For much of the region with limited manufacturing capacity, trade will be the most realistic pathway to meeting domestic vaccine needs during the current crisis. Even for major vaccine producers in Latin America, trade is of paramount importance. Vaccines are a highly complex compound involving numerous ingredients and stages of production. Few countries in the world possess all the necessary specializations and basic materials to produce a competitive and fully “local” vaccine. A made-in-Latin-America vaccine could entail active pharmaceutical ingredients (APIs) from China or formulation development in India, as well as adjuvants from Chile processed in Sweden. The import of intermediate goods is critical to the seamless production and assembly of final goods (vaccines) used for domestic consumption or export.
Given the globalized nature of vaccine manufacturing, governments in Latin America and beyond must ensure unimpeded trade flows across borders. Protectionist temptations can be hard to resist amidst global shortages, especially for countries with greater vaccine self-sufficiency. But these measures rarely pan out as desired and could result in dire regional and global consequences, including an unfortunate scenario of “vaccine nationalism.”
The breakdown of global trade in medical supplies earlier this year provided a fresh reminder of the still-present risks of protectionism. In March and April, for instance, eighty countries imposed export restrictions on medical supplies and equipment. This included at least seven countries in Latin America and the Caribbean region, as well as the world’s top three suppliers [China, the United States, and the European Union (EU)], which collectively account for 68.2 percent of regional imports of these critical goods. To protect lives and livelihoods, vicious cycles of commercial isolationism and retaliation must be avoided at all costs.
Specifically, Latin American and Caribbean policymakers can take actions to tackle shared challenges in trade on at least three levels. First, several viable quick wins exist at the national level. Governments should bring down two-way trade barriers on essential medical products and inputs, including import tariffs and export restrictions. Trade facilitation can reduce additional nontariff barriers through streamlined customs procedures and border crossings, electronic filing, expedited certifications and licensing, etc. Brazil, for instance, suspended anti-dumping and simplified administrative processes for import and export licensing of PPE and medical devices. Similar measures should be upheld to safeguard the trade of vaccines, as well as therapeutics, and other lifesaving products and services.
Second, international coordination between governments can further galvanize and amplify country-level actions. The Joint Ministerial Statement to ensure supply chain connectivity amidst the COVID-19 situation, initiated by Singapore and New Zealand in March, is an example to follow. As of July, ten other countries, including China, have joined the initiative, pledging their commitment to keep trade lines open for essential goods. Two Latin American countries, Chile and Uruguay, have also signed on.
Similarly, multilateral fora such as the Asia-Pacific Economic Cooperation (APEC) and regional integration processes such as Mercosur and the Pacific Alliance are other potential avenues to crowd in best trade practices. APEC members, including three Latin American countries, have issued at least three official declarations on trade facilitation. The Pacific Alliance is playing a critical role in trade policy coordination in Latin America and internationally through its COVID-19 Action Plan and ASEAN-Pacific Alliance Work Plan.
Third, collaboration between the public and private sectors is imperative. Delayed arrivals and departures of essential goods can be costly, especially for time-sensitive products like vaccines. Most vaccines are transported in refrigerated (or frozen) conditions and have limited room temperature shelf life, e.g., between two to twelve hours for Pfizer and Moderna’s COVID-19 vaccines. Even before COVID-19 disruptions, in 2019, the average time to clear exports through customs in Latin America and the Caribbean region was eight days; the average time associated with border compliance for imports was 2.3 days. Accelerating clearance can be achieved through efficient prioritization, nonintrusive inspection, digitization, etc. In addition, airports, seaports, and border authorities should work closely with logistics companies, vaccine producers, and various types of Authorized Economic Operators (importers, brokers, warehouses, and others). New requirements, processes, schedules, or contingent plans that may arise during the pandemic must be communicated clearly and promptly.
Another key area of public-private collaboration in trade is “hard” infrastructure. Enhanced interconnectivity can revitalize regional exports and intra-regional trade, benefitting pharmaceutical and many other supply chains in Latin America, making them more competitive. A 1 percent reduction in transport costs—achievable through infrastructure improvements—could boost overall manufacturing exports between 2 percent and 7.8 percent in Brazil, Chile, Colombia, Mexico, and Peru. In the context of the COVID-19 pandemic, reduced shipping costs and time benefit not only regional vaccine acquisition and production, but in-country distribution of the vaccines and treatments.
To read the full brief, click here.Moving-beyond-COVID-Vaccines-and-Other-Policy-Considerations-in-Latin-America
Pepe Zhang is an associate director at the Atlantic Council’s Adrienne Arsht Latin America Center.
© 2020 The Atlantic Council of the United States.