International economic law (IEL), broadly defined, refers to the rules governing the cross-border movement of goods, people, technology and finance capital, as well as the institutions created to design and enforce such rules. IEL has, over the past three decades, developed exponentially as a field of study, evolving from a sub-field of public international law into a multi-layered, highly specialized discipline of its own, encompassing areas such as trade, investment, finance, intellectual property, business regulation, energy and competition law.
As an arena of scholarship, policy and practice, IEL has largely been dislodged from the broader social, economic, political, ecological and historical context in which it operates. At the heart of our current global order are profound dislocations between the economy, society and the natural environment. The coronavirus (COVID-19) pandemic that has brought the world to a halt this year, clearly reveals brutal manifestations of these dislocations, whilst the pandemic spreads at an unprecedented speed, leaving behind a devastation that we are only beginning to fully comprehend.
The current pandemic, and the responses to it by both states and communities, are bringing into sharp focus IEL’s role in setting in motion a particular kind of socio-political and economic globalization in which, for example, the world’s billionaires have more wealth today than 60 percent of the world’s population, and where the 22 richest men in the world have more wealth than all the women in Africa. This last point is crucial given that women in Africa and beyond make up at least two-thirds of the global care workforce and in times of multiple ‘pandemics’, women remain at the forefront of governmental and community responses. While highlighting the limits of usual approaches to the international economic legal order, the current situation also makes palpable how much IEL is embedded in our everyday lives.
In this intervention, we, members of the The IEL Collective*, reflect on (some of) the ways in which IEL is intermingled with the problematic patterns of globalized production and consumption underpinning the slow responses and rapid spread of COVID-19; and the ways in which we could respond to this crisis in a more globally just and sustainable way.
2. International Trade and Procurement Law
An example of how the structural flaws of the international trading system are being revealed by the current pandemic is found at the intersection of procurement and trade. In the European Union (EU), for example, Italy has faced an unprecedented healthcare crisis that has required its central purchasing body, Consip, to procure ventilators and other medical supplies in record time. It would seem that years of investments in the professionalisation of the procurement workforce and the diligent application of the EU principles on the liberalization of the procurement market, have enabled Consip to gain significant discounts given the circumstances, and to procure fast. Yet, the initial decision to impose a ban on the export of essential and live-saving medical equipment by Germany — a ban which could affect not only Italy but other EU Member States in need of supplies — illustrates the ways in which the rules of free trade can both liberalize and constrain the movement of much needed goods in times of crisis. While the call by the president of the Commission to lift any ban to the circulation of medical equipment within the internal market might eventually work, the first COVID-19 tender awards show the scars of a Union without unity.
COVID-19 is revealing how the system of free trade, based on profit accumulation and consumerism, is not only deepening inequalities between the global north and global south but also between and within countries in the north. Beyond the EU, the imposition of trade restrictions by many countries is raising concerns that the ‘multiplier effect’, where one country’s export restriction leads to another, is likely to have detrimental social and economic impacts, including on access to food and medical suppliers. We are currently witnessing an unprecedented level of export bans, including bans on the export of medical protective equipment by the EU; of 80 drugs, including insulin, morphine and paracetamol, by the UK; and of face masks by Malaysia and Thailand. There will also be significant pressures on food supplies in many countries where global supply chains have created complicated webs of production and distribution that are likely to be impacted by travel, export and import restrictions and agricultural policies that have favoured export production over food self-sufficiency and which are dominated by large transnational corporations. A crucial question to ask going forward is what a progressive trading regime would look like that prioritized access to food and medicines to populations, especially those most vulnerable to disease and malnutrition in the global south and elsewhere?
3. Intellectual Property and Access to Medicines
The COVID-19 pandemic is indeed revealing how the union of intellectual property (IP) with global trade, in the form of the WTO Agreement on Trade-Related Aspect of Intellectual Property (TRIPS Agreement), adversely impacts public health. This is because under TRIPS, a patent — a temporary exclusive right granted to an inventor of a new product or process — lasts 20 years. Exclusivity, as a result of patents, means an innovator pharmaceutical company can prevent entry into the market of lower-priced generic versions when available.
