A number of countries, especially in the global South are suffering from acute debt distress. While this calls for reining in over-board austerity policies globally in general, since a significant cause of the current wave of inflation– still on the higher side in a number of countries including Pakistan– seen in the wake of Covid pandemic, was due to global supply shock, there is also a need that countries need lower walls of intellectual property rights (IPRs), and more balanced trading rules in favour of developing countries in general, so that they can manage their balance of payments account in a better way.
During the pandemic, for instance, covid vaccine production and access received a lot of hurdles due to unnecessarily high levels of IPRs that did not allow any meaningful collaboration between countries to produce ample vaccines for meeting the overall global needs. A 9 May 2022 Guardian published article ‘Affordable Covid drugs kept out of reach by sluggish WTO [World Trade Organization]’ pointed out in this regard ‘There is still a long way to go before South Africa and other developing countries can manufacture Covid vaccines and treatments quickly and without paying the huge charges demanded by the big US and European drug companies. …Max Lawson, co-chair of pressure group People’s Vaccine Alliance, said: “It is a tragedy that it has taken almost two years and millions of deaths to reach this point, and a travesty that the action proposed falls well short of what is needed.” …Lawson said the WTO continues to place corporate interests over the needs of global health. “It adds more unnecessary barriers than existed before negotiations began, and failure to act now on treatments and tests is inexcusable.”’
Having said that, even after two years WTO is still to reach any meaningful solution to the unnecessarily high levels of IPRs protection. A February 14 Guardian published article ‘WTO fails to reach agreement on providing global access to Covid treatments’ pointed out in this regard ‘The World Trade Organization has failed to reach an agreement to waive intellectual property rights on Covid-19 tests and treatments for poorer countries. Members of the Trade-Related Aspects of Intellectual Property Rights (Trips) council said it could not reach consensus after years of discussion, despite the “considerable efforts” of members. Campaigners said the news was a “slap in the face”. Research published last year found that more than 50 percent of Covid deaths in low and middle-income countries could have been avoided if people had the same access to vaccines as in wealthy states. According to data published by the World Health Organization in January 2023, 75 percent of people living in high-income countries have been vaccinated compared with fewer than 25 percent in low-income states.’
This is unfortunate to say the least, and raises considerable worries for developing countries in particular, a number of which are already under high debt distress, have limited fiscal space, and have seen weak multilateral spirit– both in terms of provision of climate compensation, both in terms of climate finance, and a meaningful level of debt relief– to enable them to meaningfully spend towards climate change resilience, and appropriately preparing for an otherwise likely ‘Pandemicene’ phenomenon, both in terms of public health sector preparedness, and adequate vaccine availability.
Already the level of global inequality is in a very precarious situation, which has seen sharp rise since the pandemic, and calls for much improved trading rules towards developing countries, along with a more broad-based, and progressive global tax regime.
Already, developing countries in particular need to spend to provide meaningful stimulus to the economy, to come out of the stagflationary situation that a number of developing countries are facing, including Pakistan, and to unclog the supply side to reduce the cost-push channel of inflation, for which lower prices of vaccines– as and when the need arrives, God forbid, in the case of an otherwise likely global pandemic– and a reformed WTO allowing for greater trading gains for everyone on more equitable footings, is long overdue.
Already the level of global inequality is in a very precarious situation, which has seen sharp rise since the pandemic, and calls for much improved trading rules towards developing countries, along with a more broad-based, and progressive global tax regime. Highlighting the serious inadequacies of current tax system, in turn, favouring moneyed interest, a February 27 Oxfam press release ‘Less than 8 cents in every dollar of tax revenue collected in G20 countries comes from taxes on wealth, says Oxfam’ pointed out ‘Less than eight cents in every dollar raised in tax revenue in G20 countries now comes from taxes on wealth, reveals new analysis by Oxfam today ahead of the first meeting of G20 Finance Ministers and Central Bank Governors in Sao Paulo, Brazil. By comparison, more than 32 cents in every dollar (over four times as much) is collected from taxes on goods and services. Taxes on food and other necessities, for example, shift more of the tax burden onto lower-income families. Oxfam’s research also found that the share of national income going to the top 1 percent of earners in G20 countries has increased by 45 percent over the last four decades. During the same period, the top tax rates on their incomes has fallen by roughly a third (from around 60 percent in 1980 to 40 percent in 2022).’
The writer holds PhD in Economics degree from the University of Barcelona, and previously worked at International Monetary Fund. Prior to this, he did MSc. in Economics from the University of York (United Kingdom), and worked at the Ministry of Economic Affairs & Statistics (Pakistan), among other places. He is author of Springer published book (2016) ‘The economic impact of International Monetary Fund programmes: institutional quality, macroeconomic stabilization and economic growth’. He tweets @omerjaved7
