Are Covid Passports Closing the Door for Developing Nations?

At a recent informal meeting of the heads of delegations of the World Trade Organization (WTO), India raised concerns regarding the new and emerging trade barriers such as Covid passports and vaccine differentiation. It called upon the WTO to respond to these new barriers and also address the existing trade barriers like export restrictions. India argued that the Covid passports, imposed by some developed nations, and the existing vaccine discrimination (i.e., due to supply shortages the poor countries not getting equal access to vaccines as rich countries) were severely impacting the free flow of services and movement of professionals from developing nations with insufficient access to vaccines.

These trade barriers multiply the difficulties posed by Covid-19 on developing nations, which already lack equal access to the vaccines despite urging the WTO to take necessary steps. On October 2, 2020, India and South Africa submitted a proposal requesting “a waiver from the implementation, application and enforcement of Sections 1, 4, 5, and 7 of Part II” of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The proposal, backed by many developing nations and very recently by the United States, urged that the waiver of provisions related to copyrights, industrial designs, patents and protection of undisclosed information was necessary for the “prevention, containment and treatment of COVID-19” until “widespread vaccination is in place globally, and the majority of the world's population has developed immunity.”

Even after a year, the waiver has not received consent of all countries, even though it has the potential to address the astonishing inequity of vaccine supply by allowing local manufacturers in developing nations to produce the vaccines. The waiver has been vehemently opposed by developed nations that house large pharmaceutical companies, especially the European Union (EU), because they believe this would jeopardize future medical innovation as pharma companies will be recalcitrant to invest in research and development (R&D) if they cannot enjoy the financial benefits arising from it. In fact, the EU has argued before the WTO that the waiver would not serve its intended purpose and has offered an alternative proposal which relies on limiting export restrictions and using flexibility in the existing WTO rules. Wealthy countries are wielding their power at the WTO to make life-saving heath care subservient to pharmaceutical companies’ interests and reducing it to a mere tradeable commodity.

According to the Global Dashboard for Vaccine Equity, a joint initiative of the UNDP, the WHO and the University of Oxford, as of October 27, 2021, in high-income countries, 63.52% have been vaccinated with at least one dose; while in contrast, in low-income countries, only 4.75% have been vaccinated with at least one dose. Report predicts that countries without at least 60% of the population vaccinated against Covid-19 by mid-2022 are expected to suffer a total loss of $2.3 trillion of GDP in 2022-25, with two-thirds of these losses being borne by emerging nations. If low-income countries had a similar vaccination rate as that of high-income countries, then their GDP forecast for 2021 could have increased by $38 billion.

The vaccine inequity will setback the 2030 Agenda for Sustainable Development, the Sustainable Development Goals, as it will impact welfare, jobs, public debt and human development. The TRIPS waiver is vital for addressing the Covid-19 vaccines shortage faced by poor developing nations. Intellectual property is currently a major impediment to manufacturers in countries like India and Bangladesh, who possess the capacity to undertake large-scale production of Covid-19 vaccines but lack the requisite licenses. TRIPS waiver is expected to accelerate the scaling up of manufacturing of Covid-19 vaccines and also motivate the vaccine producers to boost their technology transfer efforts.

While consensus building at the WTO for passing the waiver proposal takes time, alternative solutions are being explored, albeit with dubious success. World Health Organization (WHO)’s COVAX donation scheme, though initially aimed to accelerate manufacturing and guarantee access for every country, has only delivered 15% of the promised doses by September 2021. Further, WHO’s voluntary COVID-19 Technology Access Pool was envisioned to pool vaccine technologies so that they may be used by other such companies at a fair price, subject to payment of “royalties” to the developers. This initiative has also fallen flat, as most pharmaceutical companies, who hold the IP rights for the vaccines, failed to engage and have not responded to solicitations for collaborations by other companies, like Teva in Israel, Biolyse in Canada, Bavarian Nordic in Denmark, and Incepta in Bangladesh.

Addressing the unbridled vaccine inequity between high-income developed countries and low-income developing countries is at its greatest need. It remains to be seen whether the much-sought TRIPS waiver passes muster at the WTO. While the significance of patent protection for pharmaceutical companies cannot be denied, it should also be noted that the development of the Covid-19 vaccines has received $18 billion in public funding. Hence, a strong argument for waiving patent protection can be made. In the wake of the devastating pandemic gripping the global community, the pragmatic and just solution is global collaboration.

Ananya Dhar Choudhury serves as a graduate editor of the NYU Journal of Law & Business. She is pursuing a specialized L.L.M. in International Business Regulations, Litigation and Arbitration at the New York University School of Law as a Dean’s Graduate Scholar. With a focus on international arbitration, Ananya has taken courses on international commercial arbitration, investment arbitration, written and oral advocacy, negotiations, international law and trade law. Prior to attending NYU, Ananya worked as an Associate with the Disputes Resolution practice of India’s leading law firm, Cyril Amarchand Mangaldas. She was involved in a wide variety of commercial litigations, domestic arbitrations and enforcement of foreign arbitral awards.