WTO’s Role in Mitigating the Pandemic: Trade Measures and Global Cooperation

Global cooperation plays a vital role in our battle against the Covid-19 pandemic. It is the coming together of nations putting aside their differences to battle the virus. The World Trade Organization (‘WTO’) plays a vital role in mitigating the impact of the virus on the world. In my opinion, our battle with the virus is of a dual nature. On the one hand, we are fighting the virus itself, and on the other, we are fighting the lack of medical equipment.[1] A rapid spread of the virus in Italy and Brazil, especially amongst health workers, originated due to the lack of medical equipment, i.e., Personal Protection Equipment and ventilators.[2] The lack of medical equipment can be pinned on a shortage of supply or the unwillingness of nations to trade in these types of equipment.[3] With the shutting down of domestic industries due to the pandemic, international trade is vital to ensuring an adequate supply of raw material and equipment to nations. One example of this would be India reaching out to China to restore its medical equipment supply.[4]  This begs the question of whether the WTO can solve this problem? And how its actions can impact the pandemic.

This article aims to show the WTO’s role in facilitating trade during a crisis. Further, it will focus on the potential abuse of the GATT general exceptions by members and the deterrents to misuse of these exceptions. I will also analyze the need for global cooperation in trade and the problems caused by the lack of it. Finally, I will bring the article to a cogent conclusion. In order to limit the scope of this article, I will only focus on problems related to the trade of raw material and essential equipment.

The WTO has 164 member states, the facilitation of trade amongst these countries is the problem that the world currently faces.[5] One example of shutting down of trade includes the closure or imposing of quarantine measures in ports in over 50 countries.[6] Another example is the increase in air cargo tariff, which is dissuading countries to engage in trade, especially during the pandemic.[7] The WTO should attempt to ensure that its members keep their essential trading channels open. To a certain extent, we can conclude that trading channels are almost non-responsive because there is very little or no trade happening at all.[8] This is due to a lack of supply of goods, especially raw material and the result of nations shutting down trade. Without the movement of these goods, it is impossible to manufacture the required medical equipment. Keeping these channels open during this crisis bridges cross-border movement of medical equipment and raw material.[9] The WTO plays a part in keeping supply chains health as its agreements influence supply chains.[10] At present, the WTO’s laws are not sufficient to deal with this problem, and this is one issue that needs to be addressed.[11]

Article XX(b) of the General Agreement on Tariffs and Trade (‘GATT’) permits WTO members autonomy to take trade-related measures during a health crisis, provided that they are not arbitrary.[12] In practicality, this autonomy prompts nations to take arbitrary trade measures during the crisis, this is evident from the WTO requesting members to give prompt notification of newly imposed measures.[13] A total of 46 WTO members, including the European Community, have implemented new trade measures since the beginning of the pandemic.[14] However, only a handful of members have notified the WTO about the reasons for the implementation of their measures. The others have not maintained transparency while implementing these measures.[15] This leads to the question of whether these members are not notifying the WTO because their measures are inconsistent with WTO laws? One way the WTO can prevent members from taking unfair measures is through enforcement of  Section 1(4), Article 5 of the Trade Facilitation Agreement (‘TFA’) and Article X of the GATT. This establishes an obligation on members to issue notifications regarding their trade measures, ensuring transparency in the measures imposed, this could act as a potential deterrent to misusing of the GATT General Exceptions.[16] The WTO should enter into dialogues with the nations not enforcing this notification regime and remind them of their obligations under the TFA.

Another way that the WTO body can deter nations from taking arbitrary trade measures is by utilizing its Trade Policy Review Body (‘TPRB’) to review recently taken trade measures.[17] Since the TPRB is controlled by the WTO, it can direct the TPRB to review policies at short intervals and request nations indulging in arbitrary trade practices to comply with the laws that it is violating.[18] Another measure would be to notify the other members of the rule-breaking member’s conduct. This should convince members to change their policy or risk being dragged into disputes or subject to political pressure. I consider this to be an extreme but effective measure, where the WTO could direct members to amend their measures through fear.

