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International Economic Laws in this Pandemic

AUTHOR- Tanya Sinha, Thakur Ramnarayan College of Law, Mumbai University.

The coronavirus (SARS-CoV-2) pandemic is currently raging throughout the world. The ensuing crisis has acquired a multidimensional nature, affecting all levels of society. Measures adopted by domestic authorities have included a broad spectrum of restrictions: from general alerts to mandatory quarantines and isolations of individuals, to blanket travel bans and cordoning-off of cities and, in some cases, countries. [1]

Introduction:

International Economic Law refers to a growing body of international law addresses the large number of economic issues with global impact. This includes significant legal and institutional developments in the areas of trade, foreign direct investment, sanctions, economic integration and development, business regulation and taxation, intellectual property, and issues related to the transnational movement and regulation of goods, services, labor, and capital.[2]

International economic law (IEL), refers to the rules governing the cross-border movement of goods, people, technology and finance capital, as well as the institutions created to design and enforce such rules. As an arena of scholarship, policy and practice, IEL has largely been dislodged from the broader social, economic, political, ecological and historical context in which it operates

In this intervention it reflect on (some of) the ways in which IEL is intermingled with the problematic patterns of globalized production and consumption underpinning the slow responses and rapid spread of COVID-19.

International Trade:

The COVID-19 has become a pandemic and more and more governments worldwide are struggling to contain the virus so as to protect their citizens. Commentators have inter alia recommended policies which would ease trade restrictions on medical goods/devices so that freer trade will better equip health care systems and help them tackle the virus .Others have cautioned against restrictions limiting the movement of people and services trade and called for a coordinated approach. In times of a Public Health Emergency of International Concern and a global pandemic, rational policy-making that will not only outlast the existence of a global pandemic and PHEIC, but also provide guidance for future policy reform and liberalization, is especially important.

Most policy makers, facing so many unknowns in an emergency and a pandemic, the scope of which is not yet understood, must be mindful of the short-term effects and long-term spill overs generated by their decisions. In the short-term, when implemented, policies reducing trade barriers including tariffs on medical goods and non-tariff barriers such as export restrictions/bans and licensing procedures will likely help boost health care systems’ capacity in containing the virus and mitigating its effects. Other policies, such as closing borders may retard the spread of the virus and thus may be welcomed by citizens. But the same policies may at the same time cause extreme economic hardship for many.

However, in the long run, when the pandemic subsides and life comes back to normal, will governments have the political and legal capacity to retract temporary tariff relief and restore tariffs back to the level of commitments in force immediately prior to the pandemic? Doing so does not appear to be that straight-forward as governments will face pushback from stakeholders that have benefitted from the changes and thus will encourage the restoration of earlier high tariffs.

ü Trade Policies Under Pandemic:

§ In response to the massive surge in demand for medical equipment and supplies, several governments have imposed export controls on a variety of health/medical products needed to fight the COVID-19 pandemic.

§ While Article XI of the GATT 1947 generally prohibits the imposition of export controls, Article XX contains an exception from these commitments for actions taken that are “necessary to protect human…life or health,” subject to the proviso that “such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade…”

§ Art. II of GATT(General Agreement on Tariffs and Trade) permits governments to maintain some leeway in setting applied tariff rates not exceeding the rates to which they committed to be bound. However, raising tariffs, even within the ceiling of a Member’s Schedule, appears to be inconsistent with the WTO’s(World Trade Organisation) broad goal in reducing trade barriers. Thus, in theory, other governments may challenge the revocation of the reduced tariff rates under the “nullification or impairment” clause under Article XXIII:1 of GATT 1994. But this argument is a weak one legally in my opinion, and in any event has limited potential utility now that the WTO’s Appellate Body is unable to function.

§ Alternatively, governments may justify non-tariff trade barriers, be it export bans/limitations or import restrictions (consider the travel ban now widely imposed aiming at containing the COVID-19 or the decisions of Germany and other EU members to restrict exports of medical supplies), on exceptions such as Art. XXI (national security) or Art. XX(b) (protecting the health and life of citizens) of GATT and their counterparts in GATS(General Agreement on Trade in services), Art. XIV(b) and Art. XIV bis in general. Also, in particular, governments may rely on Arts. 2.2 and 5.7 of the Sanitary and Phytosanitary Agreement (SPS) for imposing trade restrictions on goods, especially medical goods that are in dire need.

§ According to a March 23, 2020, report by Global Trade Alert, 54 countries have imposed export controls on some sort of medical equipment, medicine, or medical ingredient. Countries restricting pandemic-related exports include India, France, Germany, South Korea, Russia, Bulgaria, Morocco, Ukraine, Turkey, and the Czech Republic.

