Priorities for global trade in 2022

What are the key developments to watch out for in global trade in 2022

Managing the pandemic will remain a global priority. It will not be any different for the WTO. Within this priority, the most important goal for the WTO will be to ensure effective distribution of vaccines to various parts of the world.

The WTO hasn’t yet been able to play a facilitating role in distribution of vaccines. Till December 31, 2021, 71% of the total vaccines exported worldwide have moved through various bilateral supply arrangement deals. Around 21% from the remaining share have been exported through COVAX, either through donations to the facility, or through supplies contracted by it. There have been quality issues with the COVAX vaccines with several recipient countries having had to reject the supplies received as they had come close to the expiry dates.

It is thus clear that vaccine trade has continued to be a ‘managed’ one. Recipient countries are working out supply arrangements with vaccine producers on pre-agreed terms for vaccine sale and delivery. This is hardly the uninhibited, cross-border flows of vaccines that should occur.

The ostensible reason behind vaccine exports (and imports) continuing to remain managed is pre-determination of vaccine prices. Vaccine producers are able to negotiate pre-determined prices with the buyers depending on the requirements of the latter as well as their abilities to pay. In this respect, vaccine export deals are resembling forward contracts executed for various commodities by different countries on pre-decided terms.

The WTO was expected to bring vaccine exports out of the pre-determined supply agreements and make them move freely. The fact that it hasn’t happened that way till now, in spite of the Omicron variant sweeping across the world, shows that producers are able to dictate prices and terms of sale. As more and more vaccines become available and overall global supplies increase, individual producers are likely to lose their command over setting prices. Much would also depend on whether the WTO is able to reach a decision on not letting intellectual property (i.e. patents) become a factor in movement of vaccines. A multilateral consensus on this subject is extremely important.

India recently asked for a virtual Ministerial meeting of the WTO for working out a plan on the WTO’s pandemic response with specific focus on the issue of waiving intellectual property rules for vaccines and other pandemic therapeutics. However, till now, there hasn’t been any noticeable movement on the issue. Matters haven’t been helped by the fact that the WTO has had to postpone its Ministerial Conferences twice, once in June 2020, and then again in November 2021.

While the Ministerial Conference is certainly important in taking a decision on waiving intellectual property rules and pushing the cause for global equity in vaccines, the difficulty of holding it face-to-face is not a good enough reason for the WTO not being able to decide on waivers. It must work out a way of progressing on the subject under these exceptional circumstances, whether it be through informal consultations among some key members, or speeding up text-based negotiations.

Production and distribution of vaccines will also feature prominently in the trade discourse outside the WTO in the coming year. Major global groupings like the G7 and G20 will continue to work on ensuring smooth flow of vaccines among their members. To some extent, vaccines will continue to figure in various FTA talks as well.

Along with a decision on intellectual property waivers on vaccines, the postponed Ministerial Conference of the WTO was also expected to work out an action plan for aligning global trade rules to climate action goals. This was imperative after the COP26 achieved tangible outcomes in its meeting last year. Considerable movement on this subject is expected within the various FTA discussions that are taking place around the world. These include the FTAs that India is negotiating with the UAE, UK, Australia, Canada and the EU, some of which are expected to conclude towards the end of the year. In all these agreements, climate-friendly trade policies are expected to be drafted.

For this year, and also much of the foreseeable future, global and regional trade agendas are expected to stay focused on welfare-centric goals, most notably in public health and sustainable development. The focus has clearly been hastened by the pandemic and the fact that it has proved stubborn and refused to go away. At the same time, however, the focus has come from the realization among trade policy makers that trade needs to be seen as standing up and delivering.

The current global context offers trade a great opportunity for refurbishing its tarnished image of having delivered benefits from globalisation in a discriminatory fashion. There is no better way of correcting the impression than contributing decisively to global public health and sustainable development goals. However, the structural and procedural obstacles for doing so, visible most prominently within the WTO, and to some extent in regional and bilateral FTA spaces, can deny trade the opportunity to restore its benign image. The will to obtain good outcomes must be matched by efforts and results.

The author is Senior research fellow and research lead (trade and economics) at the Institute of South Asian Studies, NUS Views are personal