No, the confrontation over vaccines doesn’t show that free trade is flawed

Jethro Elsden

March 26, 2021

The ongoing kerfuffle between the EU and AstraZeneca risks restrictions being imposed on exports from the bloc. This means that, despite ostensibly still being friends and allies, the EU could block the UK from receiving vaccine doses it has paid for, potentially undermining the vaccine rollout and the roadmap back to normality this side of the channel.

This didn’t have to become the confrontational trade dispute it is in danger of turning into. The failure of the EU to commit to funding the development and production of vaccines is by now apparent. But given the vast benefits the vaccines bring, even the US and UK have failed to throw anywhere near enough money at ramping up production. This failure to invest in global production capacity means today there are severe limits on vaccine supply and things have descended into a short-term zero-sum game with countries scrabbling to get hold of doses.

Of course, if it had been possible for the UK to produce domestically all the vaccine doses and all the component ingredients required then this would not be an issue. Indeed, some have suggested that this shows how untrammeled free trade is a bad idea, that in a situation like this it risks the security and health of the nation, and that we need to move to a more balanced approach where issues of security are given greater weight against the benefits that trade brings.

However, the situation we find ourselves in at present is sui generis. Countries are operating in a world with very different incentives to those that usually hold. The short-term aim of getting jabs in arms as quickly as possible is the priority. The longer-term consequences of promoting business investment and certainty for entrepreneurs over property rights understandably seem less important when a significant number of your citizens could die and your health system is at risk of collapse. But 99.9 per cent of the time these incentives won’t exist and full fat free trade and outsourcing will work fine.

Furthermore, the vaccines are highly complex products with numerous ingredients. Making them in the UK would almost certainly rely on international supply chains for certain components. We see that with production of the Pfizer BioNTech vaccine in the EU, which is made up of 280 materials from 86 suppliers in 19 countries. This includes crucial lipid ingredients exported from a plant in Yorkshire, and other components are shipped from the US and Canada.

So even if Pfizer had its factory in the UK rather than in Belgium, we would still be vulnerable to supply chain disruption. It’s an illusion that we could ever fully onshore manufacture of a product as complex as a vaccine, some components are always likely to be imported – especially when there are a range of different sorts of vaccines requiring different components, and it’s uncertain as it was for most of 2020 which ones would work.

The real lesson of the ongoing trade dispute over vaccines is not that free trade leaves us vulnerable but that failing to invest sufficiently in global vaccine production capacity has created the unique circumstances where trade becomes in the short term a zero-sum game. If countries and especially the EU had properly invested in scaling up production last year, we would not now be in the dire situation we find ourselves in with the EU threatening to impose export controls and thus blow up international supply chains crucial to the production of the very vaccines they are so desperate to get their hands on.


Written by Jethro Elsden

Jethro Elsden is a data analyst and researcher at the Centre for Policy Studies

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