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Saturday, April 1, 2023

The Cynicism Of Biden’s High-Risk, Low-Reward Vaccine Patent Waiver

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If you are perplexed by the Biden Administration’s announcement about the willingness of Washington to temporarily waive patent protection of vaccines for COVID19 developed and produced by pharmaceutical companies in the name of accelerating the inoculation of mass population segments of poor countries being ravaged by the disease, you are not alone. Even we veteran trade negotiators are scratching our heads. 

The logic behind such a decision is elusive. No matter how quickly the identities of the particular chemical components and the specific steps required to formulate them into vaccines are made public, this will do little, if anything, to move the needle (pardon the pun) one millimeter closer to generating a supply response—that is, getting more COVID19 vaccines into the arms of the people now who otherwise have little chance of doing so for the foreseeable future. 

After all, the recipient countries in question—notably India and South Africa, among the many other emerging markets throughout Africa, Asia, Latin America, and the former Soviet states—lack the modern equipment, the highly trained scientists and the infrastructure in place to actually manufacture and deploy the vaccines.

If Washington was truly interested in getting vaccines in these populations’ arms—and do so before it is too late—there are already viable mechanisms to do so. Think how the U.S.—the federal government, private companies and non-governmental organizations—have responded in the past to help poor countries deal with the aftermath of earthquakes, floods famines, and other natural disasters. 

To be sure, the problem at hand is of a much larger scale and more complex. But if a U.S. President genuinely believes that the degradation of U.S. allies as a result of a pandemic poses significant risks to our own security, there exists the authority for the federal government to procure vaccines from U.S. pharmaceutical companies and deploy them in such countries. 

Indeed, it is even conceivable the U.S. Defense Production Act (DPA) could be invoked by the President to mandate companies to make the needed vaccines under the guise of protecting U.S. national security. Hasn’t it been said enough by Washington that the real goal for dealing effectively with COVID19 is to achieve “herd immunity” not just within the U.S. but also abroad? This is where U.S. health policy, national security policy and economic policy coincide.

Using the DPA in this fashion might strike many as ironic inasmuch as its conventional use has been to prevent exports—recall Trump’s ban on U.S. firms selling PPE abroad—rather than promoting them.

So how did the issue of waiving patent protection for COVID19 vaccines make it to center stage in the White House?

The truth is that for decades many emerging markets have questioned the propriety and logic of advanced countries providing intellectual property protection—of which patents are just one mechanism—to their companies, laboratories, universities, and individuals, among others, for “discoveries” made as a result of engaging in investment in research and development (R&D) and the utilization of other resources, time and effort in analogous creative activities—in areas as diverse as pharmaceuticals, electronics, manufacturing, consumer and retail, and the arts. (For the last, think the age-old problem of China’s piracy of U.S. CDs of music and DVDs of films.)

The logic behind patent protection is straightforward—to ensure, for a well-defined period of time, researchers are able to recoup the commercial rewards for having undertaken high-risk R&D and related activities without such rewards being diluted by the entry of other parties producing the same products but who did not engage in such investments.  The rub in determining how to best structure such incentives, of course, is agreeing not only on what is the “proper” duration for which such protection from competition should last, but also on what is a “fair and reasonable” level of prices that should be charged.

The establishment of the World Trade Organization (WTO) in 1995 brought with it a breakthrough global agreement for the multilateral protection of intellectual property in the guise of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) framework. Today, 164 countries are members of the WTO. 

What many non-WTO specialists may not understand is that any changes in the organization’s agreements can only come about by consensus among all 164 of its member states.  It is in this forum that Washington’s proposal for the temporary COVID19 vaccine patent waiver will live or die. 

In this context, the Biden administration’s tactics on this matter are very strange—and that may well be an understatement.

Three points stand out.

First, as the primary advocate for the inclusion of TRIPS into the WTO in the first place, the U.S. has been a steadfast opponent of the long-standing attempts by the emerging market WTO members such as India who have questioned the fundamental fairness of patent protection—except of course when it is their firms who have patents in place. 

Why would Washington now turn around and be seemingly sympathetic to India’s position especially when there would be no response in vaccine supplies?  If Biden thinks the Indians—and the other poor countries in need of COVID19 vaccines now—are not viewing his move as a sham, he is sadly mistaken.

Second, some of the other advanced country members of the WTO—namely Canada, the EU and Switzerland—are extraordinarily lukewarm to such a waiver. They don’t believe for a minute that the “temporary” nature of Washington’s proposal will be sustainable. They are deeply worried it will become an invitation by the poorer country members of the WTO to push for a more fundamental watering down of the integrity of TRIPS.  

Thus the U.S. risks some of its most important allies will oppose its proposal in the WTO. But perhaps that is what Washington is counting on?

Finally, the President chose to have his newly sworn-in U.S. Trade Representative, Katherine Tai, make the announcement about the waiver decision rather than do so himself.  This may be understandable from a mechanical perspective since it is a WTO-specific process that will be the mode for implementing such a policy. 

But it is hard to believe that a seasoned foreign policy practitioner like Biden would not deem it far more appropriate—and impactful—for the President himself to show how caring the U.S. population is towards coming to the aid of important democratic allies under such duress like India. This is all the more striking given how sensitive this White House is toward building a positive narrative of the U.S. role around the globe in contrast to that of the Chinese. Having worked in the White House earlier in my career, you can be sure the decision to have Tai make the announcement instead of the President—or even the Vice President—was not a matter of whimsy.  Whatever it was, it centered on how to best execute a high risk-low reward strategy.           

“Strange” certainly seems to not be the best adjective to describe the new administration’s decision on this matter.  It’s hard not to use the word “cynical.” Let’s hope there is much more to this decision than meets the eye.

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