Vaccine Trade And Its Intersection With Trade Policies

By Prof Evelyn S. Devadason, University of Malaya,

Amidst the debate on how the Covid-19 pandemic has disrupted international trade, it is also interesting to observe how the pandemic has raised the profile of vaccine trade and trade policy in combatting this global health crisis through the production and distribution of vaccines.

Trade is key to deploying vaccines globally, while trade policy is crucial in ensuring the accessibility and affordability of vaccines for all.

Vaccine (for human use) trade is important for import dependent countries like Malaysia. In 2019, Malaysia recorded a deficit of US$82 million in vaccine trade. The major import sources for vaccines in Malaysia were France (30%), followed by Belgium (20%), the United Kingdom (UK, 18%) and the United States (US, 15%). France, Belgium, and the US maintained their positions as Malaysia’s top three import sources of vaccines over the years.

Malaysia’s import market concentration for vaccines mirrors the high global dependence on vaccine supply on a few developed countries. In the context of the Covid-19 vaccines, the potentially large producers are the US, China, and India, followed by several economies in the European Union (EU), Australia, Brazil, Canada, Russia, and the UK.

The significant concentration of the supply of Covid-19 vaccines on a few global exporters, the explosive demand for vaccines and the ensuing scarcity of supply, has resulted in the rise of “vaccine nationalism”, thereby reducing the global accessibility of vaccines and giving rise to the current situation of a global “vaccine inequity.” With the stark global vaccine divide, some developing countries claim that the world is on course for a “vaccine apartheid.”

The viable solution reached on vaccine inequity is the “vaccine solidarity” initiative of the United Nations (UN)-led COVAX programme. Unfortunately, the distribution of vaccines under this programme is also undermined by the continued vaccine nationalism, apart from youth vaccination in some rich countries, and the bilateral deals struck between high income countries with vaccine manufacturers for additional purchases.

From a trade policy viewpoint, the immediate concern that follows the domestic-first-approach or vaccine nationalism relates to the implementation of unilateral restrictive measures, such as export bans and embargoes on raw materials or ingredients for the manufacture of vaccines, and property rights (property patents, industrial designs, copyright, and protection of undisclosed information), by vaccine makers.

Apart from the rising protectionism from the export side, import duties (on vials, alcohol solutions and freezing equipment) and import-related non-tariff measures (NTMs), namely the packaging (cold chain equipment), storage (freezers) and border clearance procedures, are important as they affect vaccine trade, vaccine safety and vaccine pricing.

Trade barriers and trade restrictions related to vaccines are critical, considering that the vaccine supply chain is somewhat complex. This is because the restrictive measures are applied not just by the finished (end-product) vaccine makers, but also by the vaccine ingredient (preservatives, adjuvants, stabilisers, antibiotics) producers, and the suppliers of related products (syringes, needles, vials and stoppers, cold boxes, freezers, dry ice) for vaccine administration.

Hence, the reported global shortages of vaccines may not just arise because of “vaccine hoarding” by the major vaccine makers but through export restrictions enacted by the major producers of vaccine ingredients that cripple vaccine production. In the context of the Covid-19 vaccines, the problem becomes more acute as the major exporters of ingredients are not necessarily the major producers of vaccines.

For example, Germany, Argentina, and India are the top exporters of preservatives, while Mexico, China and Turkey are key suppliers for adjuvants. For stabilisers, the global exporters are France, China, and Germany, while China, Switzerland and Italy are the global producers of antibiotics.

From the above, it is not surprising that China has positioned itself as one of the top three global vaccine suppliers, as the country is also among the top three global producers of vaccine ingredients (antibiotics, stabilisers and adjuvants) and vaccine administrative products (freezers, vials, cold boxes, syringes and stoppers). Critics of China have therefore come forward to accuse the country of engaging in “vaccine diplomacy.”

Despite the numerous terminologies used in reference to vaccines – vaccine inequity, vaccine nationalism, vaccine solidarity, vaccine hoarding, vaccine diplomacy and vaccine apartheid – underlying all these evaluations is the key importance of vaccine trade and its intersection with trade policies.

Evelyn S. Devadason is Professor at the Faculty of Economics & Administration, University of Malaya, and Vice-President of the Malaysian Economic Association.

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