G-20 should ensure there’s no dearth of medical supplies during Covid-19

Many would like to believe that Covid-19 has brought the world together because of the common sufferings it has inflicted on humanity. Without the availability of a vaccine, the character of the virus seems to be egalitarian affecting all. However, in the developing world, apprehensions are perhaps that this is where it would end. While Nosoi, the Greek God of disease has been dispassionate, hopefully Asclepius, the God for Medicine, will be likewise compassionate to give access to the cure to everyone on the planet.

Covid19 supplies

On March 25, the Brussels based World Customs Organisation identified 36 items at internationally comparable six-digit harmonised codes and categorised it under six broad classifications as a reference for Covid-19 medical supplies. Analysis therein shows that the overall Covid-19 medical supplies have seen a linear increase in exports globally from $496 billion to $660 billion from 2015 to 2018, growing at an annualised growth rate of 10 per cent.

Contrary to popular belief, at an aggregated level, China is not amongst the largest exporters of all these items, as export of test kits and apparatus is being led by developed economies like Germany, Switzerland and the US which together contributes more than 50 per cent of global exports. Similar status gets mirrored in the case of sterilisation products, medical consumables, and other medical devices, with developed countries dominating exports.

However, China’s forte is reflected in protective garments and thermometers where it holds a massive global export share of 37 per cent and 22 per cent respectively. India, which is trying hard to contain the spread of the virus, holds a share of around just 1 per cent or less across categories, except in sterilisation products wherein the country has a 4 per cent share in global exports.

Referring to these data, one would either stand naturally curious as to how the Chinese managed to find all these items at their disposal in the early stages of contagion or alternatively successfully ramped up the production locally.

Dismantle tariffs during h crisis

Having said that, the nature of the virus is such that everyone should ideally have a shared interest in eradicating it. As the G-20 pledges $5 trillion to defend the global economy against Covid-19, its members must rise to the occasion and dismantle all duties related to Covid-19 medical supplies for the next few months. The world cannot afford to see trade of crucial supplies as a zero-sum game now.

There is, however, a flip side to the above as many suffering economies impose export ban on such critical items. Nevertheless, an export ban now would be construed to save the lives of their own people with no business interest, as it would otherwise be reflected by putting import duties.

While the European Commission is in discussions to waive import duties, China, Vietnam and Brazil are amongst the major ones which have already implemented it in large parts. India’s MFN (most-favoured nation) tariffs for many of these crucial items ranges between 10 and 25 per cent.

G-20 should lead

Providing access to these vital supplies which are sorely needed at this crisis across geographies is extremely important. Many countries would be keen to produce and secure their own first but given the grave situation one cannot afford to have a gestation till locally made equipment arrive in the market. Countries which have remained unscathed or mildly affected could take the onus to produce them on a mass scale.

In such precarious times, Ricardo’s theory of comparative advantage should give way to laissez-faire. The G-20 needs to respond to this clarion call for a secure tomorrow and agree to forego the trade gains/losses for the larger social good. This would perhaps be the biggest litmus test for humanity in modern world.

As John McDonnell in his final speech a few days back in Britain’s House of Commons aptly said, “An injury to one is an injury to all, united we stand, divided we fall.” Humanity today needs a transparent, inclusive, zero-tariff trade programme for overcoming Covid-19. If G-20 can do something similar, it will repose confidence of many in multilateralism which has been seen waning in recent times.

The author is an Economist with Exim Bank. Views are personal

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