HOW SHOULD vaccines be doled out? By need, or willingness to pay? Or by the terms of contracts agreed last summer, as interpreted by producers pumped with government funds? With jabs in short supply, some governments are taking matters into their own hands. On March 4th Italy and the European Union blocked a shipment of 250,000 vaccine doses produced by AstraZeneca bound for Australia. It is not the first curb on vaccine exports. Nor will it be the last.
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Since January 29th, companies wanting to export vaccines from the EU have had to seek permission from both the country where production takes place and the European Commission. Trade is still flowing; by March 9th the EU had exported 34m vaccine doses to 31 countries. But the process now involves extra paperwork, missed flights and general uncertainty. In one case the checks delayed jabs meant for a trial in Latin America. They also disrupted a shipment that was going abroad and had been intended to validate the quality of a bigger batch meant for the EU. (Both were eventually approved.)
Other restrictions have been more subtle. On February 20th Adar Poonawalla of India’s Serum Institute, a large vaccine manufacturer, caught attention by tweeting that the firm had been directed “to prioritise the huge needs of India”. Both the American and British governments signed deals with producers that locked up domestic output for their citizens. That has led to stockpiles of yet-to-be-approved AstraZeneca vaccines in America, which European officials have sought to get hold of (in vain, so far).
America’s restrictions go further. Subsidies to suppliers of some vaccine inputs seem to have been made conditional on America getting first dibs. Exports of syringes and hypodermic needles need approval. And both the Trump and the Biden administrations have invoked the Defence Production Act to direct inputs towards vaccine-making. On March 4th Mr Poonawalla said that such curbs were creating shortages of inputs for vaccine-making, including bags and filters. Richard Hatchett of the Coalition for Epidemic Preparedness Innovations, a charity, has said that although he knew of no cases where the restrictions had halted production, they were leading to shortages outside America.
This is not the first time in the pandemic that governments have turned to trade restrictions. At their peak in April there were 137 export curbs on personal protective equipment (PPE) and other medical products applied in over 70 jurisdictions, reckons Global Trade Alert, a watchdog.
Many of these, which ranged from bans to authorisation schemes, have since been lifted. But both these and the restrictions on vaccines share common causes. Demand far exceeds supply, and governments want to prioritise their own voters. Perceptions of need have informed both. (In early March Italy recorded over 20,000 new covid-19 cases a day, compared with Australia’s ten.) Curbs sometimes seem like a panic reaction to imperfect information. A year ago governments knew too little about the availability of face-masks. Now they neither know how exactly companies are allocating vaccines, nor which shots might work best, say, for children.
Yet there are also differences in the markets for PPE and vaccines—and these suggest more curbs on jabs are to come. Where PPE-makers were able to increase output fairly rapidly, it will take much longer for vaccine supplies to meet demand. New variants and the need for booster shots will keep demand high and prolong arguments over who should get what. Vaccine-making is highly concentrated, which makes it easier for a few large producing countries to cut others off. And a new study by Simon Evenett of the University of St Gallen, Bernard Hoekman of the European University Institute and Nadia Rocha and Michele Ruta of the World Bank warns that the murkiness of export curbs means that supply-chain hiccups could be misinterpreted as foul play, and lead to retaliation.
All this could have lasting effects. Prashant Yadav of the Centre for Global Development, a think-tank, warns that a reluctance to share vaccines could limit importers’ willingness to share information about new diseases. When governments next negotiate contracts with companies, they will surely keep a much tighter grip on domestic production. Trade relies on trust. Export restrictions endanger both. ■
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This article appeared in the Finance & economics section of the print edition under the headline “Shots fired”
Source: Finance - economist.com
