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Regional cooperation: the way forward for regional value chains in the Asia-Pacific

Photo credit: iStock/Bob_Dmyt

At ESCAP’s latest Regional Conversation, Promoting Regional Cooperation for Enhancing Access to Essential Health Products, Dr. Mariângela Simão of the World Health Organization (WHO) gave a telling reminder: despite a contrary narrative pushed by some governments, the coronavirus pandemic is far from over. In the third week of March, there were 12 million new cases and 40,000 deaths. Although some developed countries are approaching or celebrating ‘COVID normal’, every country is facing its own challenges. The reduced use of health measures such as testing and social distancing combined with uneven vaccine coverage have worsened the risks of the appearance of new virus strains and increased hospitalisations and deaths.

Although COVID-19 is preventable and treatable, inequities in the production and distribution of essential health products (EHPs) have stymied the effectiveness and breadth of disease prevention efforts. Production of vaccines, therapeutics, diagnostics and personal protective equipment is concentrated in few countries, and supply chain barriers and trade-restrictive measures prevent efficient and widespread distribution. Consequently, 11 billion doses have been administered globally, but 22 WHO member states have vaccinated less than 10 per cent of their populations and 75 states have vaccinated less than 40 per cent.

The Regional Conversation was an opportunity for the free exchange of views amongst policymakers, international and regional organizations, and private sector representatives about how to address these challenges, by securing regional value chains (RVCs) and promoting regional cooperation to facilitate access to EHPs.

The event’s opening high-level segment allowed distinguished representatives from government and international civil society to offer their perspectives and identify key challenges and responses. Key takeaways included:

  • Regional cooperation in the form of pooled procurement of EHPs can increase economies of scale and reduce their prices for less-developed nations, especially in more remote regions. In the future, relationships must be strengthened between developing nations such as small island states and suppliers and supply management systems.
  • There is a pressing need for the transfer of research and development (R&D), the availability and movement of raw materials and inputs, the mobility of global talent and expertise, and regulatory harmonisation for medical products. Strengthening investment facilitation, including through streamlining investment approvals and providing tax incentives and allowances, is also critical.
  • ASEAN constituents have taken concerted action to strengthen supply chain connectivity and ensure the smooth flow and transfer of EHPs. However, customs procedures must be simplified even further. One underutilised option is greater investment in digital infrastructure, including through the adoption of paperless trade, electronic pre-arrival processing, and open data exchange between authorities.
  • Strategies for long-term resilience during and beyond the pandemic are a priority. Such strategies should involve better risk-management, cross-sectoral coordination between trade, health and logistics supply chain players, and public-private cooperation.
  • There is a need to maintain and develop open trade settings and a real-time understanding of challenges in the supply chain so that relevant and informed action can be taken. A global market information system and/or a supply chain watchtower could enable greater visibility over essential medical supply chains, strengthen private-public cooperation, enable removal of potential bottlenecks, increase trade facilitation measures, bolster long-term resilience and ultimately intensify the production and distribution of EHPs.
  • Small and medium-sized enterprises (SMEs) in the region can play a critical role in ensuring equitable access to EHPs. Therefore, governments and international development banks should do more to support countries with large SME constituencies by offering appropriate funding. Such funding should be extended to valuable initiatives such as the Access to COVID-19 Tools (ACT) Accelerator and the COVID-19 Vaccines Global Access initiative.

The event’s high-level segment was followed by an insightful and informative panel discussion. Recurring recommendations and themes included:

  • Domestic health systems should be seen as an integral part of RVCs and the distribution of EHPs. Health system limitations, such as a lack of trained personnel, inadequate health infrastructure and supply chain and logistics challenges may limit the success of vaccine rollouts even if sufficient doses are available.
  • There is a need to consolidate – the currently fragmented – global R&D, enable closer coordination of clinical trials and harmonise clinical trial regulation. Focus should be placed on improving both research and regulatory capacity, as well as managing the logistical challenges in conducting clinical trials.
  • Rapid regulatory changes, a lack of consultation, and a lack of cooperation between governmental agencies lead to misunderstandings, uncertainty and delays at the industry level. Clearer legal guidance around regulatory approval requirements is needed, and these requirements should not lead to transit delays. In this regard, attention must be paid to regulatory barriers that limit the distribution of ancillary, as well as primary, health products and inputs.
  • Future planning around financial and timeframe elements must be carried out in advance of potential health or other emergencies. Such planning must consider the need to produce and mobilise large volumes of goods using limited capacity transit networks in both accessible and remote areas. Regulatory and operational requirements associated with the physical movement of EHPs should also be considered, including dangerous goods used to facilitate temperature control, the approval of data loggers and packaging standards.
  • Partnership at every stage of the production and distribution process is vital; no firm or government can alone play a significant role in the global and regional pandemic response without the assistance and cooperation of others.

A forthcoming report will detail further takeaways and outline practical recommendations from the Regional Conversation.

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Andrew Mitchell
Associate Dean (Research) and Professor at the Faculty of Law, Monash University
Rupa Chanda
Yern Fai Lee
Associate Economic Affairs Officer
Trade, Investment & Innovation +66 2 288-1234 [email protected]