Greetings from London where, like the protagonists of the film In Bruges, the FT’s Africa editor finds himself stuck in limbo, largely unable to travel to and from the continent he is meant to be covering. Fittingly, the topic of today’s post, a Covid-19 intellectual property waiver at the World Trade Organization, is trapped in a similar kind of suspended animation.
So, in a cunning attempt to break the impasse, Trade Secrets is taking a different tack. Instead of analysing the transatlantic arguments over IP waivers, today we will look at the issue principally from the perspective of South Africa which, together with India, has led the charge.
There’s also been big trade news overnight, with the US and EU poised to sign a deal to settle the Boeing-Airbus dispute after 17 long years. Expect more on this in tomorrow’s newsletter.
Charted waters takes stock of the trade links between the UK and Australia after both sides reached broad agreement on a deal.
South Africa has been here before.
Back in 2001, the author, then the FT’s pharmaceutical correspondent, happened to be in Pretoria for the historic day when drugs companies dropped their lawsuit against the South African government over access to cheap HIV medicines. Pretoria was asserting its right to tackle the Aids pandemic — which has never officially been categorised as a pandemic even though it has killed about 35m people — by overriding intellectual property protection on Aids medicines. Mainly, it wanted the right to import cheap generic copies of the antiretroviral medicines that had been saving lives in the west, but which were too expensive for most people in Africa where the pandemic was raging.
Xolelwa Mlumbi-Peter, South Africa’s ambassador to the World Trade Organization, said it was this experience that persuaded her government — along with India’s — to start pushing last year for a similar patent exemption for Covid-19 vaccines and other coronavirus-related medical interventions. It didn’t want to wait 10 years to get the vaccines as it had with HIV medicines. “We knew that once the vaccines became available, there was going to be a scramble,” she told Trade Secrets. “While we do appreciate that IP does make a very good contribution to research and innovation, we are also mindful . . . that we should use IP for the benefit of not only the IP holders, but for the benefit of society.”
The initial proposal made little headway until the US opted to support a waiver on vaccine IP rights, if not all Covid-19 medical interventions. That move by the new US trade representative Katherine Tai shocked the trade community.
The US’s support was expected to lead to South Africa and India drawing up a narrower version of their original proposal. Yet critics (including us) contend that it remains far too broad to garner widespread support at the WTO. With the US seemingly unwilling to step up and come up with its own text proposing a more limited version, the expectation is that any progress on waiving Covid-related IP rights, on vaccines or anything else, will be slow.
The pharmaceuticals industry, meanwhile, has pushed back against the idea that IP protection is the major barrier to getting shots in arms in developing countries. Complex supply chains, which mean manufacturers need to source dozens of inputs from several countries, is a logistical nightmare that cannot be solved with the waive of an IP wand. (Groan.)
South Africa, Mlumbi-Peter said, was fully aware that IP was not the only barrier to ramping up vaccine production. Voluntary licences, technology transfer and the sharing of clinical data as well as trade secrets could all play a part in what she called the toolkit of combating the pandemic. But South Africa denies the assertion by some manufacturers that IP poses no material impediment to vaccine production.
Perhaps it is reminded of similar denials when, back in the late 1990s, pharmaceutical companies often argued that patents on antiretroviral drugs were not the main obstacle to Aids treatment. Even if HIV medicines were free, they argued, Africa lacked the infrastructure or knowledge to use them effectively. That proved false, although the issue then was one of cost rather than the supply constraints that have hampered vaccine distribution in 2021.
Still, South Africa says would-be vaccine manufacturers in Bangladesh, Canada, Denmark, India and South Africa are all restrained because of the threat of being sued for IP violation. “That is the whole point of IP protection because it gives monopoly rights and if those monopoly rights are contravened, the right-holder can take it up,” Mlumbi-Peter said. “So the threat is there, which is why IP is a barrier.”
She also said they had taken on board criticism that the exceptions being demanded were too broad. In response to European objections, they had come back with a revised text spelling out that waivers should be temporary and apply only to diagnostics and therapies specifically related to the Covid pandemic. Many countries had been at least partially reassured, she said, and were prepared to negotiate on that basis.
If IP is waived, African manufacturers are gearing up to take advantage. The continent makes only 1 per cent of the vaccines it consumes annually. At a meeting convened by the Africa Centres for Disease Control and Prevention in April, delegates made plans to raise that to 60 per cent by 2040.
Three potential countries were floated for Covid vaccine manufacture: South Africa, where Aspen Pharmacare is already gearing up to fill and finish 300m doses of the Johnson & Johnson jab this year; Senegal where the Pasteur Institute produces yellow fever vaccines and wants to manufacture Covid jabs in 2022; and Rwanda, a country in central Africa with strong manufacturing ambitions and an industrial policy to match. BioNTech last week announced it was planning a push into Africa, aiming to establish mRNA vaccine production facilities on the continent.
Some of this may sound far-fetched. To critics, the demand for vaccine waivers is more a tactic aimed at industry concessions and co-operation than a serious plan to alter a situation where Africa must rely almost entirely on imports for vaccine supply. To trade purists, it shouldn’t matter whether vaccines for Africa are produced in India, Malaysia or Malawi.
Yet it is worth remembering what came out of the confusion in 2001 when South Africa was pressing for a Trips waiver on HIV medicines despite the fact that then president Thabo Mbeki was simultaneously denying the link between HIV and Aids. If he was right — which he categorically was not — antiretroviral drugs were irrelevant. Yet victory in that Pretoria court proved a turning point. Within years, South Africa’s government had caught up with the science and drugs companies had slashed the price of their HIV medicines. Literally millions of lives were saved.
Pretoria must be hoping something similar comes out of its current patent-waiver campaign. With Covid vaccination rates in developing nations appallingly low — Nigeria has delivered 1.1 jabs per 100 people, compared with 103.7 for the UK — and G7 pledges to bridge the gap set to fall short, so do the rest of us.
The UK and Australia have agreed the broad terms of a trade deal, following dinner between the two countries’ prime ministers, Boris Johnson and Scott Morrison, on Monday evening.
As the chart below shows, the two nations aren’t particularly reliant upon one another. However, the deal is significant in that it is expected to become a model for the other agreements the UK plans to sign post-Brexit. If the trade deal can be signed this year, it would mark the first big bilateral agreement entirely negotiated since the UK quit the EU.
Here’s a breakdown of reliance on Australian exports sector, showing that the links are closest for British manufacturers. Most of the concerns on both sides have been over what concessions the deal will offer to farmers. Claire Jones
There’s a great read from Gideon Rachman that serves as a reminder that, while bashing the other side might make sense for Boris Johnson or French president Emmanuel Macron in hoovering up domestic votes, the unity of the western alliance is worth more than a frozen sausage.
Nikkei reports ($) that tech suppliers in Taiwan, Japan and South Korea have been bracketed alongside China as “dangerous risks” to US national security, underlining how Washington’s desire to strengthen its supply chains could rebound on business in Asia.
Some interesting articles on how environmental policy is having an impact on foreign direct investment. For all China’s talk of going green, the Economist ($) notes that foreign companies are still putting off investing there due to Beijing’s reliance on coal. Japanese prime minister Yoshihide Suga has committed to ending government support this year for overseas coal power projects led by domestic companies without offsets, bringing his country in line with Group of Seven peers in their stance against the fossil fuel. (Nikkei, $)
Politico covers the challenges facing US president Joe Biden as he tries to secure more European support for an alliance against China. Claire Jones