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Abstract
During the past two years, the COVID-19 pandemic has caused major morbidity and
widespread economic and social disruption. This research assesses whether global
rules governing trade, investment and intellectual property have constrained
countries in responding to this and future crises.
We found that trade-related health measures were diverse, with high-income
countries relying on subsidies, middle-income countries on export and import
measures, and virtually non-existent policies directly relevant to intellectual property
protection.
Given the tension between global rules and national policymaking during the
pandemic, governments should make policy rather than rely on existing exceptions
or push national governments to comply more exactly with the rules.
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Background
The COVID-19 pandemic has caused widespread economic and social disruption.
Governments have enacted policies to mitigate the impacts of the pandemic,
including those aimed at personal protection and health, financial stability, and
producing and deploying key COVID-19 products.
Many global trade and investment rules allow goods and capital to flow freely across
the globe, but global intellectual property rules require countries to protect the rights
of those holding protected knowledge. This tension becomes exacerbated during an
acute crisis.
This paper explores how to resolve the tension between rule-based constraints and
trends in pandemic policymaking.

Methods
The study begins by identifying the nature and scope of health sector trade policies
implemented by six large countries. These countries include the United States,
Germany, France, China, South Africa and India.
This research draws primarily from the Global Trade Alert (GTA) database and the
World Intellectual Property Organization (WIPO) COVID-19 IP Policy Tracker to
examine state trade-related interventions. It then identifies the main global rule-
based constraints to these policies.
This study focused on policies aimed at increasing production of or access to key
COVID-19 related products, such as health technologies, diagnostics, personal
protective equipment, treatments and vaccines.
The treatment of tradable physical goods compared to intellectual property is
different because innovation is a "public good".
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Cataloging policies
We gathered information from various web-based databases that track government
intervention during the pandemic. We used the Global Trade Alert database as our
primary data source, while relying on the other web-resources as secondary
sources.
- How easy is it to determine if there is overlap in information between the GTA and
the other databases? - Can the other databases provide complementary information
not found in GTA?
We compared the results of the GTA database with the IMF and Oxford COVID-19
Government Response Policy Tracker.
Intervention types and the current trade and investment rules
We categorized the 24 GTA-identified intervention types into four broad categories:
subsidies, trade measures (tariffs and quantitative restrictions), investment measures
and public procurement. We added policies from the World Intellectual Property
Organization’s COVID-19 IP Policy Tracker to make sure we included all relevant
policies.
Two authors grouped interventions into five categories: subsidies, trade measures,
investment measures, public procurement and IP policies. Three other authors
verified the categorization, and one author re-categorized interventions that were
labeled differently in sources outside of the GTA.
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We compared EU airline support measures with legal constraints present in the
World Trade Organization (WTO) agreements and bilateral and regional free trade
agreements. We noted that a given EU policy with regard to France and Germany
was counted separately for each country.
General findings: the catalog of policy interventions
The types of trade-related health measures deployed during the pandemic were
diverse, with the US, Germany and France being the most active in implementing
policy action.
Table 2 quantifies the total number of distinct policy interventions in the health
sector, categorized by our five-part taxonomy. Subsidies, tariffs and quantitative
restrictions, investment measures, and public procurement policies were the most
prevalent types of policy interventions.
Policies directly relevant to the health demands of the pandemic were virtually non-
existent, except in France and Germany.
Health Sector Interventions are interventions that impact nine sectors, including
basic organic chemicals, basic inorganic chemicals, miscellaneous basic chemical
products, pharmaceutical products, chemical products n.e.c., and human health
services.
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The US dominated the list of health sector policy interventions, with the greatest
number of subsidies. China and India relied more on tariffs and quantitative
restrictions than on subsidies.
Table 3 shows that most countries used state aid or state loans, export licensing
requirements, import tariffs and anti-dumping duties to fight the pandemic. India used
the greatest number of distinct intervention types, while South Africa used the
fewest.
Table 4 provides examples of the policy typology exemplified by information found in
the GTA and WIPO databases.

