Thursday, October 14, 2021

What is needed to end vaccine inequity - another trade and investment treaty?

Covid, unhindered trade and vaccine equity have been at the centre of the debate on resolving the world's largest public health crisis. Doing away with export restrictions on critical inputs, creating adequate manufacturing facilities to waiving intellectual property rights on vaccines have been offered as effective solutions to address the crisis.What is the appropriate policy response both international and domestic to get over the epidemic is a question that engages policy makers the world over.

An interesting solution offered by Chad P. Bown (PIIE) and Thomas J. Bollyky (Council on Foreign Relations) in the PIIE is of having a Covid Vaccine Investment and Trade Agreement (CVITA). They outline the 4 main features of the proposed agreement as follows:

1. Production allocation - whatever vaccines are produced by members of this agreement should be allocated between the global Covax initiative and used domestically. No room for vaccine nationalism here.

2. Subsidize vaccine supply chains - Help manufacturers in increasing production by subsidising their inputs

3. Prohibition of export restrictions on both inputs and final vaccines by signatories to the agreement

4. Transparency -  on supply chains, inputs and vaccine production by signatories.

The authors have mooted this as a deliverable at the XII Ministerial Conference at the WTO. Will the major players agree to this formula? Will the objective of vaccine equity be met with this arrangement? What about a waiver? The authors don't necessarily think it will work:

A second proposal, initially made by India and South Africa, was to waive patents for vaccines. Such a waiver by itself is likely to have only a limited immediate impact on increasing production, given that the main technological impediment to vaccine manufacturing is how to affirmatively transfer production knowhow, not the patent. (There are other impediments to scaling up manufacturing, such as insufficient supply of specialized inputs, inadequate regulatory oversight, and an inexperienced workforce, that a patent waiver would also not resolve.) 

One must assess if this agreement is politically feasible at this stage of the crisis wherein major developing economies are still engaged in providing vaccination to their people. 

Another interesting part of this piece was the diverse ways in which supply chains and production arrangements work for different pharma manufacturers. The supply chains of both Pfizer and Astra Zeneca were laid out.

Monday, October 4, 2021

Lawyers and their role!

Should lawyers never propose changes to the law? Are they bound by the"positivist" notion of what the law is?

An interesting blog piece here on why as a lawyer signing a petition on climate change is difficult by Benoit Mayer.

An equally interesting retort on why this shouldn't matter by Srinivas Burra here.

Well, I think more voices are always welcome in debates on climate change, trade and development  - from positivists to anarchists to reformists to status quo-ists. Keep the debate going on!

Saturday, September 18, 2021

Sovereign Wealth Funds - the next big thing?

The issue of Sovereign Wealth Funds (SWFs) and its role in fostering investment, trade and globalization has been a topic that come up on and off. I haven't followed the debate as keenly but this news of UAE's SWF investing in the UK caught my attention.

The UAE's SWF Mubadala Investment Co. is committed to invest $14 billion over a time frame in the UK in various industries covering infrastructure, technology, healthcare and energy. There is a bilateral investment partnership between the UK and UAE fostering this investment.

SWFs are state owned holding companies which are created by States for various reasons including to invest in diverse portfolios across economies. They could be also funds from commodity revenues that are invested more safely in treasury bills. 

See this rating of the top 100 SWFs with Norway right on top followed by China. SWF is a state led strategy in a market driven model of investment. A number of issues including interplay of geo-political interests would probably guide investments. It would be interesting to see how a dispute would be resolved in the case of a SWF - through the traditional State to State diplomatic mechanism or a investor state dispute settlement framework.

SWFs are about 10% of global assets under management. What role will they play in the global economy? What questions does it raise about the role fo the State and market in global governance? What international institutional arrangements would be made to foster growth of SWFs?

Sunday, July 4, 2021

A scathing critique of the narratives of the ISDS

A scathing piece in the LPE Blog on private lawyers and public interest caught my attention. Provocatively titled "Public Washing the Private Interest in International Interest Law", it explains the nature of private interest protected in ISDS as well as the legal force that propels it.

Besides the issue of public international law lawyers representing in ISDS cases, the blogpost framed the justification of ISDS on three narratives:

1. ISDS promotes development

2. ISDS promotes the rule of law

3. ISDS applies public law doctrines like proportionality that balances public interest with private interest.

I think all three narratives are debatable and can be subjected to intense debate depending on where you are located. Nevertheless, how future international investment treaties will be crafted, with what kind of exceptions will determine how relevant these narratives are. For the moment, the there is an intense debate and dichotomy of opinion on the claims of these narratives - will the narratives continue to hold sway with evidence or is the reality of the the market too determined to ensure the continuance of these narratives? Is the reality somewhere in the middle - the need to counter unbridled state arbitrariness with the recognition of the requirement sustainable investment for development?

Tuesday, June 22, 2021

Digital Trade and multilateral rules - no easy answers

Can international trade rules improve/restrain domestic regulation in digital trade? 

A recent CATO webinar did throw up some of these questions. 

Some highlights that the speakers brought up were as follows:

1. Internet is flattening and democratising trade. In Covid, digital rules have kept businesses open. There is an increased customer base. Many small MSMEs are using digital rules to expand their businesses.

