COVID-19 crisis brings out nations’ inequality in access to fair personal protective equipment trade 

BySergiu Ipatii

COVID-19 crisis brings out nations’ inequality in access to fair personal protective equipment trade 

With the COVID-19 pandemic placing immense pressure on health systems worldwide, governments are literally pushing one another to be the first in line at the doors of the manufacturers of medical goods. The states of emergency declared during the pandemic and the “diplomatic channels” becoming more of a trend tend to highlight the inequalities among rich and poor nations. Will the trade war on the personal protective and medical equipment so desperately needed by every country, but apparently easier to get by rich nations, provoke a global crisis of confidence?

Medical products market overview

Trade in the medical products described as being critical to tackling the COVID-19 crisis but in severe short supply, has accounted for about US$597 billion, or 1.7% of total world merchandise trade in 2019. According to a report by the World Trade Organization (WTO) on trade in medical goods in the context of tackling COVID-19, the ten largest supplying economies accounted for almost 75% of total world exports of the products while the ten largest buyers accounted for roughly two-thirds of world imports.

The USA has been the largest importer of medical products during the last three years, accounting for 19% of total world imports in 2019. Germany followed with 9%, while China had a 6% slice of the world medical product imports pie. The import value of personal protective products (hand soap and sanitizer, face masks, protective spectacles) in 2019 accounted for US$135 billion. The USA and Germany are the biggest importers, together accounting for more than 22% of total world imports. Moreover, the WTO report suggests that the USA and Germany are the biggest bilateral trade partners for medical products and both are the main suppliers to China.

Germany, the United States and Switzerland were the TOP-three exporters of medical products in 2019 – together accounting for 35% of world medical product exports. In terms of personal protective equipment (PPE) exports – more than 40% of these come from China, Germany and the USA. With stable and functioning trade mechanisms in place between the big players, the question arises as to how fair the trade is during force major events such as the COVID-19 pandemic.

Temporary PPE export restrictions and the ways to avoid them

“One can imagine that a country like Moldova cannot afford to buy and maintain hundreds and thousands of ventilators during “peace” time. When the crisis unleashed, and the “war” with the virus began, our company ordered ten ventilators from Russia. While packing our shipment, our partner informed us that the deal was no longer valid because the export of medical equipment was “banned”. We had to provide official correspondence and, through our connections, we miraculously obtained permission to get our ventilators” shares a medical goods trader from Moldova regarding the company’s troubles arising from export bans. Moldova is a developing country, the second-poorest country in Europe.

According to the same source, the prices for some categories of goods – such as protective masks – have doubled from US$ 0.20 a piece to US$ 0.45 a piece. “The prices for medical equipment have also doubled. The ventilators we could have bought last year for just several thousand dollars, today are traded for 10 thousand”, added the trader.

Emilio Laguillo, an international consultant with over 17 years of experience in international trade and law, says that export restrictions are generally forbidden under WTO agreements with only a few justified exceptions allowed on temporary basis. “A high number of countries have imposed export bans on PPE products based on WTO rules when such bans are for the purpose of protecting human life. In particular, the USA has recently enacted laws imposing export bans to ensure that scarce or threatened health and medical resources are appropriately allocated for domestic use. After such a general ban, up to 11 exemptions apply, including international relations and diplomatic considerations, so exports categorized as any of these exemptions are allowed”.

This means that, in theory, governments can procure, through their embassies, the goods that are under temporary export restrictions and ship them through diplomatic corridors, directly to their governmental officers and in limited quantities. “As recently as April 17, international relations and diplomatic considerations were granted exemption status to the export ban, so any export that qualifies as being shipped by embassies and consulates to their foreign governments is allowed, without being subject to further discretionary scrutiny” concludes Mr. Laguillo.

However, countries have been using other types of delivery channels.

In Romania, private imports from Turkey and China trapped at customs have been the subject of phone discussions between local high-ranking officials and their foreign counter-parts. As a result, export rights have been approved for particular shipments. Instances of exports being arranged by top-level “phone” deals have been reported by various countries across the globe.

Can these cases be considered as “discriminatory”? Can a leader from a small African country count on a similar fair trade-deal with the Chinese president, as German chancellor counselor Angela Merkel did when negotiating a large-scale shipment of medical supplies to Germany in early April?

In a joint statement by WTO Director-General, Roberto Azevedo, and WHO Director-General, Tedros Adhanom Ghebreyesus, the two officials criticized the “unnecessary disruptions to global trade and supply chains”. The efforts to protect human lives can be impeded by these actions, according to the officials while “keeping trade in health technologies as open and predictable as possible is of vital interest”.

“Governments need to avoid measures that can disrupt supply chains and negatively impact the poorest and most vulnerable, notably in developing and least developed countries that are typically reliant on imports of medicines and medical equipment.” 

Currently, 38 WTO member-states have notified the secretariat of the organization regarding temporary export/import measures relating to COVID-19.  Some of these are not related to medical products. Some countries, such as Kyrgyzstan and North Macedonia, have imposed temporary export bans on wheat and meslin. 

The United Nations suggests that the COVID-19 pandemic could have a devastating effect on food security if major cereal exporters adopt trade barriers or export bans. Export restrictions imposed on cereal exports by the US, China and the Russian Federation can potentially imperil global food security, especially in atomized net food-importing developing countries. 

Increasing profits generate a loss of confidence

Emilio Laguillo believes that the rising prices and shortage of supplies, which are particularly intensely felt in developing countries, along with export bans, reveal a non-co-operative and protectionist attitude that is far from the ethical demands of a global, unprecedented crisis as such as COVID-19.   

“I think the main ethical consequences of the battle for PPE are the amorality that it brings with it, especially the indifference to the needs of the most vulnerable, as well as the lack of accountability of those countries that act beyond rational expectations. Such self-centric response to the COVID-19 pandemic could send the wrong signal by prioritizing competing, unfriendly sympathies among populations across the globe, just in a period where the world needs more solidarity, co-operation and coordinated efforts than ever.” 

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