Trade and health: Parliamentary perspectives on MC12

Inter-parliamentary Union and European Parliament

HE Mr Bernd Lange;

HE Mr. Manzoor Nadir;

HE Mr Martin Chungong, Secretary General of the Inter-Parliamentary Union

Honourable Members of Parliament,

Excellencies, Ladies and Gentlemen.

It is an honour to join you today. I want to apologise in advance for the fact that I will have to leave early due to other engagements. With barely three weeks to go before our Twelfth Ministerial Conference, you can imagine that things here are hectic!

As I said when we met back in April, parliamentarian engagement on WTO issues is vital. Your constitutional roles in scrutinising and ratifying international agreements are a critical part of ensuring their legitimacy.  You are key interlocutors between International Institutions such as the WTO and the general public.

It is heartening that our partnership with both the Inter Parliamentary Union and the European Parliament continues to flourish. While the traditional Annual Parliamentary Conference on the WTO will not take place this year due to the pandemic, I am happy to see that parliamentarians have moved our engagement online. I believe you will also be speaking today with Ambassador David Walker of New Zealand, who is shepherding members’ efforts to reach an MC12 agreement on trade and health, and next week with Ambassdor Dacio Castillo, the Chair of General Council.

We today confront triple crises of Covid-19, climate change, and an economic recovery that is leaving out much of the world. Trade is part of the solution to each of the three. By contributing to a well-informed, fact-based public debate on trade, you have crucial roles to play in achieving the robust, inclusive, and sustainable future growth path we all need.

You have asked me to focus my remarks on two topics: trade and health, which today means the WTO’s role in pandemic response, and preparations for MC12.

Trade & Health: the WTO role in the pandemic

Turning to the first. Trade has been a force for good through the COVID-19 pandemic. After some initial disruptions, the multilateral trading system helped keep goods and services circulating around the world. Supply chains were able to resume operations as lockdowns lifted, and trade became a lifeline for people to access food and medical supplies.

In 2020, even as the value of global merchandise trade fell by 7.6%, trade in medical products rose by 16%. Trade in personal protective equipment grew by nearly 50%, jumping by 480% for textile face masks. 

When scientists developed safe and effective COVID-19 vaccines at record speed, supply chains came together to provide the specialized inputs and capital goods needed for vaccine production at scale. Trade was absolutely critical for these supply chains: Pfizer and BioNTech’s vaccine relies on components from 19 countries, as does Moderna’s. AstraZeneca’s supply chains cut across at least 15 countries, and Johnson & Johnson’s across 12 countries.

Had we chosen to rely on purely national supply chains, we would be nowhere close to the seven billion doses the world has administered thus far. This matches a message from our flagship research report that will come out next week: the world’s close trade, financial, and travel connections might make us more vulnerable to pandemic risks, but they also makes us more resilient when shocks do hit. Closing off trade in an attempt to foster resilience is likely to backfire.

Of course, even the doses we have produced are still not nearly enough to meet global needs – even more so now with booster shots pushing up global demand. And they have been unequally distributed.

Less than 6% of Africans, and 2.2% of people in low-income countries, are fully vaccinated, compared to 64% of people in developed countries. Rich countries have administered more booster shots than low-income countries have first doses. This vaccine inequity is not just morally unacceptable, it is a practical and economic threat to people everywhere. The longer the virus circulates freely in parts of the world, the likelier that dangerous new variants will emerge and go global.

The past few weeks have seen exciting news about the prospect of pills developed by Merck and Pfizer that promise to sharply reduce the risk of severe illness, hospitalization and death in COVID-19 patients. Therapeutics are part of what we need to bring this pandemic to an end. But it will be important to ensure that we do not repeat the inequities of access we have seen with vaccines. A welcome development here is the royalty-free licensing agreement Merck has reached with the Medicines Patent Pool. Subject to regulatory approval for the drug, it will allow the Patent Pool’s sub-licensees to manufacture low-cost versions of the anti-viral pill for use in 105 developing countries. Notably, the arrangement includes assistance with technology transfer if sub-licensees need it. This royalty-free licence is a significant contribution to expanding and diversifying the manufacturing base for COVID-19 countermeasures and will hopefully serve as a model as new treatments come on to the market.

Economic recovery has been strongest in places with ready vaccine access and lots of fiscal firepower, which means advanced and some emerging economies. Poorer regions are lagging behind. For example, the IMF estimates that global GDP will grow by 5.9% this year, compared to 3.7% for sub-Saharan Africa.

This K-shaped recovery in output is mirrored in divergent trajectories for trade. Overall trade growth is strong: the WTO now forecasts that merchandise trade volumes will rise by 10.8% in 2021 (nearly three percentage points higher than projected in March), and by 4.7% in 2022. But the growth is unevenly distributed: our economists estimate that between 2019 and the final quarter of 2022, Asia’s exports will have grown 18.8%, and North America’s and Europe’s by around 8%, compared to 4.8% for South America, 2.9% for the Middle East, and 1.9% for Africa.

Ending vaccine inequity is a prerequisite for reversing this divergence in growth, trade, and development outcomes. The IMF estimates that vaccinating 40% percent of people in all countries this year, and at least 60% by the middle of next year, would add as much as $9 trillion to global economic output by 2025. However, we are not on track to meet these targets. Trade matters because smooth international flows of vaccine inputs and finished products is necessary to produce and distribute COVID-19 vaccines on the scale needed.