The WTO provides a forum to address the negative impacts of trade measures.[19] The reason for its establishment was to liberalize trade and curb unfair trade practices. If members are using the newfound autonomy to indulge in unfair trade practices, such as hoarding and bidding wars, then the WTO needs to notify members to comply with their obligations. The WTO recognizes ‘good faith’ as principles of Customary International Law under Article 3(2) of the Dispute Settlement Understanding.[20] The principle of good faith will apply as nations exercising the GATT exceptions are signatories to the GATT. Therefore, mere compliance with letter of the provisions is not enough, these measures have to be exercised in good faith.[21] The Appellate Body (‘AB’) has already adopted good faith as an interpretative tool into the DSU through its disputes. This should deter nations from resorting to misusing the general exceptions. This is because a member affected through misuse of Article XX will have a very persuasive reason for success if a dispute is initiated. Through these disputes, the AB has held nations accountable in the past for hoarding.[22]  The WTO’s adversarial method of dispute resolution, plays a vital part in dismantling an abuse of the general exceptions.

All of the measures mentioned above are deterrents. In order to make a real impact during the pandemic, global cooperation is vital. As a negotiating forum and the leading organization on international trade, the WTO needs to prioritize a plan including all its members to ensure fair trade. This will guarantee that affected members have access to goods that will mitigate the crisis for them.[23] The WTO, in the past, has called for international cooperation with regards to certain disputes. In the case of US- Shrimps, the AB stated that there was a need for international cooperation to protect the environment.[24] The WTO Committee on Trade and Environment has also, in the past, called for international cooperation to tackle environmental problems of a global nature.[25] The WTO can, therefore, call for the transcendence of international cooperation from environment-related issues to trade issues. After all, the WTO draws its legitimacy from international cooperation and enforces its trade rules as a result of the same.[26]

The recent plea by the WTO Director-General urging nations to ensure transparency in implementing measures during the pandemic and the organization’s statements regarding a lack of international cooperation are all worrying concerns.[27] Member states need to cooperate with each other and also ensure that trade measures are taken after careful considerations. A block in the movement of medical equipment, raw material and essential goods even for one day is deadly. If members decide to take matters into their own hands, it can turn into a veritable disaster. The WTO can attempt to resume trade in a normalized manner by encouraging dialogue between its members. It could provide guidance to members and direct them towards unrestricted trade during this crisis. Another measure would be recognizing legitimate disputes from members and imposing retaliatory measures to bring nations into compliance.[28]

Trade problems that nations currently face include the hampering of essential goods trade of one member by another. One such case is the seizing of 3M Masks headed for Germany, by the US.[29] Another issue is the problem of bidding wars for essential goods.[30] Recent examples of a ‘winner takes all’ situation can be observed in the US-France and the US-Brazil mask wars.[31] The second issue is problematic for two reasons, one, this leads to financially well-off countries hoarding essential equipment, seriously crippling poor nations in their fight against the pandemic. Two, the hoarding countries could potentially sell the equipment to a worse off country at a price higher than cost price. Capitalizing on the misfortune of another country, especially during a public health crisis is disturbing. All nations can equally benefit if the supply chains are kept active. The WTO should collectively advise nations to keep the supply chains active and not to resort to unfair trade practices. If treated seriously, this advice should pull trade back into some semblance of its pre-pandemic state.

Finally, the WTO needs to coordinate with the World Health Organization (‘WHO’) and the member countries to frame plans involving trade and healthcare to provide medical aid to the required parties at the required stages. A previous instance of cooperation between these two organizations includes the adoption of the WHO Codex Alimentarius as the relevant international standard to be followed under the Agreement on the Application of Sanitary and Phytosanitary Measures.[32]  The WTO has also coordinated efforts with the WHO regarding intellectual property, services, and health-related measures.[33] As the WTO focuses on trade in medical equipment, the WHO must focus on the use of the equipment. Cooperation between the nations, the WTO and the WHO will ensure smooth trading of medical equipment between nations and the full utilization of said equipment. Such coordination will also ensure less duplication of activities, thus saving time and resources.[34]

To conclude, the WTO plays a vital role in providing relief during this pandemic. Disputes bought forth by nations during this crisis, could consist of arbitrary trade practices. By resolving these disputes, the WTO can provide nations relief. However, what is more important is that the WTO prevents trade-related problems caused by the crisis before they occur. With regards to arbitrary trade measures, this problem can be controlled by the quick and efficient notification by nations to the WTO. This will result in a transparent mechanism, thus deterring nations from engaging in unethical practices before the international community.  Almost151 nations have already committed to the TFA, therefore enforcing this notification regime should not prove difficult.[35] Nevertheless, the most important measure to mitigate the trade issues during this crisis would be international cooperation. The WTO can use retaliatory measures and expose nations for employing unethical tactics.  However, the strongest weapon in the WTO’s arsenal would be its ability to facilitate a dialogue between its members and subsequently establish clear lines of communication. In simple terms, the best thing that the WTO can do would be to put these nations on a (virtual) table and get them to cooperate.