§ In addition to restrictions on exports of products needed to fight the COVID-19 pandemic, several countries have recently imposed restrictions on exports of certain food products. In the fourth week of March, Russia, for example, proposed restrictions on grain exports. During the March 30 G20 virtual summit, EU Trade Commissioner Phil Hogan told his counterparts that “There is no global supply shortage [of food] at this time and such measures are completely unjustified.”

§ The heads of the WTO, the UN Food and Agriculture Organization, and the World Health Organization issued a joint statement on March 31 calling on governments to minimize the impact of COVID-19 related border restrictions on trade in food, and warning that “Uncertainty about food availability can spark a wave of export restrictions, creating a shortage on the global market.”[3]

International Public Finance:

The COVID-19 pandemic and probable ensuing financial and sovereign debt crises also demonstrate the urgent need to rethink the role of international public finance and the institutions that mobilize and disburse collective resources for financing global public goods. The current model of financing for collective public goods, including fighting pandemics and intervening in financial crises, relies on discretionary aid contributions by developed countries (and, increasingly private donors) rather than on collective and mandatory pooling of funds to redistribute global resources. This means that financing remains contingent on the economic and political exigencies of donor countries and large non-state actors, such as philanthropic foundations, and subject to the conditions set by donor states and the international organisations they control, notably the IMF and the World Bank.

As it is, macro economics and structural conditions attached to lending by these institutions, such as fiscal austerity, liberalisation, deregulation and privatisation of economic sectors, have significantly reduced the capacity of states in the global south to withstand natural disasters, health epidemics and financial crises. In the arena of global health, reliance on earmarked contributions and extra-budgetary trust funds at the World Health Organisation (WHO) which prioritised donor interests in communicable diseases over institutional capacity building and public health systems, have been attributed as a key factor for failures in the Ebola responses. Thus, there is an urgent need to examine the forms of financing extended to countries to support responses to this pandemic and ensure that the package of measures does not further increase their debt burden through taking on more public and private debt; and that conditions attached to these financial instruments do not further undermine states’ capacity to invest in public health systems, combat pandemics and withstand economic shocks emanating from such health crises.[4]

Intellectual Property and Access to Medicines:

The COVID-19 pandemic is indeed revealing how the union of intellectual property (IP) with global trade, in the form of the WTO Agreement on Trade-Related Aspect of Intellectual Property (TRIPS Agreement), adversely impacts public health. This is because under TRIPS, a patent — a temporary exclusive right granted to an inventor of a new product or process — lasts 20 years. Exclusivity, as a result of patents, means an innovator pharmaceutical company can prevent entry into the market of lower-priced generic versions when available. As early trials of potential COVID-19 treatments begin to emerge, there is an urgent need for international collaboration on the research and development of new medicines, as well as greater flexibility in the implementation of pharmaceutical patent law regarding access to and sharing of pharmaceutical technology on COVID-19. This is thus an opportune moment to limit data exclusivity and ensure easier access to clinical trial data and encourage quicker development of new vaccines/drugs.

Following the example of the Chilean Chamber of Deputies’ approval of compulsory licenses for patents relating to COVID-19, countries should ensure access to and availability of drugs and vaccines if and when they become available. This includes invoking the TRIPS Agreement flexibilities, which include compulsory license and public non-commercial use to address the pandemic. As nearly every drug in development stages for COVID-19 is backed by publicly funded research and funds, we need a radical rethink of the global patent system focused on maximising access to new inventions for this and future pandemics.[5]

Conclusion: The Crisis Across and Beyond IEL

The COVID-19 pandemic is an extraordinary occurrence, extraordinary not because it represents a variation of the normal functions of the global economy and global society but because of the potential of it disrupting a mode of doing, thinking and being that for the most part of history has been premised on exploitation and marginalization of vulnerable people. The problematic nature of our international economic architecture in the emergence of the pandemic are some of the inadequate responses from national and international institutions. But the pandemic surely offers us, scholars and practitioners of International Economic laws and beyond, an opportunity to review, rethink, and reimagine the current legal order so that, when we emerge on the other side, it will not revert to business as usual. It is time, while we are confined within physical borders, to imagine and plan for breaking out of the epistemological, methodological and ideological borders that have led to this and other global crises.

[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3561650 [2] https://asil.org/topics/international-economic-law [3] https://www.steptoe.com/en/news-publications/what-you-need-to-know-about-the-impact-of-covid-19-on-international-trade.html [4] https://www.efpia.eu/news-events/the-efpia-view/blog-articles/trade-policy-and-covid-19-openness-and-cooperation-in-times-of-a-pandemic/ [5] https://medium.com/iel-collective/international-economic-law-and-covid-19-d46e17fdcd3f


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