Vaccine squabble tests global trade ties as WTO meeting postponed

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  • Ngozi Okonjo-Iweala
    Nigerian economist

The World Trade Organization’s new director is fighting for relevance in an era of discordance for the global economy.

That job just got harder: The Omicron variant of Covid-19 is adding a new complication to Ngozi Okonjo-Iweala’s efforts to broker an agreement among rich and poor nations for a waiver of patents for vaccines, drugs and other tools to help fight the disease, but talks remain at a standstill.

The new variant forced Okonjo-Iweala on Friday to postpone indefinitely the organization’s big decision-making conference that had been scheduled to begin Tuesday in Geneva — a meeting that she had hoped would finally lead to a compromise as the pandemic continues to mutate in countries without widespread access to prevention and treatment.

The vaccine impasse is just one example of how the WTO’s power to forge new trade rules and agreements is increasingly in doubt. Governments scarred by the pandemic are unsure if open markets still are a goal worth pursuing while protectionist trade policies often play better at home. Strained relations between key players such as the U.S., China, the European Union and India are also helping to fuel an existential crisis at the 26-year-old world trade body.

Failure to reach an agreement on vaccine patents or other longstanding disputes would raise more doubt about the purpose of the WTO as countries increasingly make two-way or regional deals. It would also raise questions about whether the former Nigerian finance minister, after just nine months on the job, is the right person to lead the organization out of its morass.

The WTO’s 164 members also have been unable to finish a two-decade-old negotiation aimed at reducing harmful fishing subsidies that have helped deplete ocean stocks. And there’s still no consensus on how to overhaul the WTO’s dispute-settlement system, an issue that prompted the United States to cripple the group’s appellate body by blocking the appointment of new judges.

At stake "is the future of multilateral trading system, whether it's going to increase its service to the world's economy," former WTO Deputy Director General Alan Wolff said this month. "If they don't have an agreement, it's just another black mark."

Since taking over as head of WTO in February, Okonjo-Iweala has focused much of her energy on resolving the patent dispute. The fight pits a group of more than 100 developing countries led by South Africa and India, which favor the broadest possible waiver, against the EU, the U.K. and Switzerland, which argue that logistical bottlenecks rather than patent protections are the biggest impediments to boosting vaccine availability.

Okonjo-Iweala said she planned to go ahead with a series of previously scheduled meetings this weekend. Those will involve ambassadors to the WTO stationed in Geneva and visiting negotiators who had arrived early.

"Delegations in Geneva should be fully empowered to close as many gaps as possible. This new variant reminds us once again of the urgency of the work we are charged with," Okonjo-Iweala said.

President Joe Biden earlier this year met the proponents halfway by agreeing to support a waiver of IP protections for vaccines.

He reiterated that support in a statement on Friday, saying the new variant showed "the importance of moving on this quickly" to ramp up vaccine production globally. But India and South Africa have been holding out for the broader package they first proposed in October 2020.

“It’s very difficult,” Okonjo-Iweala acknowledged during a recent visit to Washington, D.C. “I’m trying to bring members on both sides of this equation together.”

For Okonjo-Iweala, there’s the added dimension of proving that someone who hadn’t been steeped in WTO rules before taking office can effectively lead the organization.

Though she was the most popular among member countries of the eight candidates vying for the WTO top job last year, then-President Donald Trump’s trade chief Robert Lighthizer blocked her selection for more than three months, complaining that she “knows nothing” about the WTO’s core mission.

But to many others, Okonjo-Iweala’s credentials make her well-suited to take charge of the organization in the midst of a pandemic. She was the No. 2 official at the World Bank and has a Ph.D. in regional development and economics from the Massachusetts Institute of Technology.

From 2016 to 2020, she was chair of the board for Gavi, a public-private sector alliance aimed at boosting vaccine availability in poor countries. Okonjo-Iweala, the first woman and African to lead the WTO, is also one of the world’s leading development economists.

The Biden administration expressed no uncertainty about her abilities. It quickly and enthusiastically threw its weight behind her candidacy.

Still, James Love, director of Knowledge Ecology International, a group that favors easing patent protections, said that Okonjo-Iweala came into the organization with the attitude that she was the “CEO of the WTO.” Faced with the much more limited realities of the role after taking on the job, Love believes she experienced “a bit of a culture shock.”

At a press briefing last week, Okonjo-Iweala dismissed the suggestion she didn't have enough trade experience to lead the WTO and had misjudged how much power she would have to get countries to agree.

"I knew what I was getting into," she told reporters. "I've always said the CEO, if you want to call it that, or the DG has soft power, and the ability to use that soft power. And we've used it wisely."

So far, Okonjo-Iweala’s attempts to help countries reach a compromise on vaccine patents have failed. But that hasn’t been for a lack of trying. She brought together governments and vaccine developers to discuss the WTO’s role in vaccine equity in her first month after taking office.

Her ability to get those players to the table so quickly was the first evidence of her “very good network” and her expertise as a political operator, said one Geneva-based diplomat. She’s continued that outreach, along with “targeted messaging” to specific countries on the role that she sees them playing in ongoing negotiations, the diplomat added.

Okonjo-Iweala also realized early the goal of producing more vaccines could start to be solved without a waiver, if the big pharmaceutical companies came on board.

"Even if you bash the pharmaceuticals, at some stage you also have to work with them, to see how you can increase production,” Okonjo-Iweala said.

That was reflected in her so-called “third way” proposal, in which she was “very forcefully trying to call for technology transfer, for voluntary licensing, for partnerships, including, of course, with Africa,” said Thomas Cueni, director general of the International Federation of Pharmaceutical Manufacturers & Associations.

Okonjo-Iweala deserves credit for some of the progress in this area, Cueni said. While questions remain about the details of many of the plans, multiple deals have been announced by major pharmaceutical companies to increase vaccine manufacturing capacity, including plans to build mRNA factories in Senegal and Rwanda.

The WTO chief also helped spur on two recent deals between drugmakers and the Medicines Patent Pool to share the licenses for coronavirus antivirals, Love said.

One of her first missions after taking office was to tackle trade barriers to getting coronavirus products to the people who needed them. That led to the WTO publishing a list of the bottlenecks hindering trade in the critical goods, which it has kept updated.

“When we look at 10 months ago, versus now, I think many of these trade barriers have disappeared,” said Cueni, crediting Okonjo-Iweala for putting pressure on countries.

Still, developing countries say that doesn't eliminate the need for intellectual property waivers.

Without a meaningful waiver “there cannot be a meaningful WTO response to the pandemic,” said Sangeeta Shashikant, a legal adviser at the Third World Network, which advocates on behalf of developing countries.

On the flip side, pharmaceutical companies credit strong patent protections with fueling the rapid development of vaccines. They also say the waiver is unnecessary because of rapidly expanding vaccine production.

"We're expecting there will be 12 billion vaccines produced by the end of this year, and another 16 billion produced in the first half of 2022," said Joe Damond, executive vice president for international affairs at the Biotechnology Innovation Organization, whose members include vaccine-maker Pfizer and other pharmaceutical companies. "That's currently what's on line. So any IP waiver wouldn't be in time to add appreciably to that.”

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