Discussion
High-income countries deployed extensive financial resources and subsidies in
addition to tariffs, trade constraints and in-kind measures, while middle-income
countries relied more on non-financial measures.
Mapping policies onto rule-based constraints
The global trade and investment rules, which prefer liberalized trade and free market
economies, may be violated by government subsidies and public procurement
practices. However, this does not necessarily mean that they are bad or undesirable
policies for countries to put in place.
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1. Subsidies
The WTO's Agreement on Subsidies and Countervailing Measures (SCM) lays down
strictures on government support of industries, though it does not prohibit them
outright. The EU, however, has an extensive and strict set of state aid rules that
constrain member states' subsidies and related policies.
The US and the European Investment Bank provided financial support to Moderna
and BioNTech for research and development on the mRNA vaccine platform. The
SCM Agreement provides guard rails to make sure these processes are fair and
transparent.
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State support for vaccine development was not limited to high income countries, and
India and China provided subsidies for domestic vaccine development and
production. These subsidies could be challenged by a fellow WTO member whose
competing industry was negatively impacted.
During this pandemic, countries are likely to engage in tit-for-tat disputes at the
WTO, but as the urgency of the pandemic begins to wane, WTO disputes and
domestic investigations into subsidies and countervailing measures are likely to
make an appearance.
The second most prevalent intervention was tariffs and quantitative restrictions,
which are largely prohibited under the General Agreement on Tariffs and Trade
(GATT) and regional and bilateral free trade agreements (FTAs).
India, South Africa and Germany introduced new export licensing requirements for
COVID-19 health products, and Germany imposed an outright ban on exporting
personal protective equipment (PPE). These policies would almost certainly fall
under the general prohibition on non-tariff barriers.

3. Investment measures
The WTO's Agreement on Trade-Related Investment Measures (TRIMS) prohibits
measures that restrict imports or exports or prefer domestic to imported products,
including local content requirements on medical coveralls, German and French
introduction of new foreign investment screening in the health and biotech sectors.
IIAs typically have deeper, more specific and more enforceable commitments than
the TRIMs Agreement, and IP is often included as a protected investment.
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Investor-state dispute settlement (ISDS) mechanisms provide a unique opportunity
for investors to sue national governments in private arbitrations for government
regulations claimed to interfere with the value of their investments. Many have
written to critique this system.
The Government Procurement Agreement (GPA) is a plurilateral agreement within
the WTO that requires members to not discriminate against fellow members in their
procurement decisions. The US has not made any procurement commitments with
respect to state or local governments.
The US does not have to extend the same treatment to China as it does to fellow
GPA-member EU states, but other countries may have accepted more in-depth
procurement commitments. The US also eliminated government procurement
commitments with Canada in the new USMCA.
India introduced procurement measures that require medical device producers
supplying directly to government bodies to rely on local inputs for production. These
measures are similar to local content requirements generally, but are not prohibited
under WTO or FTA rules.

