A Recipe for Disaster: Export Bans, TRIPS Waiver and Hyper Nationalism

(Long post ahead)

Three vials of a Covid-19 vaccine with a syringe beside them (image from here)

On 23rd April, Ned Price, a spokesperson for the US State Department, revealed that the Biden administration is not considering lifting the export bans on the necessary raw materials for the COVID-19 vaccine. This refusal comes in response to the requests (see here and here) made by the SII CEO Adar Poonawalla to get rid of the export bans and assist in ramping up the outputs of vaccines in the global market. (Side note:  Back in Feb, Poonawala requested other nations to be “patient” as SII has been directed to prioritize the huge needs of India). 

Export bans: displaying vaccine nationalism in tougher times

The reason for this refusal stems from the protectionist stance the USA has maintained since the outset of the pandemic. A few of the USA’s tactics in the past include the export restriction on distribution of necessary protective equipment, hoarding medicines based on unsubstantiated rumors, and threatening others with retaliation on doing the same, signing the most pre-purchase agreements with vaccine manufacturers, etc. Price’s refusal resonates with that “America First” sentiment, where he expressly says that “It is not only in the U.S. interest to see Americans vaccinated, but it is in the interests of the rest of the world to see Americans vaccinated.” (Whatever about no one is safe, till everyone is safe, eh?)

However, the bizarre stance of the White House sharing Astrazeneca doses with Mexico and Canada while simultaneously blocking the export of necessary raw materials to India, hindering the latter’s vaccine output, puts up a big question mark on its vaccine policy.   

Regardless, the USA is not the only nation that has imposed an export ban on vaccines or related commodities. Recently, the EU has imposed a de facto export ban on vaccines. India, too, has reportedly reduced its export of vaccines. This trend of imposing export bans on necessary products for COVID-19 treatment is an unfortunate continuation from last year. In April last year, WTO had cautioned nations against imposing export restrictions. Despite that, the spree to impose export bans continued. (see here and here).

A map of the world displaying the countries which have imposed export restrictions in red
Image from here

Are these Export Bans valid?

(Short version: Possibly so. International law folks may be interested in this portion; others may be interested in moving straight on to the next heading) 

The rule as under Article XI:1 GATT says that any prohibition on export or sale for export to other Member countries is “generally” prohibited. As the name suggests, ‘export bans’ are prohibitions on export and thus fall within the ambit of the above provision.  However, in certain situations, these export bans can be imposed by a Member. For instance:-

1. Article XI:2 permits any prohibition imposed temporarily to prevent or relieve critical shortages of other products essential to the exporting country

In the present case, the ban has been ‘temporarily’ imposed to ‘prevent’ critical shortage of an ‘essential product,’ i.e., the raw materials for vaccines. We should rely on the Panel Report and the Appellate Body Report in China-Raw Materials for interpretation of the clause. The Appellate Body held that “temporary” doesn’t mean that the member should give an explicit time limit, but rather the measure must be applied to “bridge a passing need.” (para 323). In the present case, the US may argue that the export ban  was imposed to bridge the need for COVID-19 vaccines in its territory and thus justify it to be “temporary”. The Panel under para 7.306 held that if the product is ‘essential’ or not, the member must see the particular circumstances faced by it when it applies the restrictions. Thus, the burden of proof to determine whether the product is essential or not lies on the USA itself, considering its circumstances. Furthermore, the Panel also ruled that such measures can be imposed preemptively and do not require the shortage actually to take place. (para 7.294)

2. Article XX (b) permits Members to impose any measures necessary to protect human, animal, or plant life or health

However, this exception must fulfill the “Chapeau requirement” of Article XX, which states the measure must be applied in a manner that doesn’t discriminate between the Members in an arbitrary and unjustified manner or is disguised as a restriction. The US should not have any problem in defending the decision for export bans under Article XX (b) as it was made to protect human lives from the clutches of the ongoing pandemic. 

Unlike Article XI:2, As explained by Artheya here, Article XX(b) doesn’t apply in a narrow sense, i.e., it doesn’t concern itself with the nature of the product, nor is it just applied during an impending crisis. Rather, Article XX(b) justifies a measure which is necessary to fulfill a policy undertaken by the measure imposing Members in further to protect human health or lives. (See Appellate Body report in Brazil-Retreaded Tires (Para. 156).

3. Article XXI (b) (iii) permits a Member to take any actions which it considers necessary for the protection of its essential security interest during other emergencies in international relations. 

This is perhaps the most interesting exception available in defense of the export bans. This provision which was generally seen as an exception to defend actions undertaken during war-like situations is now gaining traction to justify restrictions imposed by countries during the pandemic too. A plethora of scholars have argued that COVID-19 is an emergency in international relations (see here for arguments by JB Heath and here for arguments by Henning Grosse Ruse-Khan, and here for our coverage of the argument by Shirin Syed). Thus, in arguendo, it can be said that the export ban by the US can be justified under Article XXI. 

Considering the above, it is safe to assume that a theoretical argument can be made justifying the US’s export bans. 

