Supply chain threats

Vaccine nationalism shows how the pandemic has stressed trade

Although there has been no formal admission by the government, India appears to have curtailed exports of the Oxford/AstraZeneca vaccine, being made by the Serum Institute of India (SII). Nearly all of the 2.4 million doses that SII makes a day are being held back for use domestically, a reversal of the previous policy. This has led to concerns that other developing nations that depend upon SII’s contract with the vaccine alliance GAVI for their doses will struggle to continue their roll-outs. The recent data from GAVI reveals that it is mainly the Oxford vaccine that is not being delivered to the alliance, whereas, for example, the Pfizer/BioNTech contracts are being fulfilled. For Indian policymakers, the concern is presumably the sudden surge in infections in several key states and cities, particularly Mumbai, Pune, and — over the past fortnight — Delhi.

Yet the fact that India, which was presenting itself as the vaccine factory of the world, may now also be succumbing to vaccine nationalism is a reflection of the broader failure of robust supply chains and trade over the course of the pandemic. The United States and the United Kingdom have also prioritised their national roll-outs, with effective export bans in place. Meanwhile, the European Union (EU) is the only large producer that is living up to its commitments, and exporting vaccines made in its factories. Rather than leading to plaudits, this has led to criticism of the EU, with even Americans, who are benefiting from several EU-designed and -manufactured vaccines, calling the European roll-out “bungled”.

Questions will now inevitably be asked about the robustness of global supply chains under the sort of pressure that the pandemic has applied. There is no question that the logic of free trade should apply to vaccines just as much as to any other product — it makes sense for the product to be developed and then manufactured in countries which have a comparative advantage for each stage of the process, and then for it to be exported across the world. This would be both efficient and fair. But, in practice, that is not how things are turning out. Nor is this the only occasion during the pandemic in which free trade principles have been bent or broken — both PPE and medicines for Covid-19 have been subject to the same problem. Multiple other stresses and fault-lines have also become clear. A dependence on China-made active pharmaceutical ingredients has led to concern in capitals worldwide. A drought in semiconductor production as the Sino-American trade war heated up has led to major problems in sectors as disparate as cryptocurrencies and automobiles. And last week’s blocking of the Suez Canal by the container ship Ever Given brought home the fragility of some of the world’s most trafficked trade arteries.

It is clear that a greater robustness in supply chains, alongside a proper diversification, will need to be a priority post-pandemic. Supply chain diversification will have an efficiency cost, but it will add stability. It will be important, however, to not throw the baby out with the bathwater. In the end, the basic principles of free trade must continue to apply. The instincts underlying vaccine nationalism must not be normalised. The emerging world, including India, has the most to lose if the pressures of the pandemic lead to de-globalisation.