This article is an on-site version of our Trade Secrets newsletter. Sign up here to get the newsletter sent straight to your inbox every Monday to Thursday
Hello from Washington, where Amazon is being sued and we’re talking about Trips again. That’s the focus of today’s main piece, where we look at the debate inside the beltway and discuss how the US ought to respond to the poorly received redraft of the waiver, which India and South Africa unveiled on Friday.
Charted waters marks another sterling quarter for world trade.
The domestic challenges to the Trips waiver
When the 18th-century poet Alexander Pope coined the term “bathos” to refer to something comically anticlimactic, he probably wasn’t thinking of things like India and South Africa’s second crack at a Trips waiver proposal. But here we are.
When the US shocked the world just a few weeks ago and said it would back a waiver on intellectual property for vaccines — unthinkable just months before — it felt like something of a moment. It seems the captains of this big push for a Trips waiver, India and South Africa, don’t quite realise what a goal they’ve scored by persuading the US to say it would support a waiver for vaccines. Instead, they’ve returned to the World Trade Organization table with a madly broad proposal that goes far beyond vaccines, and is barely changed from the original.
The new proposal suggests the waiving of IP rights, including not only patents, but also copyrights, trade secrets and industrial designs for a range of Covid-related medicines, tests and their inputs and ingredients. So broad is the scope that they’ve been forced to clarify digital streaming services will be exempt (presumably so that you can’t claim you need to watch Netflix and listen to Spotify while recovering from a bout of Covid-19). The waiver would also last for three years, and would need to be ended by the General Council (which suggests full consensus from members would be needed — a full consensus India and South Africa could block).
There are other issues with what is not included in the India/South Africa proposal too, set out neatly in a great Twitter thread by former WTO bod Peter Ungphakorn. He suggests some WTO members might want more controls in place to stop countries exporting doses made under the waiver to countries not recognising the waiver, and that many countries will want to see robust transparency measures.
The Biden administration has already gone against the US business community in supporting a waiver for vaccines. Those businesses will want the waiver to be limited. To begin with, one lobbyist tells me it would be helpful if the waiver only lasted the duration of the pandemic, as defined by the World Health Organization. PhRMA, the US pharmaceutical industry lobby, is still talking publicly about being against the waiver full-stop, and publicising its efforts to boost vaccine production.
On Capitol Hill, Republicans are increasingly angry about the waiver idea and are using the pharma companies’ arguments that waiving IP could land valuable US tech in the hands of China. Earlier this month, former chair of the influential Senate finance committee Chuck Grassley signed a letter along with 13 other Republicans demanding to know the details of meetings with Indian, South African and Chinese officials. Other Republicans, including Pat Toomey, Tim Scott, Richard Burr and Grassley again are trying to pass a bill blocking funding to the US Trade Representative for supporting the measure.
Democrats on the Hill are serious about wanting the US to pursue a Trips waiver. This will mean the US negotiating seriously, which will mean — if it wants to stand a chance of getting the Europeans, British, Japanese, Swiss and others to back a waiver — that it will probably have to come forward with its own proposal. The next informal meeting of the Trips council is next Monday. It seems unlikely that the US would table a text between now and then.
Some might say the US is in no hurry to get any agreement at the WTO and won’t be serious about pressing countries who object to the waiver to come around. Under the cynical read, backing the waiver was a political exercise, designed to distract from the US’s use of the Defense Production Act to scoop up vaccines, and from its big stores of AstraZeneca (some of which have now been donated). It also serves as a stick to use against pharma companies if the US feels they’re not doing enough to ramp up production.
Whatever the US Trade Representative does next, it will have to be careful it doesn’t end up serving up its own order of bathos. Having already angered Trips critics such as the EU, agreeing to the waiver and then not following up with its own — realistic — proposals in good time would end up aggravating both sides. We’ll be watching their moves on Monday to see how they avoid that fate.
The latest edition of the OECD’s quarterly snapshot on global trade came out yesterday. The figures showed that the recovery in trade in both manufacturing and services remained strong between the final quarter of 2020 and the first three months of this year.
With the exception of the UK, all G20 economies recorded positive growth in merchandise exports in the first quarter. The OECD said the weaker dollar and the knock-on impact in commodity prices played a role. Claire Jones
There’s plenty more on US trade in the Financial Times today. Kiran Stacey and Nikou Asgari delve into Big Pharma’s fightback against the US’s support of the IP waiver. The much maligned industry has found that while its public approval ratings have soared on the back of the vaccine success it is struggling to have the political influence it once did. Our leader writers pitch in on the US’s steel tariffs, saying that the industry can thrive with a little less protectionism.
Nikkei has more ($, requires subscription) on Tesla’s tangle with Beijing. The automobile manufacturer has built a new data storage centre in mainland China in response to China’s forthcoming rules preventing overseas transfers of sensitive information. Japan, meanwhile, is preparing ($) a new $10bn facility to export renewable energy technologies and support decarbonisation efforts in south-east Asia.
Bloomberg has a great read ($) on the recovery in the recycling trade. The industry fell on hard times after China said in 2017 that it planned to restrict the import of recyclables. But recyclers in the US have upgraded their facilities to process the nation’s waste. To paraphrase Frank Zappa, rubbish isn’t dead, it just smells funny. Aime Williams and Claire Jones