THERE is much room for improvement in most of the Asia-Pacific Economic Cooperation (APEC) economies as far as addressing tariffs on medical goods is concerned, says an APEC Policy Support senior analyst.
Carlos Kuriyama said APEC economies should use the present time when many of the world’s economies are vastly unprepared for a health crisis like the Covid-19 pandemic as an opportunity to initiate much-needed changes.
“Global trade in medical goods has not been as critical and urgent as it is now, even though it accounts for nearly US$1 tril in value,” he said on APEC’s website.
Concerning the tariffs, he sees an apparent imbalance in that while APEC member economies apply low most-favoured nation (MFN) tariffs on medicines and medical equipment, they likewise impose higher tariff rates on medical supplies and personal protective equipment (PPE).
“This is particularly harmful to people and patients because access to PPE and medical supplies is of prime importance given the current challenges presented by wide-scale lockdowns and social distancing measures and the large inflow of patients requiring medical attention,” he said.
In fact, he said, the top 10 products with the highest average for all tariff duties on medical goods comprise medical supplies and/or personal protective products.
“Ethyl alcohol used for producing hand sanitiser, for example, is highest on the APEC MFN tariff list at 76.6%. Other key medical supplies and protective products on the list are shielding goggles and visors, surgical gloves made of vulcanised rubber, hand soaps, plastic face masks, and other cleaning and sanitising products.”
Kuriyama said from an economic perspective, over 90% of the medical goods trade among APEC members centres around 10 APEC economies.
He said it was not enough that some governments were implementing temporary waivers on import tariffs for a variety of medical goods as most of the measures are transient and will last only for the duration of the pandemic.
“Instead, we have to take the long view and focus on the apparent and vast lack of clear healthcare-related trade policies. The same issues we are dealing with today are likely to appear anew should another public health crisis occur in the future if we do not address this now,” he stressed.
On how APEC can address the tariff imbalance, he said the inter-governmental forum for 21 member economies in the Pacific Rim needs to establish systems that allow for more efficient and faster movement of medical goods internally and across borders.
“A good start is a collective initiative among members that seeks to reduce or outright eliminate tariffs on essential medical goods used to fight Covid-19 on a permanent basis.
“APEC finds itself in a great position to effect change, given its track record. Should this initiative push through, it would fit well within the purview of the market access group or the committee on trade and investment,” he opined.
Aside from aiming to relax tariffs, Kuriyama said APEC could also cease non-tariff measures that hamper the smooth regional flow of medical goods.
He said APEC economies could complement the steps outlined earlier, target tariff changes with dialogues and initiatives to remove any trade-restrictive measures on medical goods, especially export restrictions and bans.
“While some governments have implemented protective measures that affect a wide range of medical goods, some decisions could, in effect, unnecessarily restrict access to these critical life-saving products and affect the production chain.
“Worse, such measures could unduly increase the price of medical goods,” he cautioned.
Summarising his analysis, Kuriyama said it was imperative that supply chains dedicated to the provision of medical and other essential goods be kept open during any public health crisis.
“The ongoing pandemic has severely affected internal and cross-border movements. While measures are necessary to limit people movements and promote social distancing, they have nonetheless affected some production lines and transport frequencies for all modes of cargo, which in turn results in increased freight costs,” he noted.
He said APEC is in a prime position as a forum to strengthen both regional and multilateral efforts on the trade of medical goods and initiate lasting and sustainable change.
“We must envision trade policy as a key tool for assisting healthcare systems, especially those bearing the brunt or struggling to cope with the pandemic,” he concluded. — May 4, 2020, Bernama
