Trade Monitor Urges Lowering Barriers To Aid Virus Response

By Mike LaSusa
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Law360 (March 24, 2020, 7:02 PM EDT) -- A trade policy monitoring organization has released a report calling on countries around the world to reduce restrictions on cross-border flows of medical supplies as a way to help combat the novel coronavirus global pandemic.

The Swiss-based group Global Trade Alert issued a report Monday urging governments to refrain from implementing protectionist trade policies on things such as soap, medical masks, gloves and other items that are in high demand as the world battles COVID-19.

The report's author, Simon J. Evenett, told Law360 on Tuesday that governments should prioritize ramping up the production of medical supplies, not distorting global trade patterns for critical goods. Both import and export curbs have made it more difficult for medical supplies to get where they are needed and should be reassessed in light of the growing health threat, he said.

"These are really inefficient and indirect ways of nailing that problem," Evenett said. "The right solution is to give strong incentives to firms to scale up production and scale up capacity."

In addition to the human cost of limiting access to necessary medical products, Evenett's report points out that putting up trade barriers can be counterproductive when it hurts cooperation among countries and discourages producers from increasing production.

"This trade-off is often overlooked — and it shouldn't be as sequential waves of infection are a feature of pandemics," Evenett said in the report, recommending governments try setting price floors or providing other types of subsidies instead.

Evenett told Law360 that trade barriers can also increase uncertainty when decision-making around the curbs isn't transparent and when governments have too much leeway in implementing restrictions.

"This is of course frustrating from a legal point of view, where you don't know what is allowed," Evenett said.

Last week, a bipartisan group of U.S. Congress members sent a letter to the U.S. Trade Representative, the U.S. ambassador to China and the U.S. Department of Defense, urging them to "prioritize working with our trading partners to find essential medical equipment," saying domestic capacity can't meet surging demand for such items.

The Office of the U.S. Trade Representative has received a flood of comments on its proposal to lift certain tariffs on Chinese imports as part of the government's response to the coronavirus outbreak.

The USTR opened its new COVID-19 tariff exclusion process late Friday and saw 339 public comments filed over the weekend to the docket on Regulations.gov. The comments themselves have not been published yet, but the public calls for tariff relief from U.S. importers have been mounting for weeks.

Relatedly, generic-drug makers recently sounded the alarm over an anticipated "Buy American" executive order, saying that forcing federal agencies to buy U.S.-made drugs and medical supplies will disrupt pharmaceutical supply chains already stressed by the COVID-19 crisis.

Brand-name and generic-drug manufacturing has shifted abroad over the past few decades, and bringing that capacity back now will limit the availability of affordable medicines and increase the risk of drug shortages, the Association for Accessible Medicines said Friday.

--Additional reporting by Alex Lawson and Alyssa Aquino. Editing by Stephen Berg.

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