Hello from Brussels. The European Parliament, never averse to stating the obvious for a bit of publicity, will today vote on a resolution that says the EU-China investment agreement (CAI) will remain in the deep freeze until China stops sanctioning some of the EU’s MEPs. As with trade commissioner Valdis Dombrovskis’s similar comments earlier this month, this statement more or less crystallises what everyone is thinking anyway and doesn’t have any legal power, but it’s useful to have it out in the open. The stand-off is that China won’t un-sanction its EU targets until the EU does the same to its Chinese equivalents, and that isn’t going to happen. Until then, the CAI will spend a lot of time in the freezer drawer next to the pizzas and bags of peas at minus 18C (for our American readers, that’s zero degrees Fahrenheit).
Today’s main piece looks ahead to tomorrow’s health summit in Rome, where the issues of vaccines and patents will no doubt receive non-partisan and technocratic scrutiny with no grandstanding involved. Charted waters looks at bitcoin’s dramatic fall — we don’t think it will be anyone’s reserve currency of choice anytime soon.
Moving the WTO Covid discussion on
The flurry of spin and counter-spin ahead of tomorrow’s Global Health Summit is giving us flashbacks to the G8 and G20 meetings of past decades. Reporters would spend days minutely parsing press releases about aid to Africa, debt relief for Iraq, fiscal stimulus during the global financial crisis and what have you to separate out genuine innovation from disingenuous reannouncement, subtle misrepresentation and straight-up falsehood.
Yesterday was the EU’s turn to have a go at grabbing the narrative with what it billed as a counterproposal to the US’s support for a Trips waiver for Covid-19 vaccines at the World Trade Organization. By the time of the summit, possibly even by the time you read this, South Africa and India, who kicked off this entire conversation back in October, have promised a refinement of their own plan.
As far as we’re concerned, the EU initiative goes firmly in the “reannouncement” box. Its suggested provisions on patent waivers essentially restate the flexibilities already available under the Trips agreement, including the ability to issue compulsory licences for export to countries without manufacturing capacity of their own and the freedom to issue a licence during an emergency without first negotiating with the patent-holder. At least they were pretty honest about this: one EU official told reporters yesterday it was more of a “reaffirmation” of existing rights than a new proposal. Brussels says it’s prepared to negotiate over patent waivers but doesn’t think it would necessarily help much.
Since we’re in the restating business, we’ll briefly go through the counterargument to the EU’s scepticism. The problem isn’t that the options to override patents aren’t there — Bolivia is trying to get a compulsory licensing deal with Canada — but that they are slow, cumbersome and subject to resistance from pharmaceutical companies and their governments. As we’ve said before, if the US signalling on patent waivers has any effect, it will probably be to increase pressure on pharma companies to do more tech transfer and share intellectual property themselves. The EU joining in that move might help send a signal to European pharma companies as well.
But here’s our key point today, lest we be accused ourselves of falling for spin. A lot of the EU’s arguments are correct. Vaccine patents aren’t the main thing. Tech transfer and exports are more important, certainly in the short term. Governments need to keep supply chains open and functioning. Promoting open trade in medical products is as important — maybe more so — for the WTO right now than changing patent rules.
But it’s hard to keep media and public attention focused on such a diffuse set of issues. You might even feel slightly sorry for Brussels, trying to manufacture a simple impressive announcement in a complex and nuanced situation. The EU isn’t some evil cackling agent of corporate evil, or at least if it is, it’s in respectable company. The EU has been holding pretty much the consensus view among advanced economies. It’s also in line with the “third way” rhetoric of WTO director-general Ngozi Okonjo-Iweala, who as it happens is in Brussels today for meetings with the European Commission and parliament.
So, given it’s going to take months to agree any patent waiver, how do we move the conversation on? The best thing would be for the US quickly to produce a proposed text for the waiver along with the South Africa-India one, turn on the WTO negotiating machine in Geneva, feed both proposals in and then have the talks run while governments turn to the question of boosting production right now. This won’t be as sexy — it involves dull but vital things such as the mechanics of the Covax distribution scheme, regulatory authorisation, production schedules, procurement contracts and cold chains. It is, however, what needs to be done.
The contribution of tomorrow’s summit to this isn’t clear. The most obvious thing likely to come out of it will be a flurry of announcements about funding Covax and donating surplus vaccines to developing countries, which may or may not involve double-counting. The last we heard, it’s not even clear whether the final statement will even discuss patent waivers at all. Summits are generally only useful to force action by lifting a relatively simple question to a higher political level, which isn’t really going to happen here. The best thing this gathering could do would be to announce a pivot away from patent waivers and towards the complex but more immediately fruitful issue of increasing production. Will it? Maybe not tomorrow, but we’re optimistic people here at Trade Secrets and we trust it will happen at some point.
Charted waters
We’ve been pretty clear that we think bitcoin’s chances of being used widely in world trade are slim to none. One of the reasons being that its value (when measured against currencies that people actually buy things with) is pretty volatile. With that in mind, take a look at what has happened to bitcoin of late:
It’s unclear exactly what drove the sell-off. It’s been linked to China saying it wants to clamp down on the use of crypto, but the Chinese Communist party’s distaste for a product set up with the explicit aim of challenging states’ currency monopolies should have surprised no one. Anyway, as Naeem Aslam of AvaTrade, an online trading platform, put it: “No company wants their treasury account plunging by nearly 40 per cent in one day.”
Something will eventually replace the dollar on its perch as the dominant reserve currency. But it won’t be this. Claire Jones
Trade links
Some cheery news. It turns out vaccine distribution has the power to unite, not only divide. The Asia-Pacific Economic Cooperation grouping, which faced serious conflict during the Trump administration, is trying to establish itself as a force for keeping trade open in jabs and other Covid treatments. The EU is also drawing up plans to open up to vaccinated tourists.
Do the tensions surrounding the Northern Ireland protocol present an opportunity for Joe Biden? Philip Stephens thinks so, calling on the US president to follow in the footsteps of his predecessor Bill Clinton and lend a hand in fostering a diplomatic solution.
Nikkei reports ($, requires subscription) that a shipment of shirts from a Japanese clothing retailer was confiscated by US customs officials after suspecting they were made by Xinjiang Production and Construction Corps under forced labour.
While the new EU artificial intelligence guidelines will have a limited impact on transatlantic trade for the moment, the German Marshall Fund of the US thinks this could increase later. Alan Beattie and Claire Jones
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Source: Economy - ft.com
