Trade is a Weapon Against the Pandemic
Singapore, 30 May 2021
The APEC region produces most of the world’s COVID-19 vaccines. It must also lead the way in their distribution and administration.
More than 1.8 billion shots of the COVID-19 vaccine have been administered around the world. No doubt this is good news, but we are far from the point where celebrations are in order.
The current capacity of vaccine production falls short of meeting pressing demand worldwide. Assuming that two doses are needed to fully vaccinate one person, 14.2 billion doses are required to inoculate 90 percent of the world’s 7.9 billion people and achieve herd immunity. Health experts say 12 billion doses manufactured by the end of 2021 would be optimistic. To achieve this, producers will have to ramp up production capacity to levels never seen before.
The vaccines that are available are not distributed equitably—85 percent of global doses thus far were administered in richer and upper-middle-income economies. Low-income economies have received an insignificant fraction by comparison. Within some economies, jabs are readily available for some while remaining out of reach to others.
We must produce more and ensure they get to everywhere and to everyone. Trade policy is significant to meeting this twofold challenge.
Vaccine production relies on a specialized supply chain with multiple components originating from across the APEC region and the rest of the world. Ensuring that supply chains are resilient and that trade remains free and open amid the crisis will help speed up production. Once produced, vaccines should be available and affordable, which means tariffs must remain low and export restrictions eased.
The APEC region is responsible for most of global COVID-19 vaccine production. Specifically, as of March 2021, four members accounted for more than 60 percent of the world’s vials. But APEC is made up of 21 big and small economies, and predictably, inoculation rates are grossly uneven among the membership.
The APEC forum’s work over decades in promoting free trade is benefiting the region these days. The average most-favored-nation tariff rate on vaccines for human use is very low across APEC economies at only 0.8 percent. Fifteen members of the 21 do not charge any duties on vaccines.
However, the story is different for products used to manufacture, store, distribute and administer vaccines. Glass vials and rubber stoppers for example have average tariffs of 6.3 percent and 5.1 percent, respectively. Three types of alcohol solutions—needed to disinfect skin before the jab—record average rates of 77.2 percent, 29.5 percent and 14.6 percent, kept high in some economies because of the products’ potential non-medicinal alternative uses.
Such policies must be reviewed and reconsidered by APEC’s policymakers if only for the sake of weathering this global emergency. Once passed these lifted restrictions and low tariffs could then be considered for permanent status in the hope of being more prepared for facing any next medical crisis.
APEC’s significance as a force against COVID-19 extends to its capacity as a forum that promotes discussion among diverse institutions. Governments need to step up cooperation with each other as well as engage earnestly with the private sector, universities, and other institutions all of which play a part in containing the virus and reviving the industries that COVID-19 has damaged. An APEC-commissioned public survey from 2020 confirms that this is precisely what is expected of multilateral cooperation—most people in the region believe it is important for economies to cooperate to solve global and regional challenges.
The multisectoral nature of such conversations will be essential when tackling complex undertakings like mutually recognizing good manufacturing practice approvals to ensure that the quality assurance of the vaccines produced in one economy will be valid in others.
It will be even more important when addressing complex matters such as intellectual property. Technology transfers could be critical to boosting production. Some options to resolve the current bottlenecks on intellectual property are to garner commitments from firms to non-exclusive and royalty-free licensing or convince them to issue non-enforcement declarations and to publish scientific data and technical specifications on a free-to-use basis. This will necessitate trust building among sectors, good-faith discussion, as well as determination to do what must be done.
The pandemic will not be over anywhere unless it is over for everyone, everywhere. Cooperation in trade policy can contribute to timely and equitable access to vaccines in the region and around the world. Fighting any pandemic requires collective and multisectoral action. APEC is uniquely positioned to take the initiative.
Carlos Kuriyama is a senior analyst at the APEC Policy Support Unit and the author of the policy brief, “Promoting Trade in Vaccines and Related Supplies and Equipment,” on which this article was based. To read more about this topic, download the paper.