Despite the first approvals in December 2020 of vaccines for COVID-19, the challenges around their distribution and associated inoculation programmes mean that governments will be dealing with the current pandemic through much of 2021, at the very least. Levels of demand for medical consumables (such as masks), medical equipment and medicines will remain elevated. Most countries will continue to rely on overseas production for the supply of many of those goods.
This raises two questions. What steps, if any, should governments take to minimize the likelihood, extent and duration of shortages of medical goods? And how can international cooperation help to achieve this, and prevent competition for supply from impeding responses to the pandemic?
Trade frictions around medical goods (including vaccines) have been a prominent concern during the pandemic to date. Following the heavy-handed scramble for personal protective equipment (PPE) and ventilators in the second quarter of 2020, many governments framed their initial policy responses in terms of security of supply – a concept used previously in deliberations on the adequacy of supplies of food and electricity. For what it is worth, others have framed the matter in terms of supply chain resilience.
Following the heavy-handed scramble for personal protective equipment and ventilators in the second quarter of 2020, many governments framed their initial policy responses in terms of security of supply.
During this initial pandemic response, certain senior government officials – and not only those known to advance economic nationalism – were very critical of cross-border supply chains. They proposed repatriating production in general, subsidizing the relocation of factories from China in particular, and financing the expansion of domestic production of medical goods through state aid. That China was both the source of the pandemic and a large supplier of PPE aggravated the contentiousness of the issue, coming on top of the discord arising from pre-pandemic trade tensions and geopolitical rivalry.
This paper explores ideas for minimizing the risks to supplies of pandemic-related medical goods, addressing in particular the paradox that poorly constructed national procurement agendas may undermine the very trading arrangements needed to ensure reliable supplies. The paper’s focus is on the international trade dimension of security of supply. The approach taken is deliberately grounded in evidence and relevant sectoral experience, as this provides a useful counterpoint to the impulsive arguments of certain policymakers and analysts.
Governments have a duty to protect their citizens during crises, including threats to public health. What is contested here is the means, not the ends, of public policy. As this paper will elaborate, there is a role for international cooperation to support properly devised national reform initiatives; indeed without the former, the benefits of the latter will be blunted.
The paper is structured into three sections (excluding this introduction). First, to put the policymaking calculus in perspective, the paper presents two case studies from sectors where security-of-supply considerations are important: medical goods and electricity. In the latter, such considerations have long preoccupied policymakers, and the sector offers a useful contrast to the on-the-hoof policymaking witnessed last year in the medical goods sector. The case studies are followed by a final section that outlines recommendations for national policy, international cooperation and measures to sustain cooperation in an enduring implementing structure. A proposed timetable is also presented.