A senior US official has hit out at countries including Germany, Russia and Turkey, that have rushed to introduce export controls to limit trade in medical supplies in response to the coronavirus outbreak.
Peter Navarro, the White House’s trade and manufacturing adviser, told the Financial Times that the moves showed that the US was “alone” in confronting the outbreak and would have to reduce its dependence on global medical supply chains.
“Just as in the H1N1 flu pandemic of 2009, actions by strategic competitors and putative allies alike once again demonstrate that in a global public health emergency, the US is alone,” Mr Navarro said. “Such behaviour is precisely why it is important for the Trump administration to bring home its manufacturing capabilities and supply chains for essential medicines and thereby simultaneously reduce America’s foreign dependencies, strengthen its public health industrial base, and defend our citizens, economy, and national security.”
The US government has been encouraging companies to ratchet up domestic production of medical supplies. Washington has not proposed any export controls in response to the crisis, but has not ruled out implementing them either.
The Trump administration’s concerns about the coronavirus crisis have increased in recent days, as the number of cases in the country has grown to 149 people and 10 deaths, according to the Centers for Disease Control and Prevention on Wednesday evening. Mike Pence, the US vice-president leading the federal government’s response, was on Thursday travelling to Minnesota to visit 3M, one of the biggest manufacturers of protective medical gear, and Washington state, which has experienced the most fatalities from the US outbreak.
Mr Navarro’s comments followed moves this week by Germany, Russia and Turkey to introduce restrictions on overseas sales of protective equipment including masks and respirators. India has also limited exports of certain drugs and pharmaceutical ingredients. Other countries, such as France, have moved to stockpile protective equipment but have not imposed export restrictions.
The purpose of the measures is to avoid shortages of products needed to combat the coronavirus. However, they could also lead to a protectionist spiral that could hurt the global response. Public health officials, including the World Health Organization, and trade experts have warned that hoarding could prevent supplies from reaching the most-needed areas and reduce incentives for companies to ramp up production.
Tedros Adhanom Ghebreyesus, WHO director-general, this week said governments should be “easing” restrictions on the export and distribution of medical supplies. “This is a question of solidarity. This cannot be solved by WHO alone, or one industry alone,” he said. “It requires all of us working together to ensure all countries can protect the people who protect the rest of us.”
Martin Chorzempa, research fellow at the Peterson Institute of International Economics think-tank in Washington, said “this may be a classic tragedy of the commons”.
“Each country may be doing what it thinks is best for itself, but the damage to the complex, interconnected supply chains that have consistently kept goods cheap and in good supply could be severe and irreversible,” he said.
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The rush to impose export controls has increased pressure on Washington to explore ways to increase domestic production of medical goods.
The German ban was announced this week by the government’s crisis committee for dealing with the coronavirus outbreak, and applies to exports of all medical protective clothing including masks, gloves and protective suits — with exceptions only for international humanitarian emergencies. The government also moved this week to centralise procurement of all protective clothing for doctors’ practices, hospitals and federal authorities, after doctors’ organisations warned that stocks of masks and other items of protective clothing would not last if infections continued to rise.
In Russia, an export ban until at least June has been applied to medical equipment and antiviral medications. Russia has only seven cases of coronavirus but has thrown a huge amount of resources at stopping the infection entering the country.
Export controls do not necessarily mean that all overseas sales are blocked, although a government licence would be required. This could delay transactions and lead to intense scrutiny from officials, with a high likelihood of denial.
One big concern is that such measures will have detrimental effects on regional distribution chains for medical supplies, as in the case of the United Arab Emirates, which is a hub for the Middle East and Africa.
“Inventory that is sitting in a country was not only meant for consumption in that country,” said Prashant Yadav, visiting fellow at the Center for Global Development, a think-tank.
John Murphy, senior vice-president for international policy at the US Chamber of Commerce, a lobby group for corporate America, said some of his members were increasingly concerned about the proliferation of export controls.
“We’re hearing of these bans not just in producing countries, but consuming countries too. It’s unfortunate that even countries that have no production are considering this,” Mr Murphy said.
The World Trade Organization said it was “monitoring the situation closely”, according to a spokesperson.
“To date, no member has raised an official complaint regarding any such measures that have been taken. Under Article XX, WTO rules clearly provide governments the right to take actions deemed essential to protect the health of people, plant and animals. It is not for the Secretariat to determine whether actions taken to date comply with Article XX obligations or not.”
Additional reporting by Amy Kazmin in New Delhi, Guy Chazan in Berlin, Henry Foy in Moscow, Laura Pitel in Istanbul and David Keohane in Paris
Source: Economy - ft.com