5. Intellectual property protection

The TRIPS agreement provides a baseline of protection for intellectual property,
including 20-year pharmaceutical patents, with limited exceptions for health
emergencies. FTAs have introduced "TRIPS-plus" standards, which extend patent
terms, protect clinical trial and other data for longer periods of time and interfere with
marketing approvals for generics.
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Countries have been reluctant to ignore global IP rules, and even hesitant to rely on
existing flexibilities within the rules, such as compulsory licensing, in the current
crisis. They sought an official negotiated waiver of provisions of the TRIPS
agreement, but the waiver fell far short of the expansive waiver initially proposed.
There are exceptions to many trade and investment rules, including measures
necessary to protect human, animal or plant life or health, and measures essential to
the acquisition or distribution of products in general or local short supply.
GATT article XXI allows WTO members to take action necessary for the protection of
their essential security interests, and similar language is found in the GATS, TRIPS,
and GPA. FTAs also tend to retain the language of general and security exceptions.
Subsidies to support vaccine development and production could be justified under
existing rules and exceptions, and many countries declared a state of emergency,
making such subsidies available.
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Trade measures aimed at securing a country's supply of essential products like PPE
(Germany) or vaccines (India) are likely to be justified if the measures are not a
disguised restriction on trade.
Relying on exceptions to defend pandemic policymaking has both short- and long-
term shortcomings. If a country is able to successfully defend itself against a
challenge at the WTO, it may face market access consequences sanctioned by the
WTO Dispute Settlement Body.
At the time of this writing, the WTO's dispute settlement processes are hamstrung by
the lack of an appellate mechanism. As a result, countries are not likely to face
immediate consequences for flouting the WTO rules.
Understanding the tensions and trade-offs
During the early stages of the COVID-19 pandemic, various countries frequently
disregarded or circumvented policy constraints arising from WTO and other
trade/investment commitments. High-income countries used extensive financial
resources and subsidies in addition to tariffs, trade constraints and in-kind measures,
while middle-income countries relied more on non-financial measures.
Of particular interest was the lack of any IP policy changes for our study countries,
given that one of the main externalities of IP protection is decreased access to the
protected product for a time. However, the political backlash that countries have
faced historically drives their underuse. To issue a CL in accordance with the TRIPS
Agreement, each patent involved in the production of a product must be identified.
This cumbersome and lengthy process renders Articles 31 and 31bis highly
impractical.
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The pharmaceutical industry in the United States has frequently lobbied to punish
countries that attempt to issue CLs. The US has repeatedly put pressure on India for
issuing a CL for an expensive cancer drug, and has threatened sanctions against
India.
The pharmaceutical industry lobbied for punitive sanctions against countries
pursuing flexible CL policies, and even those that have, are reluctant to use them.
India and South Africa's proposal to waive key provisions of the TRIPS Agreement
implicitly recognized the need for global cooperation to effectively increase access to
protected health innovation.
In June 2022, the WTO adopted a ministerial decision on the TRIPS Agreement that
purported to address the "exceptional circumstances of the COVID-19 pandemic" by
"clarifying" and "waiving" certain TRIPS provisions. However, the decision made no
substantive changes to the existing flexibilities available under TRIPS.
Resolving the tension
Given the tension between global rules and the actual policymaking that took place
during the pandemic, there are three possible approaches to resolve it. One could
argue that nothing need change, or that the main problem lies with the overly activist
role of states.
There is a rich literature on the role of exceptions in international jurisprudence, and
some argue that global public goods such as public primary education, the global
climate and global health technologies, as well as innovation, should take
precedence over the current framework of trade, investment and IP rules.
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There are special international rules for one particular global public good -
intellectual property - which requires countries to intervene to protect it. However,
increasingly strict international IP rules do not seem to consider the dangers of over-
protection of IP.
Some global public goods, such as research and development subsidies for mRNA
research, receive the same protective treatment as national public goods, but others
do not. From an economic perspective, global rules do not provide adequate policy
space for governments to address key market failures.
From a scientific perspective, the most effective approach to end the pandemic is at
the global level. However, the governance of the pandemic occurs at the national
level, and the WHO lacks the authority to mandate responses by states.
Methodological limitations
Methodological and other considerations should be mentioned when using
secondary data from the GTA database. These include the possible under-reporting
bias of government notifications, as well as the lack of information about state acts
which are likely to be enacted but still pending in the legislative process.
Moreover, countries with larger GDPs, more transparent governments, and more
information available online will have better coverage of global public goods, and the
market will not supply adequate products for poorer economies.
Although some economists argue that the private sector can increase supply and
therefore distribution, studies show that the private sector under-invests in research
and development.
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The authors have not reviewed the GTA "amber" classifications, which are used
when a policy intervention would likely worsen the relative treatment of some foreign
commercial interests.

Conclusions
This research paves the way for additional studies to explore how trade and
investment rules might constrain policymaking in countries dealing with the climate
crisis, or other types of global crises.
Countries have deployed many policies to increase access to essential health
products during the pandemic, but many of those policies are in tension with the
global trade, investment, and IP rules. These tensions must be resolved in favor of
governments making policy rather than relying on existing exceptions or pushing
national governments to comply more exactly with the rules.
BIT is a bilateral investment treaty, CPTPP is a comprehensive and progressive
trans-Pacific partnership, GPA is a government procurement agreement, ISDS is an
investor-state dispute settlement mechanism, and USMCA is a United States-
Mexico-Canada Free Trade Agreement.
Authors’ contributions
RT, WK, VJW, LC, SPB, and SP made substantial contributions to the design,
conception, analysis, and revision of the manuscript. All authors have read and
approved the final manuscript.