2.Regulation for any technology is critical. Proper regulation is required in the area of the internet. The way regulation is perceived can undermine trade benefits from digital technologies.

3. Discrimination in closed markets is prevalent - Closing markets to foreign players is happening. Political economy is playing out in many economies.

4. Lack of transparency and due process can hinder progress. Lack of applying the rule of law in the digital space can be counter-productive.

5. Lack of inter-operability is an issue. Governments are making digital policies in a vacuum. Too much regulation in silos.

6. Intersection of digital trade and international rules an area of study. Movement towards to a common high level approach may be required.

7. Trade agreements do not stifle digital regulation. Domestic regulations should be subject to international obligations - non-discrimination, transparency and other basic norms

8. Sector specific commitments - coverage can vary from country to country

9. Exceptions in trade agreements - whether relevant to problems faced in the digital world.

10. Ecommerce chapters in FTAs recognise standards in consumer protection, privacy, AIs - never considered trade policies

11. US focuses on digital aspects. China focuses on trade aspects.

12. US - Firm sovereignty model - Governments dont intervene

      China - State sovereignty model - lot of restrictions on what you can do in the internet

       EU - Individual sovereignty model - privacy protection of personal information. Uses regulatory power ro protect this

13. Why three different approaches

       American and Chinese firms - 6 and 4 firms out of the top 10 big Tech players in the world

       US firms - are mainly pure digital services firm - dont sell physical products.Digital side is more important to them

        Chinese firms - sell physical goods and digital services

14. Digital Trade framework - should be a multilayered framework - multi-stakeholder institutions - like private organisations - network of institutions. Better than binding obligations in trade rules.

15. What structure is best for digital trade agreements?

       Global deal - at the WTO would be good to regulate digital trade.Better record than other international institutions. Regional deals and bilateral agreements have a lot of digital trade provisions. Joint Statement Initiative from Buenus Aires - plurilateral rules. 

16. Architecture of RCEP and CP-TPP quite similar though substantive provisions differ.

17. Digital development dimension not addressed in free trade agreements. The question of digital inclusion.

18. Cultural differences a barrier to agreeing on digital trade rules? Yes, possible.

19. Tiered obligations (TFA model) could be used in digital trade rules. Different modules to be chosen from.

20. Lowest common denominator. Minimum standard - free flow of data and prohibition of data localisation?     

21. Are trade lawyers equipped to deal with digital governance issues?

22. What is the core of these digital trade rules? - Non-discrimination or free flow of data?

      Data flow - foreign websites, data localisation (national treatment)

      Go beyond non-discrimination. Enabling ecommerce, online consumer protection.

       JSI - has more provisions.

These are some of the issues that came up in the talk. An important question - are trade rules required for digital growth within economies? Can digital inclusion be achieved without trade rules? Can trade rules exacerbate or redue digital inequities?   

Monday, June 21, 2021

Of negotiations and problems

How does one describe an intractable problem to work on with a smile and yet having to face the difficulties of negotiating positions? 

Here is a nice way of saying it:

"In fact, if you had to sum up the entire encounter, it was that while leaders and officials luxuriate publicly in a rhetorical hot tub of co-operation and mutual appreciation, they still need to pass through a cold shower of political and legal reality on the way to the changing rooms."

"The links with Tai that Brussels hopes will bind", Financial Times, 17th June 2021

This quote applies to all sticky situations where hard-nosed negotiations are involved to solve decade old problems!

Wednesday, June 16, 2021

The deal, finally!

The Airbus-Boeing deal, atleast the bare public text, is out here. The longest WTO dispute is temporarily suspended - atleat for 5 years without any retaliation by either side. Latest reports on it are here.

What are the highlights and what does the truce tell us?

Some highlights:

1. A constant engagement at the highest level Working Group to sort out issues and thrash out more details

2. Financing for aricrafts by either side will be on market terms.

3. R & D funding to be continued on an open and transparent basis which is not specific and cause negative effects to the other side. (This requires more understanding!)

4. Application of the deal and its principles to all levels of government - national, provincial and local level. recall that many subsidies are provided by State authorities and local governments.

5. Watching activities of non-market practises of third parties (read China) that may harm their aricraft producers interests

6. Suspending any retaliatory measures for 5 years - no withdrawal of cases at the WTO but in effect calling it truce.

What can we decipher from this deal:

1. Even the most seemingly complex trade dispute with huge financial implication can be resolved with political direction

2. A larger threat makes former foes to come together for survival! The new competitor on the block are the Chinese aircraft manufacturers which can be a potent threat to both Airbus and Boeing. The US and EU allege that support for the Chinese project is largely state based and state subsidies. The need to counter this busniess threat is one of the motivating factors to come together

3. Complex, legal, trade disputes can be resolved by political intervention - a task that requires looking at the bigger picture, inetersts and future.

4. It is okay to have a duopoly situation (created by state subsidy) on market terms to counter future non-market threats!

5. Will we see more collaboration from the largest trading partners US and EU on issues with a similar threat - third party economies acting on non-market terms!

6.Subsidies have been part of the game in the aviation sector for a long time and continues to be. It seems to be ok to use them but is a challenge when others start using them too!