Stronger Trade Systems for Better Health

📙 DOWNLOAD THE REPORT
The report studies how trade in medical goods and services in many ways contributed to global health security during the crisis by getting critical supplies to places where they were needed most.

📺 WATCH THE EVENT REPLAY
With welcome remarks by Ngozi Okonjo-Iweala, Director-General of the World Trade Organization and Mari Pangestu, Managing Director, Development Policy and Partnerships, World Bank.

Overview

Lockdowns and other social distancing measures adopted during the COVID19 pandemic disrupted economies and global supply chains. A new joint report from the World Bank Group and the World Trade Organization studies how trade in medical goods and services contributed to global health, and how it fell short in some ways. It recommends ways to mitigate the risks of integration into global health value chains and maximize the benefits as the world prepares for future pandemics.

Open trade, combined with government support, led to the remarkably rapid development of vaccines, although distribution has been unequal. And while trade in medical goods expanded rapidly, trade in medical services declined by 9 percent in 2020, the first year of the pandemic, because of travel and border restrictions. This decline was partly offset by a surge in cross-border medical services (including telehealth), which mostly benefited high-income countries.

Governments used a wide range of trade and trade-related policies to bolster domestic availability of critical medical goods and services. Measures to liberalize imports and limit exports of medical goods surged in the first two quarters of 2020. According to an analysis conducted for this report, these measures increased average trade costs for medical goods by about 60 percent.

Governments also adopted emergency measures to facilitate trade, ease regulatory bottlenecks, and promote the diffusion of health technologies. To reduce physical contact between traders and border authorities, many countries expedited a transition from paper-based to electronic documents. Countries also simplified trade procedures to facilitate the flow of critical supplies.

The pandemic uncovered gaps in international cooperation, including a lack of information on the stocks and availability of critical inputs; a lack of mechanisms to mobilize financing to develop vaccines and therapeutics; and barriers to the rapid movement of certified medical products across borders. To maximize the benefits of trade for global health, governments should work toward:

• An agreement to lower barriers to trade in medical goods and services. Lowering tariffs on medical products and reducing import costs for information and communication technology and health-related business services, would increase income by more than $6 billion annually, with more than half accruing to low- and middle-income countries.
• Commitments on import and export policy. Countries could agree to limit the duration of restrictions on exports of critical goods during a pandemic; improve trade-policy transparency; and ensure that trade is not interrupted for countries in need.
• Regulatory cooperation. Governments could pursue mutual recognition and equivalence regimes for critical medical goods and support the development of international standards.
• A balanced global IP system. This would help establish a basis for sharing technology and geographically diversify manufacturing capacity.
• Reduction of trade barriers. This would expand access to medical services and enhance their quality in normal times while also bolstering pandemic preparedness.
• Rules in trade agreements on subsidies, public procurement, and competition. Trade rules could help to coordinate subsidies for crisis-related medical goods, develop joint purchasing tools, and identify good practices for competition law in a pandemic.

Coordinators

Michele Ruta is Lead Economist in the Macroeconomics, Trade & Investment Global Practice of the World Bank. He had previous appointments at the International Monetary Fund, the World Trade Organization and the European University Institute, and holds a PhD in economics from Columbia University and an undergraduate degree from the University of Rome “La Sapienza”.

Nadia Rocha is a Senior Economist in the Macroeconomics, Trade and Investment Global Practice at the World Bank. Prior to joining the Bank she worked at the WTO and she also served as a Senior Advisor on trade to the Colombian Ministry of Trade. She holds a PhD in International Economics from the Graduate Institute of Geneva, and an MA in Economics from Pompeu Fabra University of Barcelona. Nadia’s work focuses on trade policy, regional integration, global value chains and trade and gender.

Joscelyn Magdeleine is an Economic Affairs Officer in the Trade in Services and Investment Division of the World Trade Organization. His sectoral responsibilities include health-related services and many business services. He is also responsible for the Services Integrated-Trade Intelligence Portal (I-TIP services) database and statistics issues in the division. Before joining the Trade in Services and Investment Division, he was responsible from 2003 to 2014 for trade in services statistics related issues in the Economic Research and Statistics Division of the WTO. 

Marc Bacchetta is Chief of the Economic Modelling and Quantitative Analysis Section in the Economic Research and Statistics Division of the World Trade Organization. He joined the WTO in 1996. Between 2002 and 2004, he worked on trade related issues at the World Bank, on leave from the WTO. He holds a PhD from the University of Geneva where he taught economics for six years before joining the WTO.

Watch the replay of the report launch with Mari Pangestu, Managing Director, Development Policy and Partnerships, World Bank and Ngozi Okonjo-Iweala, Director-General of the World Trade Organization.