The Biden administration has identified pandemic response as its top priority. Both the public health and the closely-related economic recovery elements in U.S. pandemic response must be the principal focus of the new administration and Congress in the first months of 2021.
Trade policy can help advance these efforts in ways that stretch from enabling innovation to ensuring that critical supplies get to the patients who need them. With respect to tariff relief for medical supplies, the U.S. International Trade Commission (USITC) in May 2020 issued a report at the request of the House Ways and Means and Senate Finance Committees identifying imported products related to pandemic response, including such products as testing kits and instruments, including reagents: personal protective equipment; disinfectants and sterilization products; and other medicines and equipment used to diagnose, cure, treat, or prevent COVID-19.
In response, Ways and Means Chairman Richard Neal called on the administration to exercise its existing authorities to suspend all tariffs on the products identified by the USITC for a period of 90 days. While the Trump administration did exclude a narrow group of products from Section 301 tariffs in the early days of the pandemic, it made only limited moves to respond to the USITC report and Chairman Neal’s comments.
Given the increasing intensity of the pandemic, the Chamber has urged the Biden administration to suspend all tariffs on the medical supplies identified by the USITC for the duration of the pandemic and at least through the end of 2021. Doing so would help America’s health care workers and first responders stay safe by assisting them in obtaining medical supplies speedily and economically as vaccines become more widely available. This action would also facilitate a safe resumption of normal economic activity, given the wide range of industries that rely on these products to operate safely in the months ahead.
In addition, the administration should immediately begin exploratory talks with allies, notably including members of the Ottawa Group, who have been developing proposals to expand tariff-free trade in medicines, inputs, and medical supplies to build on the framework established by the 1995 WTO sectoral agreement on medicines and promote trade facilitation measures for critical products such as vaccines. Such an initiative will be crucial to minimizing trade disruption and facilitating swift pandemic response, ensuring that the world is better prepared for future pandemics. The United States has an important leadership role to play in brokering an agreement on these issues and encouraging greater global cooperation.
Export restrictions relating to medical supplies should be another area of immediate focus and international coordination, including as part of this initiative. In the early weeks of the pandemic, more than 60 governments around the world adopted export restrictions on medical supplies and medicines in an effort to ensure sufficient domestic supply during the COVID-19 crisis. These export restrictions at times took the form of nonautomatic licensing requirements, consularization requirements, as well as outright bans on exports. In various instances, transparency was limited, administration was ambiguous, and no end date was given.
Maintaining open trade and efficient supply chains is critical to ensuring that medical supplies get to the patients who need them. Export restrictions delay the transit of critical supplies and often fail to contribute to a more effective response, particularly if other governments retaliate in kind. These policies have a particularly damaging impact on patients in developing and least developed countries that are endpoints in complex distribution systems for pharmaceuticals and other medical supplies.
For these reasons, the Chamber supports the statements by G20 Ministers that governments should first consider other policy tools to ensure adequate medical supplies. Many policy tools other than export restrictions exist and may be more effective to address shortages and supply chain issues. Export restrictions should be a last resort, and if they are applied, they must be “targeted, proportionate, transparent, and temporary,” as the Ministers stated. They must be applied in a nondiscriminatory manner and be tailored to a legitimate objective. At the same time, the WTO has identified hundreds of trade enabling measures taken by governments on a temporary basis to facilitate pandemic response. Attention should be given to dismantling export restrictions while at the same time identifying those policies that were adopted to facilitate trade that could be made permanent.
Health experts warn that the pandemic will only be overcome when vaccination rates worldwide reach a share of the population—estimated between half and 80%—that provides broad immunity. In other words, Americans will only be completely free of the COVID-19 threat when it is defeated all around the globe. For these reasons, the Chamber supports the provision of international assistance to respond to the humanitarian consequences of the pandemic and assist in the prevention, identification, and treatment of COVID-19 overseas. As we chart a path toward economic recovery, these funds will help ensure American companies continue to have access to consumers abroad, maintain their global competitiveness, and don’t lose market share to our global competitors.