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The Role of Crucial Services During a Pandemic Crisis

05 Aug 2020
By Pascal Kerneis
Massive container freight ship MSC TOMOKO PANAMA
Photo: Mike Baird,

It is necessary to consider the role of crucial services in international trade during a pandemic. To ensure the safe and continued transport of medical supplies, policy measures must cover all logistical aspects of transporting these supplies.

Without services like health, transport, logistics, and ICT services (information, communication and telecommunication services), no trade of essential medical equipment or pharmaceutical products can take place during a pandemic crisis. Despite this, it seems that most countries around the world, when planning for future such crises, only consider trade in healthcare products essential. This will clearly not be sufficient to fight another pandemic, be it the resurgence of COVID-19 or any other outbreak. The current crisis has shown the necessity for actions around the essential services, like those mentioned above, that enable the free flow of essential goods.

At the first peak of the COVID-19 crisis in March 2020, trade ministers of the G20 considered the idea that it would be important to take measures to ensure better flow of medical supplies and protective equipment around the world. Since then, the World Trade Organization (WTO) has produced many documents and reports on the coronavirus, notably an information note entitled “Trade in medical goods in the context of tackling COVID-19.”  On 21 May, the WTO Secretariat published an information note that looked at how the COVID-19 pandemic has affected trade in services, from tourism and transport to retail and health services. The note provided an overview of the impact of COVID-19 on various modes of supply and service sectors that have been heavily affected by the crisis.

Indeed, a large number of countries took emergency measures in the various service sectors to smooth operations during the crisis. The WTO published a list of 91 measures affecting or helping trade in services (as of 3 June 2020) that have been taken by WTO members.  For instance, the Australian government has introduced new measures in response to COVID-19 to allow some temporary work visa holders employed in critical sectors including health, aged and disability care and childcare to remain in Australia. Visas may be granted for stays of up to 12 months. With regard to air transport services, the Russian Federation has exempted flight crews from the 14-day quarantine. Also, the European Union has published guidelines setting out operational measures to facilitate the operation of air cargo during the COVID-19 outbreak. These measures clearly demonstrate that these countries considered the importance of the proper functioning of the service sectors during the COVID-19 pandemic to ensure the smooth flow of essential goods such as medical equipment. In addition, many other measures in financial services, telecommunication services and distribution services were taken to smooth the economic activity during the lockdown periods. Measures like the ones notified to the WTO would now need to be assessed and possibly incorporated into any future international trade agreements that include clauses to deal with future health crises.

On 11 June, the European Commission published a concept paper that calls for a WTO agreement among at least a subset of members to eliminate tariff and non-tariff barriers to trade in pharmaceutical and medical goods. High tariffs still on pharmaceutical goods and other medical equipment still exist in more than 80% of the WTO member countries. Import and export restrictions on these products like quotas, licensing procedures, testing and certification processes, either permanently or on exceptional basis, slow down the flow of these goods. This concept paper was meant to contribute to an exploratory discussion on a possible initiative to facilitate “trade in healthcare products.” The deal would include easy handling of technical regulations and standards, expedited customs clearance, nondiscrimination in public procurement, smoother import licensing procedures, general transparency rules, and easier trading conditions for re-manufactured goods. But unfortunately, nothing is said about the need for keeping essential services functioning.

Governments can take the best measures to facilitate trade in healthcare products, but without measures facilitating the transport and logistics of these medical supplies, they will be totally inefficient. We have seen that in these times of lockdown, borders are closed, ports and airports are subject to freight transportation restrictions, truck drivers, ship captains, and pilots of air cargo planes are subject to border controls and  quarantine measures, visa delivery is stopped or slowed down . With an exclusive focus on healthcare products, it feels like the European Commission’s proposal falls short of understanding the need for crucial services to continue functioning seamlessly during a pandemic.

On 15 June 2020, the European Commission presented its concept paper to the “Ottawa Group,” which includes  Australia, Brazil, Canada, Chile, the 27 member states of the European Union, Japan, Kenya, South Korea, Mexico, New Zealand, Norway, Singapore and Switzerland. The Ottawa Group welcomed the initiative  but its recommendation was “to advance analysis and consideration in order to identify what steps WTO members could take to facilitate trade in medical supplies to help ensure that the world is better positioned to deal with future health emergencies.”Hence, there was no immediate decision taken towards the development on new international disciplines on trade in healthcare products. The EU will work with its partners to finetune its analysis.  This is an opportunity for incorporating the essential logistic and other services needed into their assessment to enable the flow of these essential products in case of a pandemic.

It needs to be emphasised that the focus here is on essential services to fight future health pandemic crises, not essential services that are crucial for the continuation of the overall economy during such a crisis, nor on the measures that would be helpful to help endangered service sectors to emerge and recover out of a future such crisis.  This would cover a much larger scope which is beyond the reach of this article.

The services dimension of any future pandemic crisis should be included in the framework of the proposed “advance analysis” suggested by the Ottawa Group. All political decision-makers need to acknowledge that the world will likely face similar (or worse) emergencies in the future. It is therefore important to examine– in a manner that respects the principles of the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS)– whether current trade rules should be adapted or if new rules should be developed to guide collaborative policy responses by WTO members. This includes looking at necessary measures in the service sectors that contribute to the healthcare supply chain. Doing so will help ensure that the world will be better prepared to deal with similar future crises.

It is clearly only the beginning of the debate, but one can try, in a preliminary assessment, to identify what these “necessary measures” could be. Future WTO Disciplines relating to essential services in health crisis situations should include rules that will facilitate i) air transport and express courier transport of medical supplies; ii) international maritime transport of medical supplies; iii) international road transport of medical supplies (like for instance the creation of “green lanes” at the borders); iv) support services for transport (customs agents, airport services, port services, road station services, etc.).

Governments will also have to put into place rules for easing cross-border mobility of “essential workers” (i.e. service providers) to ensure their mission (exceptions to quarantine rules – with respect to workers’ health; continuation of visa services; etc.).  This might include aircraft crews, vessels crews, truck drivers, doctors, healthcare personnel and researchers, maintenance and repair service providers for medical equipment and essential IT and telecom equipment, etc. They will also need to look at facilitating rules on financial services for exports and imports of medical supplies (documentary credits, payment facilities, etc.). Finally, a very important aspect will be to set rules that will facilitate international transfers of data related to logistic of healthcare supply chain, to research and development of vaccines and health treatment, etc.

Many international organisations have worked on various guidelines and reports in relevant areas, like the World Health Organisation (WHO), International Civil Aviation Organisation (IACO), International Maritime Organisation (IMO), Bank of International Settlment (BIS), and should be involved in this work.

Pascal Kerneis is the Managing Director of the European Services Forum and a member of the EU-Australia Leadership Forum Multi-Stakeholder Steering Committee.

This article is published under a Creative Commons Licence and may be republished with attribution.