A crisis at the World Trade Organization has been brewing for years and it now looks like coming to a head. There are many potential flash points as trade ministers assemble for talks in Geneva this week but in the end they boil down to a single issue: vaccines.
Put simply, the WTO’s members need to decide whether they are going to waive patent protection for Covid-19 treatments developed in the west so that poorer countries can manufacture their own lower-cost vaccines. What the meeting ought to do is come up with a meaningful agreement covering the waiving of patent rules not just for the current but any future pandemic. If it does so, the WTO will live to fight another day. All the other vexatious issues – and there are plenty of them – will be fudged or kicked down the road.
If, on the other hand, the status quo (or something close to it) prevails, it is hard to see much future for the WTO as a multilateral organisation. The message from the governments of wealthy developed nations to developing countries will come across loud and clear: we look after our own.
Richer countries make all the right noises about the need to share the benefits of the breakthroughs made to fight Covid-19, but in practice they have been dragging their heels in talks for the past two years. Switzerland, the EU, the UK and the US – all of which have strong and powerful pharmaceutical sectors – have tried to make any waiver to TRIPS (trade related intellectual property rights) as weak and as time-limited as possible.
In a sense, this is inevitable. Trade negotiations are not really about which bits of a country’s economy are opened up to competition; they are about the sectors and interest groups that a country seeks to protect. The argument made by western pharma companies is that the development of new drugs is a lengthy, expensive and risky business, so without patent protection there would be fewer medical breakthroughs.
Poorer countries don’t dispute the necessity for good ideas to be rewarded. What they object to is a system that has resulted in a global divide that has seen blanket Covid protection offered in the west, while less than 18% of people in low-income countries have received at least one dose.
Led by India and South Africa, developing nations have been lobbying hard at the WTO to have intellectual property rights waived so that they can manufacture their own versions of the treatments widely available in rich countries. They view the current regime as entrenching “vaccine apartheid”.
Negotiations will reach a climax at this week’s ministerial meeting and the portents are not good. Successful international meetings tend to involve ministers coming in at the last minute to resolve a couple of outstanding issues that can be agreed with a bit of political horse-trading. Meetings where there is a lot on the agenda and much that divides the various parties are prone to collapse. And there are plenty of other contentious issues – agriculture, fisheries, e-commerce and the mechanism for dealing with trade disputes – in addition to intellectual property rights.
All of which makes this make or break week for the WTO and for its director-general, Ngozi Okonjo-Iweala. The former Nigerian finance minister was chosen to head the WTO in part because she was a political operator rather than a trade expert. Talks in Geneva had become bogged down in arcane arguments among technocrats: what was needed was someone to bang a few heads together.
As Okonjo-Iweala admits herself, it has been a tougher task than she envisaged, and her attempts to speed up progress have not always gone down well. But as her predecessors in the job have found, running the WTO is not an easy gig, for reasons that are both complex and simple. Complex because trade agreements are by their nature highly technical affairs that lend themselves to protracted wrangling. Simple because at root the WTO is the most dysfunctional of the multilateral organisations.
Developed western countries have controlled the World Bank and the International Monetary Fund since they were founded at the Bretton Woods conference in 1944. The decision-making machinery does not reflect the global economy in its current form, but the stranglehold of the US and its western allies means decisions can be taken.
The WTO is designed to be different. Decisions are taken on the basis of unanimity so in principle one small country can block progress. In practice this never happens, but even so the governance system makes it harder for rich western governments to bulldoze their proposals through.
The bigger emerging market countries – China, India, Brazil and South Africa among them – have proved only too willing to resist attempts by the EU and the US to come to their own agreement and then foist it on the rest of the world. Trade officials in Washington and Brussels would prefer it if the old bilateral model was still in existence but it isn’t. There is pressure for the WTO to become more of a plurilateral organisation, where groups of countries cut their own deals. Unsurprisingly, the bigger developing countries see no reason why the WTO should be run to suit the interests of business groups in Europe and North America.
That’s why vaccines are such a totemic issue. As Nick Dearden, of the campaign group Global Justice Now puts it, an organisation “which can’t bend its pro-big business rules to allow for the rapid scale-up of medicines desperately needed to end a global pandemic is simply not fit for purpose”.
The task for the WTO in the next few days is to prove Dearden wrong. Currently, it looks a tall order.