[1] L. Chadwick, ‘Medical supply shortage spurs global scramble for materials’, euronews (5 April 2020), <https://www.euronews.com/2020/04/04/medical-supply-shortage-spurs-global-scramble-for-materials&gt; accessed on 7th May 2020.

[2] Ranney, M. L., Griffeth, V., & Jha, A. K., ‘Critical Supply Shortages — The Need for Ventilators and Personal Protective Equipment during the Covid-19 Pandemic’ N Engl J Med 2020; 382:e41 <https://www.nejm.org/doi/full/10.1056/NEJMp2006141&gt; accessed on 8 May 2020; R. Philipose, Why Covid-19 fears rise in South America as Brazil becomes world’s second largest hotspot, The India Express (May 23 2020), <https://indianexpress.com/article/coronavirus/why-covid-19-fears-rise-in-south-america-as-brazil-becomes-worlds-second-largest-hotspot-6423764/&gt; accessed on 23 April 2020.

[3] Silvia Sardone, Failure to transfer medical supplies to Italy and number of patients sent to other European countries, Parliamentary questions, European Parliament (24 April 2020),

< https://www.europarl.europa.eu/doceo/document/P-9-2020-002428_EN.html&gt; accessed on 23 May 2020.

[4] V. Rees, India to import PPE from China in COVID-19 fight, says report, European Pharmaceutical Review (6 April 2020), <https://www.europeanpharmaceuticalreview.com/news/116411/india-to-import-ppe-from-china-in-covid-19-fight-says-report/&gt; accessed on 23 May 2020).

[5] Members and Observers, UNDERSTANDING THE WTO: THE ORGANIZATION, <https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm&gt; accessed on 7 May 2020.

[6] COVID-19 and international trade: Issues and actions, OECD (10 April 2020), <http://www.oecd.org/coronavirus/policy-responses/covid-19-and-international-trade-issues-and-actions-494da2fa/&gt; accessed on 20 May 2020).

[7] Id.

[8] O. Solleder & M.T. Velasquez, The Great Shutdown: How COVID-19 disrupts supply chains, International Trade Centre (5 May 2020), < http://www.intracen.org/covid19/Blog/The-Great-Shutdown-How-COVID19-disrupts-supply-chains/&gt; accessed on 19 May 2020.

[9] ET Bureau, ‘Covid-19 crisis has highlighted e-commerce importance, cooperation in cross-border goods, services movement: WTO’, The Economic Times (5 May 2020), <https://economictimes.indiatimes.com/news/economy/foreign-trade/need-to-bridge-digital-divide-as-tech-has-played-key-role-during-covid-19-crisis-wto-report/articleshow/75556051.cms?from=mdr&gt; accessed on 7 May 2020.

[10] B. Hoekman, A 21st Century Trade Agenda: Global Supply Chains and Logistics Services, WTO,

< https://www.wto.org/english/forums_e/public_forum12_e/art_pf12_e/art5.htm&gt; accessed on 23 May 2020.

[11] Richard Baldwin, The WTO and global supply chains, East Asia Forum (24 February 2020),

< https://www.eastasiaforum.org/2013/02/24/the-wto-and-global-supply-chains/&gt; accessed on 19 May 2020).

[12] Art. XX(b), General Agreement on Tariffs and Trade 1994 (15 April 1994) LT/UR/A-1A/1/GATT/1.

[13] WTO report finds growing number of export restrictions in response to COVID-19 crisis, ECONOMIC RESEARCH AND ANALYSIS, WTO (23 April 2020),

< https://www.wto.org/english/news_e/news20_e/rese_23apr20_e.htm&gt; accessed on 23 May 2020.

[14] Id.

[15] Id.

[16] Section 1(4), Art. 5, Section 1, Agreement on Trade Facilitation, Annex 1, Marrakesh Agreement Establishing the World Trade Organization; Art. X, General Agreement on Tariffs and Trade 1994 (15 April 1994) LT/UR/A-1A/1/GATT/1.

[17] ¶ A, Annex.3, Marrakesh Agreement Establishing the World Trade Organization.

