At the WTO, Canada fiddles while the pandemic rages on

Temporarily suspending trade rules covering COVID-19 vaccines and treatments would speed up the global recovery. Our government has other plans.

November 17, 2021

7-minute read

Oxfam Canada made a startling announcement this week: while 98% of people in low-income countries have still not been fully vaccinated for SARS-CoV-2, Pfizer, BioNTech and Moderna are earning a combined $1,000 every second selling their COVID-19 vaccines mainly to a handful of wealthy countries.

Governments funded much of the research and development into the vaccines and, in most cases, they are the sole buyers. Yet, the companies continue to refuse to share their recipes with generic pharmaceutical manufacturers around the world. Pfizer and Moderna are expected to take in a combined US$93 billion next year on vaccine sales alone.

In July, when head of the World Health Organization Tedros Adhanom Ghebreyesus called out the brand-name drug companies for their role in the “shocking imbalance” between the vaccination rates in rich countries and everywhere else, Pfizer CEO Albert Bourla accused him of being emotional. Lower-income countries should get in line for orders, suggested Bourla.

Here’s the reality: vaccine inequity is fundamentally an outcome of the global trade system working as it was designed to work.

Many of them did get in line and found themselves either outbid by rich countries or unable to accept the outrageous conditions Pfizer and other companies are attaching to their vaccine contracts. Under non-transparent and lopsided deals, companies may safely miss delivery dates while their customers—governments—can have their assets expropriated for missing a payment.

Through such hardball tactics, brand-name drug companies have set the pace and cost of the pandemic recovery. Vaccine hoarding by rich countries like Canada inevitably led to shortages elsewhere, and much of the world still struggles to cope with high infection rates and strained health care systems.

Here’s the reality: vaccine inequity is fundamentally an outcome of the global trade system working as it was designed to work.

Strong intellectual property rights enforced by the World Trade Organization (WTO) and in other free trade deals are intended to delay and frustrate competition from generics. Flexibilities for public health emergencies, negotiated by WTO members in the early-2000s, are too cumbersome to work. The rules need to be bent, or at least temporarily waived, for public health to trump corporate profits.

In October 2020, India and South Africa jointly urged the world to do exactly that. Their TRIPS waiver proposal, named after the WTO Agreement on Trade-related Aspects of Intellectual Property Rights, would temporarily let countries ignore some intellectual property rights on pandemic-related vaccines, treatments and medical devices so they can be produced and/or imported under compulsory licences. To date, more than 100 WTO member countries have endorsed the concept.

Canada is, unfortunately, not one of them. Over the past year, the federal government, as a member of the Ottawa Group1 of WTO countries formed in 2018 to develop reforms to WTO governance, has poured cold water on the waiver idea. Instead, Canada worked to shore up support for a separate “Trade and Health Initiative” that is heavy on trade and rather light on health.

Draft elements of the Canada-backed Trade and Health Initiative, published on the WTO site last November, emphasize the elimination of tariffs and export restrictions on “essential medical goods” and a requirement that any new restrictions be “targeted, transparent, proportionate and temporary, and consistent with WTO obligations.” (The government’s refusal to grant a compulsory licence to produce and export a generic version of the Johnson & Johnson vaccine to Bolivia is not seen as an export restriction in this vision.)

The WTO is putatively a member-driven organization, not one guided by corporate interests, although in practice it’s hard to tell the difference sometimes.

The Ottawa Group initiative, which does not mention intellectual property rights barriers to a fair pandemic recovery, would also urge WTO members to strictly abide by transparency and notification requirements (e.g., in the Agreement on Technical Barriers to Trade) so that supply chain disruptions might be minimized. On November 15, the European Federation of Pharmaceutical Industries and Associations enthusiastically supported the initiative.

Last year, the Ottawa Group initiative was absorbed into a facilitator-led process at the WTO, led by New Zealand ambassador David Walker, to find “a multilateral and horizontal response to the COVID-19 pandemic.” The “Walker Process'' has produced a draft ministerial decision that also strangely does not reference the TRIPS waiver proposal. Somewhat humorously, given ongoing supply chain bottlenecks for literally everything, including some medical goods, the draft declaration underlines “the critical contribution that trade and the rules-based multilateral trading system have made to addressing the pandemic and to the resilience and stability of the global economy during the pandemic.”

Some developing countries complain of a lack of transparency in the Walker Process and warn that as serious as the pandemic is, it “should not be utilized to pressure developing countries and [least-developed countries] to undertake additional liberalization, whether in goods or services.” The Walker declaration, for example, commits WTO members to establish a “Work Plan on Pandemic Preparedness and Resilience” that will:

 

...address issues related to crisis response, preparedness and resilience and focus on topics hitherto discussed in this Declaration, including: trade facilitation; export restrictions; regulatory coherence; transparency and monitoring; scaling-up of production and distribution of essential goods; services; and coordination with relevant stakeholders, including international organizations and the private sector [emphasis added].


