Tackling Coronavirus – The Trade Policy Dimension

Not every nation produces the medical supplies needed to tackle the Coronavirus. Those that do can still face shortages as health care systems come under pressure. Since it is central to sourcing from aboard, trade policy should face additional scrutiny at times like this.

Since the beginning of 2020 the governments of 24 nations have taken steps to ban or limit the export of medical equipment (such as masks) and medicines and their ingredients. Export bans are proliferating—16 have been imposed since the beginning of this month. Now, beggar-thy-neighbour means sicken-thy-neighbour.

Even though sourcing needs have multiplied, the vast majority of governments maintain import taxes or restrictions on medical supplies. Of the 164 WTO mem- bers, only 50 do not tax imported medical devices and 23 levy duties at less than 3% of shipment value. Sensi- bly, 76 nations do not tax imported medicines. But only 37 WTO members refrain from taxing imports of disinfectant. For soap just nine WTO members permit duty-free imports.

Governments have not aligned their trade and medical policy responses to Coronavirus. For example, according to data reported to the World Trade Organization, the Bahamas and Djibouti charge tax rates on imported

medical devices that exceed 20%. Such is the reach of Indonesia’s non-tariff barriers to foreign sourcing that 92% of its medical device imports are implicated—for Russia the percentage is even higher (96%).

Remarkably, 22 WTO members charge tariff rates of 6% or more on imported medicines. Twenty-five governments charge import tariffs of 15% or more on disinfectant. Seventy-nine governments went into the crisis taxing imported soap at rates of 15% or more. A tax on soap is a tax on hygiene and hastens the spread of Coronavirus. These findings and more are summarised in easy- to-read maps and tables at the end of this note.

To date, only one trade restriction on medical equipment, medicines, disinfectant, and soap has been lifted this year. In contrast, in the previous five years, by 9 March an average 2.8 trade restrictions on these goods had been eased.

The incoherence between national trade policies and medical response threatens the lives of people at home and abroad, including those of front-line health professionals. Trade policy should play an integral role, permitting much needed medical supplies to get to where they are needed most. To that end, this note concludes with five trade policy recommendations.