We cannot get the vaccine production and deployment we need without cooperative action on trade in inputs and final products. And we will only have a sustained and inclusive recovery in trade and the wider economy when we get our vaccine policy right. That is why I tell everyone that trade policy is vaccine policy, and vaccine policy is trade and economic policy.

At the WTO, we have been focusing on supply chain issues working directly with vaccine manufacturers to identify and address bottlenecks that are holding back production, and to encourage increased investment, particularly in developing countries. The WTO Secretariat has been monitoring export restrictions and trade facilitating measures. I joined a task force with my counterparts from the World Health Organization, the International Monetary Fund, and the World Bank, to mobilise financing and action on non-financial constraints for vaccine access.

I can report some positive steps that have already emerged from our work at the WTO.

The Secretariat has worked with other international organizations and manufacturers themselves to identify key vaccine inputs and raw materials, at a granular level, as well as trade policy and regulatory bottlenecks that can impede their movement around the world. The papers are available on our website – and could serve as a road map for your countries’ efforts to speed up vaccine production and distribution.

The number of pandemic-related export restrictions and prohibitions has come down from 116 to about 50. But while governments have rolled back many pandemic-related trade restrictions and brought in various measures to facilitate trade, the value of trade covered by pandemic-related restrictions now exceeds that covered by facilitating measures, by $88 billion to $48 billion.

Another welcome development is new efforts to build pharmaceutical capacity in developing countries, notably in Africa.  It was actually at one of the meetings we convened that Pfizer and BioNTech announced their planned investment to make 100 million COVID-19 vaccine doses in South Africa. Decentralized manufacturing capacity, anchored in open global supply chains, will be necessary to foster resilience in a future health crisis. The pre-pandemic status quo – in which the world relied on ten countries for 80% of vaccine exports – could not deliver when COVID-19 went global.

From access to medical supplies last year to steps to address vaccine production bottlenecks now, the WTO is delivering for the people you represent, and for the global economy. But I am convinced that we can and must do more. In the weeks between now and MC12, members have an opportunity to ensure that key medical products are available and equitably accessible now and the future.

Preparations for MC12

This brings me to the second issue you have asked me to cover, namely preparations for MC12, which is now only a few weeks away.

MC12 is a critical milestone because we need to show that the WTO is back on track.

A successful MC12 would deliver outcomes for people and the planet. It would send a powerful signal of members’ collective intent to use trade to drive an economic recovery that includes all countries and people. It would strengthen the WTO and position members to further reform and reinvigorate the institution in the months and years ahead.

There is no such thing as low-hanging fruit in a WTO negotiation. To increase prospects of getting to agreements, I have been saying that members should pragmatically focus on delivering meaningful results in two or three areas.

Pandemic response is one such area. By agreeing on a strong MC12 declaration on pandemic response, members can bolster our capacity to respond to this crisis and better prepare for future ones.

Ambassador Walker, whom you will speak with next, is leading this process, and is well placed to answer any questions you might have.

WTO members are looking at a pandemic response framework with three main elements:

• The first is keeping supply chains open – dealing with export restrictions and bottlenecks and facilitating trade, working closely with vaccine manufacturers and other pharmaceutical companies.
• The second is about more cooperation with other international organizations to encourage decentralized vaccine and promoting pharmaceutical manufacturing capacity, for the reasons I just mentioned.
• The third potential element relates to technology transfer and intellectual property issues, including a proposal to waive some standard WTO intellectual property protections for COVID-19 vaccines, therapeutics and diagnostics. IP issues will not go away, and require pragmatic compromises. Negotiations on IP are unfortunately not in a good place, but we are still hoping for a pragmatic outcome. The key here is to ensure equitable access for people in developing countries while preserving incentives for research and innovation.

A second potential MC12 deliverable is a multilateral agreement on ending harmful fisheries subsidies.

• This would contribute to ocean health, and help achieve one of the Sustainable Development Goals. It would contribute to the livelihoods of hundreds of millions of fisherwomen and men, and bolster long-term food and livelihood security in coastal communities.
• An MC12 fisheries deal would prove that WTO members are still capable of negotiating multilateral agreements. It would demonstrate that they can come together and respond to problems of the global commons.
• The stakes are sufficiently high that UN Secretary-General Antonio Guterres recently made a rare foray into WTO issues, sending all leaders a letter urging them to push their trade ministers to conclude a meaningful agreement by MC12. 

A third area for potential results is agriculture, which is always a highly contentious topic at the WTO. Members’ levels of ambition vary enormously. At the same time, many developing countries see outcomes in agriculture as a central part of any MC12 package. At a time when hunger is rising around the world, it would be positive if WTO members can at least deliver results at MC12 that contribute to enhancing food security.

Finally, we need to use MC12 to chart paths forward on wider WTO reform, including our dispute settlement system. This is about restoring the effective dispute settlement essential for all rules-based systems. In addition, progress in plurilateral talks in areas such as e-commerce, services, investment facilitation, women’s economic empowerment, and small businesses would be part of a successful MC12, because progress in these areas is about showing that WTO rules continue to evolve to meet changing economic and commercial realities.

I have gone on long enough, so will stop here, and end with an appeal: I need your help. I urge you to engage with your respective governments and with legislators from other countries to help us make MC12 a success, to strengthen the WTO, and to ensure that trade and trade policy continue to deliver for people and the planet.

Thank you.