This emphasis on multi-stakeholder coordination is in line with WTO Director-General Ngozi Okonjo-Iweala’s decision to consult regularly with patent-holding drug companies on what they need to increase vaccine production. But it has also sparked concerns, expressed by Egypt, Pakistan, South Africa, and Sri Lanka in a restricted WTO document on October 25, that the WTO Secretariat has surpassed its mandate, which “is limited to the various agreements within the WTO and is not expanded to addressing matters beyond its competency.”

The WTO is putatively a member-driven organization, not one guided by corporate interests, although in practice it’s hard to tell the difference sometimes. Okonjo-Iweala’s direct negotiations with pharmaceutical companies and repeated promotion this year of a “third way” on vaccines that preserves patents and profits muddied the waters and almost certainly postponed a consensus at the TRIPS Council, prolonging the pandemic. Her project with the World Bank, World Health Organization, and International Monetary Fund to ask G20 countries to pony up US$50 billion to vaccinate 40% in every country by the end of this year is not going well.

In contrast, there is proof a coordinated international transfer of technology and know-how to regional vaccine production hubs could have seen everyone vaccinated by now. According to a Public Citizen report this year, with careful planning, technology transfer and training (and yes, a loosening of export restrictions on medical components), we might see eight billion doses start to come off regional production lines within six months—enough to cover 80% of the world’s population—at a relatively low capital cost of between US$400 million and $3.2 billion depending on the choice of vaccine.

You wouldn’t need a TRIPS waiver to make that happen—as long as the patent-holding companies are willing to cooperate. But they’re emphatically not. The next stage of the brand-name business plan is booster shots in the Global North and locking in market monopolies on COVID-19 treatments. The waiver gives governments the leverage to make a more equitable pandemic recovery reality.

The not-so-subtle message in the “Walker Process” at the WTO, which is Canada’s message too, is that saving the current “international rules-based order,” as lopsided as it clearly is in favour of Pfizer and gang, is more important than saving human lives. The world needs more production of life-saving medicines and PPE in more places and more international cooperation based on humanitarian needs, not commercial interests. The WTO is not the place to achieve this.

With perseverance, we might even build a new, more balanced trade and intellectual property rights regime on the flaming rubble of the one Pfizer built.

TRIPS waiver proponents at the WTO, backed by an overwhelming consensus of public health advocates around the world, may yet have the upper hand. Dagfinn Sørli, the Norwegian chair of the TRIPS Council, is reported to have said at this week’s meeting that “The role of IP in the context of the pandemic has become the centre of attention in the run-up to the ministerial conference.” Member countries are under pressure to come to an agreement before the ministerial and potentially at the General Council meetings of November 22 and 23.

The European Parliament on October 18 passed a second resolution saying that “many, especially developing, countries face difficulties in the use of TRIPS flexibilities,” and urged the EU to “actively participate in text-based negotiations on a temporary TRIPS waiver.” In October, nearly 400 international trade unions sent a similar message to EU countries. Multiple former heads of state and Nobel laureates have called on the Biden administration “to ensure that COVID-19 technology is shared with the world.”

A week ago, a group of 80 international jurists warned that countries blocking the adoption of a waiver are breaching other international human rights treaty obligations that guarantee the right to the highest standard of physical and mental health, and the requirement to take steps to prevent, treat and control epidemics.

And just last Thursday, an international coalition of human rights groups charged that by failing to lift intellectual property barriers on all COVID-19 medical technologies (or to effectively implement the waiver through technology transfers), the U.S., U.K., Germany, Norway and Switzerland are in violation of the International Convention for the Elimination of All Forms of Racial Discrimination, a human rights convention ratified by nearly all countries in the world.

Whatever pandemic declarations do or don’t come out of this upcoming WTO Ministerial, the struggle for vaccine equity will live on in these legal challenges, in shareholder activism targeting the vaccine patent holders, and in pressure here in Canada on the federal government to put COVID vaccines on the Schedule 1 list of drugs that can be produced and exported under compulsory licence.

It took two WTO ministerial conferences and impressive levels of international civil society collaboration to win the TRIPS flexibilities as a response to the high costs of HIV/AIDS medications. With perseverance, we might even build a new, more balanced trade and intellectual property rights regime on the flaming rubble of the one Pfizer built.

1. Ottawa Group Member Countries (12 not counting EU member states): Australia, Brazil, Chile, the European Union, Japan, Kenya, Korea, Mexico, New Zealand, Norway, Singapore, Switzerland.

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