[18] Overseeing national trade policies: the TPRM, TRADE POLICY REVIEWS: BRIEF INTRODUCTION, WTO, < https://www.wto.org/english/tratop_e/tpr_e/tp_int_e.htm&gt; accessed on 23 May 2020.

[19] Petros C. Mavroidis, ‘Free Lunches? WTO as Public Good, and the WTO’s View of Public Goods’ [2012] EJIL, Vol. 23 No. 3, 731.

[20] Art. 3.2, Understanding on Rules and Procedures Governing the Settlement of Disputes, Annex 2, Marrakesh Agreement Establishing the World Trade Organization; ¶17, Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline (20 May 1996) WT/DS2/AB/R.

[21] Id.

[22] Appellate Body Reports, China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum (29 August 2014) WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R.

[23] J. McBride & A. Chatzky, ‘What’s Next for the WTO?’, Council on Foreign Relations (10 December 2019), <https://www.cfr.org/backgrounder/whats-next-wto&gt; accessed on 8 May 2020.

[24] ¶171, Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products (12 October 1998) WT/DS58/AB/R; M.J. Hahn, M. Mitsuo, P.C. Mavroidis, T.J. Schoenbaum, ‘The World Trade Organization – law, practice, and policy’ (3rd edition, Oxford University Press, 2015).

[25] ¶171, Report of the Committee on Trade and Environment, WT/CTE/1, 12 November 1996, WTO Committee on Trade and Environment; M.J. Hahn, M. Mitsuo, P.C. Mavroidis, T.J. Schoenbaum, ‘The World Trade Organization – law, practice, and policy’ (3rd edition, Oxford University Press, 2015).

[26] Pascal Lamy, ‘The Place of the WTO in the International Legal Order’, WTO NEWS: SPEECHES — DG PASCAL LAMY, WTO (15 June 2008) <https://www.wto.org/english/news_e/sppl_e/sppl94_e.htm&gt; accessed on 7 May 2020.

[27] WTO report finds growing number of export restrictions in response to COVID-19 crisis, ECONOMIC RESEARCH AND ANALYSIS, WTO (23 April 2020),

< https://www.wto.org/english/news_e/news20_e/rese_23apr20_e.htm&gt; accessed on 23 May 2020.

[28] Art.22 .2, Art. 3.7, Dispute Settlement Understanding, Annex 2, Marrakesh Agreement Establishing the World Trade Organization.

[29] ‘Coronavirus: US accused of ‘piracy’ over mask ‘confiscation’’, BBC News (4 April 2020), <https://www.bbc.com/news/world-52161995&gt; accessed on 7 May 2020.

[30] “Shortage of personal protective equipment endangering health workers worldwide’, News release (3 March 2020), World Health Organization, < https://www.who.int/news-room/detail/03-03-2020-shortage-of-personal-protective-equipment-endangering-health-workers-worldwide&gt; accessed on 7 May 2020; The editorial board, ‘Covid-19 is bringing out protectionist instincts’, The Financial Times (19 April 2020), <https://www.ft.com/content/ed78b09c-80a3-11ea-8fdb-7ec06edeef84&gt; accessed on 7 May 2020.

[31] M. Peel, R. McMorrow, Liu et al., EU warns of global bidding war for medical equipment, Financial Times (7 April 2020), < https://www.ft.com/content/a94aa917-f5a0-4980-a51a-28576f09410a&gt; accessed on 20 May 2020.

[32] The WTO and the World Health Organization (WHO), WORK WITH OTHER INTERNATIONAL ORGANIZATIONS, WTO, < https://www.wto.org/english/thewto_e/coher_e/wto_who_e.htm&gt; accessed on 21st May 2020.

[33] Id.

[34] A. Qureshi, ‘Interpreting WTO Agreements: Problems and Perspectives’, (Cambridge University Press, 2015).

[35] Ratifications list, Trade facilitation Agreement Facility (TFAF), WTO,

< https://www.tfafacility.org/ratifications&gt; accessed on 23 May 2020.


ABOUT THE AUTHOR

Jacob Abraham

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Jacob Abraham is a second-year student at West Bengal National University of Juridical Sciences (WBNUJS), Kolkata. He is passionate about International Trade Law and has participated in the John H. Jackson Moot Court Competition (formerly ELSA) in his first year and placed as a quarterfinalist at the final oral round held in Geneva, Switzerland. He does research and write on topics under WTO Laws pertaining to Agreement on Safeguards and The General Agreement on Trade in Services (GATS).

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