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Trade distortion and protectionism

Reduced trade barriers on vaccines can balance economic recovery

Published 31 August 2021

Multilateral cooperation has never been more important in facilitating the free flow of vaccine components and related supplies and equipment along the supply chain. The rapid deployment of vaccines in APEC economies helps to ensure more equitable access, which will be critical for a balanced recovery.

In its simplest and most essential form, multilateral cooperation today means coming together to remove impediments to vaccine production and access. It has been said, including at an informal meeting of APEC leaders in July 2021, that ‘nobody is safe from this (Covid-19) virus until everyone is safe.’[1]

The global economy is now experiencing another wave of the pandemic due to the more contagious Delta variant, and a sub-lineage called Delta Plus is emerging even as initial laboratory experiments are discovering the Lambda variant to be highly infectious.[2]

As APEC 2021 host New Zealand convenes APEC senior officials for the third time in virtual meetings,[3] the challenge to step up cooperation in vaccine production and deployment grows more urgent.

Higher but uneven growth

The surge in Covid-19 variants takes place amidst revitalized economic activity. As outlined in the new APEC Regional Trends Analysis, the APEC region is expected to rebound strongly to a 6.4% GDP growth in 2021 following a 1.8% contraction in 2020. APEC is on track to achieve near-term growth expectations, with a 6.1% expansion in Q1 2021, after declining by 2.0% a year ago.[4]


World/APEC GDP forecast

Trade activity has also reverted to positive territory, as the volume and value of merchandise trade in APEC has grown in tandem with global trade. The rebound was bolstered largely by increases in sectors related to Covid-19, particularly pharmaceuticals as well as office and communications equipment.

However, brighter prospects in the near-term mask the growth divergence among member-economies, driven by the disparity in vaccine access and support measures. For economies that continue to grapple with vaccine access and narrowing fiscal space, recovery is expected to be slower. Continuing uncertainty, hinged on virus mutations and potential resurgence in infections, mar the prospects of some economies.

Stark differences in vaccine access across APEC

Indeed, concern over virus variants is growing. Early studies have shown that, while the Delta viral loads were the same for the vaccinated and unvaccinated, they decreased faster among vaccinated people.

Unfortunately, in the race between vaccines and variants, low- and middle-income economies are lagging.

As of mid-August 2021, APEC data reveals great disparity in vaccine coverage in the region, from a high of 148 doses per 100 residents to a low of only one dose per 100 residents. This results in wide variation in the percentage of fully vaccinated people across economies, from as low as 0.2% to as high as 72% of the population.

APEC vaccine tracker

Note: Missing bars denote unavailability of data. Source: Financial Times Covid-19 vaccine tracker (accessed on 16 August 2021), using data compiled from the Our World in Data project at the University of Oxford, the World Health Organization and member-economy sources.

Currently,16 APEC economies have yet to reach 40 percent vaccination coverage, with five of these economies at below 40 doses per 100 residents.

As context, around 4.7 billion doses have been administered globally, at a pace of 36.7 million doses daily. Some 23.5% of the world’s population is fully vaccinated. However, only 1.2% of people from low-income economies have received at least one dose of the Covid-19 vaccine.

According to global vaccine alliance GAVI, around 40% of the global Covid-19 vaccine supply has been purchased by high-income economies, with these economies achieving at least 50% vaccination coverage. Meanwhile, COVAX – coordinated by GAVI, the Vaccine Alliance, the Coalition for Epidemic Preparedness Innovations (CEPI) and the World Health Organization – has bought 17% of global vaccines, benefiting some 137 low- and middle-income economies.[5]

Role of multilateral cooperation

Multilateral cooperation can be critical in both vaccine production and distribution. Vaccine production requires more than 280 materials and components manufactured by suppliers in 19 locations across the world. The highest most-favoured nation (MFN) tariff rates in the APEC region are levied on disinfectants, medical consumables, and equipment needed to produce, distribute, store, and administer vaccines.

Data in 2020 show that the average duty rate for alcohol solution (undenatured, containing by volume 80 percent or more ethyl alcohol) is 77.2% while other types of alcohol solutions also record high tariffs. In addition, the tariff rates for various freezing equipment range between 6.8% and 8.5% and for storage containers, 5.3% to 5.8%.

The message is clear. There has never been a more important time for multilateral cooperation to play a role in facilitating the free flow of vaccine components and related supplies and equipment along the supply chain. Multilateral cooperation can ramp up vaccine production and deployment subsequently prompting a significant ripple effect on vaccine affordability, availability, and access.

APEC economies have taken decisive steps to support rapid vaccine deployment. They have formulated a regional response to the pandemic, centered on equitable access to safe, effective, quality-assured, and affordable Covid-19 vaccines to overcome the health crisis.

They have also accelerated regulatory convergence for life-saving medical products to protect people’s health and safety, an initiative by the APEC Life Sciences Innovation Forum.[6]

Lastly, they have facilitated the rapid flow of vaccines and vaccine-related goods by eliminating trade restrictions and barriers to freight and logistics services, and adhering to a set of customs guidelines, an agreement by the APEC Ministers for Trade.

Beyond the pandemic, APEC leaders have agreed to chart a more resilient path that places innovation and digitalization front and center, together with trade and investment, in the pursuit of sustainable and balanced growth. As an initial step toward building back better economies and boosting pandemic preparedness, APEC launched the Covid-19 LIVE (Latest and Immediate Virtual Exchange) to track the region’s recovery initiatives.[7]

Equitable access to vaccines is a global health imperative and a pragmatic solution to economic and social fragilities. In a community of interdependent nations, it is also a moral obligation to make sure that all members of the community are safe, healthy, and productive.

Access APEC Regional Trends Analysis, August 2021 Update: Vaccine access drives recovery.

Rhea Hernando is an Economic and Policy Researcher at the APEC Policy Support Unit (PSU) and a co-author of the August 2021 APEC Regional Trends Analysis.

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© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).

Rhea Hernando is an Economic and Policy Researcher at the APEC Policy Support Unit (PSU) and a co-author of the August 2021 APEC Regional Trends Analysis. 

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