Implications of the Export Bans on Vaccine Supplies

These export restrictions can have a disastrous impact on the supply of COVID vaccines globally. Contrary to the principle of “Atma Nirbharta,” in reality, no country or industry is self-sufficient. The same is the case with the vaccine manufacturers, who rely extensively on different sources/ entities for different functions. 

A flowchart which displays vaccine production process
Image from here

When restrictions like export bans are imposed, the whole supply chain of the product disrupts. Simon J. Evenett (See Chapter 3 here)  explains that the supply chain functions on the basis of the “O ring theory” (see here for a primer). If a malfunction happens in even a small part of the whole supply chain, it can have a huge impact on the ultimate outcome, much like the Challenger Space Shuttle accident, which occurred due to a fault in a simple gasket or “O ring.” 

In the past as well, aftereffects of such export restrictions have been observed by the world. As highlighted by Nadia Rocha (here), back in the early 2000s, few exporting Members imposed export restrictions on agricultural commodities, which led other Members to impose similar restrictions owing to a gradual shortage in supply. This chain of export restrictions led to a ‘multiplier’s effect’ whereby Members ended up contributing to the existing shortage. Rocha prophesied that similar should be the fate of the world (or maybe worse) if the Members continued with the present trajectory of export restrictions on medical items in the wake of COVID during her interview for the trade talks podcast. Similar arguments were advanced by Prashant Yadav, especially with regard to the export restrictions on the supply of COVID-19 vaccines here

These arguments are translating into reality with every passing day. In March 2021, COVAX blamed India for its inability to supply the poor with vaccines. In April, it asserted that SII is obligated to supply it with the Oxford-Astrazeneca vaccines. Initially, COVAX expected to receive more than 100 million doses of the vaccine from SII but ended up receiving only 18.2 Million doses. SII, on the other hand, blamed the US Government for not supplying it with necessary raw materials and requested it for lifting the export bans. 

Looking at the (in) effectivity of TRIPS Waiver from the lens of Export Bans

With this established that the international trade regime permits the Members to impose quantitative restrictions, where does it leave the argument to waive TRIPS and facilitate access to medicines? The primary argument which is advanced in support of the waiver is the consequential rise in the number of manufacturers who can produce the COVID-19 treatment without worrying about IP enforcement. However, as pointed out by Prashant here and Christopher Garrison here, it is tough to reverse engineer and make complicated biologics like the COVID-19 vaccine unless undisclosed information (knowhow) and necessary technology to manufacture such vaccines are shared with the manufacturers. Unfortunately, the waiver can do only so much about it. 

Looking at the scheme of WTO, for a decision concerning the waiver from the obligations arising out of TRIPS, the same must be passed by a three-fourth majority (Article XI:3 of the Marrakesh Agreement). As reported by TWN,  presently the proposal is supported by two-thirds of the members.

However,  even if passed, the waiver may face turbulence in functioning, and the opponents may continue to create hurdles in its operation. Apart from not sharing know-how and technology, the opponents to the waiver may continue to impose export restrictions and tamper with the supply chains. In such a situation, I am not sure if waiving TRIPS will be sufficient to resolve this barrier. In fact, the waiver might end up being ineffective. As a consequence of the waiver, the number of COVID vaccine manufacturers will increase inadvertently. If the export bans persist, then these new manufacturers may not have raw materials to work on and thus defeating the purpose of amplifying vaccine growth throughout the existence of the waiver.  

Conversely, the proposed TRIPS waiver nowhere suggests that the products generated from the waiver shall not be subjected to export restrictions themselves. Readers may recall that last year when it was rumored that hydroxychloroquine might be efficient in curing COVID-19, India (one of the proposers of the TRIPS waiver) in a knee-jerk reaction, was first to impose a ban on the export of the drug without any shortage of the same. Unknowingly risking the fight against malaria in countries where it is still seen as a problem. 

Thus, the liberty at which the WTO Members may and have been imposing export bans highlights how the Waiver alone might not be sufficient in ensuring universal access to treatment for COVID. 

The way out? 

The very first thing which the Members must realize is that the pandemic knows no boundaries.  In this vein, initiatives targeted to improve the technology transfer and access to knowhow like the new  COVID-19 mRNA vaccine technology transfer hub need to be supported, and perhaps new life should be given to CTAP as well. Similarly, emphasis shall be given to the negotiations aimed at strengthening the local production of medicines, especially with the support of government funding. 

If we ever get to talking about amending the WTO agreements, then necessary amendments seeking restrictions on imposing absolute export bans can be introduced in the GATT. Or maybe something more ambitious like complete restriction on using justifications under Article XI:2, XX(b) and XXI, during pressing times, as suggested by Prof. James Gathii et.al. Most importantly, the waiver must also include a clause stating that the Members shall not apply any export restrictions on the products generated out of the TRIPS waiver and should have mechanisms to differentiate such products, much like the Article 31bis products. 

What seems like the immediate solution to this curveball thrown by the USA, India had decided to waive custom duties to improve imports of vaccines and its raw materials for three months.  However, this measure will be of no use if the exporting country decides to impose its own version of the export ban on these commodities. Thus, apart from adopting feasible lucrative interim measures, India should accept help from its neighbors and friendly countries (China, Australia, France) and keep the differences at bay. 

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