group said that the "LDC graduation helps elevate a least developed country a step further to integrate into the multilateral trading system."

According to the African Group, "LDC graduation is also a continuous process and gradually every LDC will be included in the process" and that "in this connection, every LDC should be prepared to face the future post- graduation challenges, sooner rather than later."

Citing the 2016 UNCTAD LDC report, which suggested that "graduation itself should not be the primary focus of LDCs and their development partners, but should rather be viewed as one milestone in LDCs' longer-term sustainable development, and the UN General Assembly Resolutions," the African Group said "after leaving the category, LDCs would normally lose access to all trade-related support measures and flexibilities granted to them."

The loss of access to all trade-related support measures and flexibilities granted to them "will put LDCs in a difficult situation, not least given their economic vulnerabilities and their limited negotiating capacity."

"An incomplete and fragile graduation, without specific support mechanism, may lead LDCs after graduation to more difficulties in addition to the existing multi-pronged challenges they face at present," the African Group warned.

Moreover, "the shock created by the COVID-19 pandemic on LDCs will be huge and the impact is yet to be measured," the African Group said, arguing that "the LDCs will need reinvigorated and comprehensive support from the WTO Members."

Arguing that "the LDC group's submission is logical," the African Group said that "the draft MC (ministerial conference) decision text will be a genuine response to the UN General Assembly Resolutions for introducing a comprehensive and effective smooth transition mechanism for graduating LDCs under the WTO system."

Jamaica, on behalf of the ACP (Africa, Caribbean, and Pacific) group, supported the LDCs' submissions, arguing that the group looks "forward to a further productive engagement on the matter in order to support LDCs, including graduating LDCs, in their developmental aspirations and their efforts to integrate into the multilateral trading system."

 


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