Getting a grip on essential medical supplies

A version of this blog was published as an op ed in the Toronto Star. Canadians won a reprieve when the Trump administration and 3M, a leading manufacturer of N-95 respirators, struck a deal allowing the company to continue supplying customers in Canada and Latin America. The U.S.-based multinational will reportedly supply an additional 166.5 million respirators to the U.S. from its factories in China, on top of the 35 million it already produces monthly for the U.S. market.

Trump’s threat to force the company to cease exports to Canada, while disturbing, should not have come as a surprise. The U.S. is currently the global epicenter of the COVID-19 pandemic. Facing the same situation, almost every other jurisdiction—including China, South Korea and the European Union—applied export restrictions, and most acted more quickly.Canada was right to choose diplomacy over retaliation, which would only have made matters worse. But the accelerating U.S. health crisis will greatly complicate Canada’s efforts to stabilize its own supplies of medical equipment.

Starting last week, new regulations restrict the export of personal protective equipment without the explicit approval of the Federal Emergency Management Agency, though an exception should allow 3M’s shipments to Canada to continue.In mid-March, the EU similarly restricted exports of personal protective equipment (PPE)outside the bloc. Their regulations cover all member governments, including exports from the United Kingdom, which is still governed by EU rules. China likewise restricted exports during the worst of its crisis, although it has allowed some shipments to resume as it begins to emerge from the initial wave of infections. Amid growing concerns about quality, the Chinese government recently restricted export licenses for PPE to those facilities certified to sell in the Chinese domestic market.

Indeed, of the world’s top ten exporters of medical supplies and equipment (see table) all but Switzerland have applied export restrictions on personal protective equipment.

Top 10 exporters of medical products in 2019

Source: WTO Secretariat

Such export curbs on medical supplies are almost certainly consistent with international trade agreements. These agreements, including GATT and NAFTA, permit exceptions to address public health emergencies. The COVID-19 pandemic certainly qualifies. In fact, direct retaliation by Canada against U.S. export curbs would probably be inconsistent with these trade treaties.

The basic problem is a severe global shortage in a range of essential medical supplies, a situation worsened by cutthroat competition. The drama over the N-95 masks is only the tip of the iceberg. Other materials are also in short supply, from surgical masks, face shields, gowns, and gloves to therapeutic supplies such as test kits, denatured alcohol, certain medications, and ventilators needed to help critically ill patients survive.International co-operation is now essential, both to boost global production and to get these life-saving supplies to where and when they are needed most.

Certainly, the Trump administration’s erratic response, the president’s loutish behaviour and the lack of basic universal health care in the U.S. have unnecessarily worsened the pandemic. Yet Canada has clear humanitarian and public health reasons for closely co-operating with our U.S neighbours at all levels, in order to stem the spread of the disease. The immediate priorities of Canadian governments must be curbing the spread of the disease at home, treating those affected, and protecting frontline medical and other essential workers.While procuring supplies internationally is essential, there are challenges.

The global shortage has highlighted all the worst failings of unregulated markets, with bidding wars, dirty tricks, fraud, and price gouging run rampant. It is therefore imperative that we also ramp up domestic production of needed supplies. On the legislative front, Canada has all the tools it needs to do this. The government’s COVID-19 legislation, Bill C-13, mandates unlimited spending to acquire medical supplies and allows the temporary suspension of patents to respond to the public health emergency. This gives government the ability to address any supply chain obstacles to producing or procuring medical supplies, equipment, or medications it decides are needed.Government could also invoke Canada’s Defence Production Act, which grants the crown extraordinary powers to acquire designated supplies, “mobilize, conserve and co-ordinate all economic and industrial facilities,” and stockpile essential materials and substances to prevent shortages.

Canadian companies, workers, researchers and public institutions are already stepping up. According to the prime minister, nearly 5,000 have responded to the federal government’s urgent call for suppliers to combat COVID-19. Many are retooling their current production to meet new needs. Across the country there are stories of independent initiatives: boutique distilleries producing hand sanitizer, university labs making masks, and companies redeploying 3D printers to produce protective visors.

The mobilization of the scientific research community has been impressive, with the National Research Council of Canada co-ordinating and supporting an array of initiatives to design everything from testing kits to ventilators. The example of particle physicists designing a low-cost, easy-to-produce, made-in-Canada ventilator provides the most effective response imaginable to the critics of public funding for basic scientific research. Health Canada is providing support to specialists working around the clock, in concert with the international research community, to develop effective treatments and vaccines.

While these initiatives are encouraging—even inspiring—not nearly enough material is currently reaching frontline medical workers in their time of need. A recent Canadian Medical Association survey reports that many physicians and clinics are running dangerously low on personal protective equipment. Uncertainty about whether and when urgently needed supplies will arrive is undermining the morale of doctors, nurses, and other essential workers. Hopefully, this unacceptable situation will soon be remedied.

But there must be serious reflection on how to better prepare for future crises. The pandemic has underlined the value of having a flexible, technically capable domestic manufacturing sector. The concept that “manufacturing matters” has been disregarded during the era of hyper-globalization. Suddenly everyone is paying attention to global supply chains, not just corporate bean counters. Far-flung supply chains are now seen as a source of vulnerability, not simply a means to cut costs. One initiative from the federal government has been to cover the start-up costs for a Canadian-based multinational manufacturer of surgical masks to set up permanent manufacturing facilities in Canada.

Innovation, Science and Industry Minister Navdeep Bains said this is necessary “to ensure the country is never again caught short if global mask demand explodes.The Quebec government is working on increasing the province’s self-sufficiency in health care and food, “to make sure it has enough locally made medical equipment, medication and other supplies needed to weather a future crisis.” This will reportedly involve detailed study of trade balances and where the province fits within global supply chains, with a mind to reducing vulnerability to future disruptions.

More public leadership is needed to boost domestic manufacturing capacity and investment in research in order to nurture a higher degree of local and national resilience in meeting essential needs.

This support could take many forms. The Green Jobs Oshawa coalition is urging Ottawa to step in to reopen the idled GM plant in that city. This state-of the-art flexible production facility could readily be retooled to produce essential supplies such as ventilators. As the coalition rightly insists, a publicly owned plant could anchor a manufacturing hub re-employing thousands of highly skilled workers to produce medical supplies today and electric vehicles tomorrow. International cooperation is the only sensible approach when confronting a global crisis, whether a pandemic or the climate emergency.

But this does not mean, as many neoliberals are already arguing, that a rapid return to the “normal” functioning of unregulated international markets and unchecked corporate control over global supply chains is desirable. That flies in the face of recent experience.The path forward involves building new forms of international cooperation to redress the obvious failings of unregulated markets. Public supervision should be put in place to identify and remedy supply chain vulnerabilities and assess meaningful penalties to prevent profiteering in a crisis.

We should also empower international bodies such as the World Health Organization to stockpile supplies regionally and to draw on resilient networks of publicly owned labs and facilities, with the capacity to rapidly produce essential medical supplies to be distributed freely where they are needed most. The still-unfolding impacts of the pandemic in vulnerable countries of the global south have been terrifying to watch. Canada and the world must come out of this crisis far better prepared to handle the next one.

Scott Sinclair is Director of the Trade and Investment Research Project at the Canadian Centre for Policy Alternatives.