Bearing in mind the mistakes and missteps of the HIV/AIDS crisis of the early 1990s, the COVID-19 pandemic presents another opportunity for the international community to come together to develop a plan to facilitate access to medicines and other tools needed not only for treatment of the virus but also for detection, prevention, and isolation. As early trials of potential COVID-19 treatments begin to emerge, there is an urgent need for international collaboration on the research and development of new medicines, as well as greater flexibility in the implementation of pharmaceutical patent law regarding access to and sharing of pharmaceutical technology on COVID-19. This is thus an opportune moment to limit data exclusivity and ensure easier access to clinical trial data and encourage quicker development of new vaccines/drugs.
Following the example of the Chilean Chamber of Deputies’ approval of compulsory licenses for patents relating to COVID-19, countries should ensure access to and availability of drugs and vaccines if and when they become available. This includes invoking the TRIPS Agreement flexibilities, which include compulsory license and public non-commercial use to address the pandemic. As nearly every drug in development stages for COVID-19 is backed by publicly funded research and funds, we need a radical rethink of the global patent system focused on maximising access to new inventions for this and future pandemics.
4. Financial Regulation and Sovereign Debt
The financial crisis generated by the pandemic has seen a substantial set of monetary stimulus by major central banks. The US Federal Reserve Board (the Fed) has lowered interest rates, revived the discount window, and launched a US$700 billion new round of quantitative easing. Moreover, it strengthened the swap network with the other five central banks that sit at the core of the international monetary system. As during the global financial crisis of 2008, it has also extended swap lines to nine other central banks, including those of emerging markets such as Brazil, Mexico, and South Korea. In turn, the ECB has announced a €750 billion Pandemic Emergency Purchase Programme to purchase private assets and sovereign debt of Eurozone member states.
In the meantime, developing and emerging economies (DEEs) face a huge pressure, with sudden stops in private capital inflows and the largest outflows ever, amidst fears that aid flows might also diminish. Unless capital controls are adopted by the emerging economies included in the arrangement, it is not certain whether those swap lines will alleviate the pressure over their currencies, as the run towards safer assets denominated in the world’s top currency is not likely to stop anytime soon. Importantly, the Fed’s bilateral swap arrangements exclude the vast majority of countries in the world, which will be left unprotected if there is a dramatic run towards liquidity in US dollars.
This reinforces the idea of a global hierarchy of money in which the core (and sometimes a select group in the periphery) of the system can access unconditional liquidity backstops to ease strains in global funding markets, while emergency liquidity for most of the periphery will typically take the form of conditional (and possibly insufficient) IMF lending. A resetting of the international monetary system would be needed to resolve these background asymmetries but an immediate option would be an injection of liquidity through Special Drawing Rights (SDRs) by the IMF without the typical eligibility requirements and conditionalities attached to most of its programmes. This would provide a margin of manoeuvre for those states to implement countercyclical fiscal policies to fight both the pandemic and the economic recession which appears on the horizon.
A new round of sovereign debt crises in the global south would produce dire socioeconomic consequences as public spending on basic services such as education, welfare, and crucially healthcare, would likely need to be reduced by austerity measures put in place to ensure debt repayment. This poses yet again an urgent call for a sovereign debt restructuring mechanism that provides for a fair and rules-based distribution of losses should a state become insolvent. As a matter of urgency, a global Jubilee is crucial to ensure an alleviation of the debt burden of the world’s least well-off countries.
5. International Public Finance
The COVID-19 pandemic and probable ensuing financial and sovereign debt crises also demonstrate the urgent need to rethink the role of international public finance and the institutions that mobilize and disburse collective resources for financing global public goods. The current model of financing for collective public goods, including fighting pandemics and intervening in financial crises, relies on discretionary aid contributions by developed countries (and, increasingly private donors) rather than on collective and mandatory pooling of funds to redistribute global resources. This means that financing remains contingent on the economic and political exigencies of donor countries and large non-state actors, such as philanthropic foundations, and subject to the conditionalities set by donor states and the international organisations they control, notably the IMF and the World Bank.
As it is, macroeconomic and structural conditionalities attached to lending by these institutions, such as fiscal austerity, liberalisation, deregulation and privatisation of economic sectors, have significantly reduced the capacity of states in the global south to withstand natural disasters, health epidemics and financial crises. In the arena of global health, reliance on earmarked contributions and extra-budgetary trust funds at the World Health Organisation (WHO) which prioritised donor interests in communicable diseases over institutional capacity building and public health systems, have been attributed as a key factor for failures in the Ebola responses. Thus, there is an urgent need to examine the forms of financing extended to countries to support responses to this pandemic and ensure that the package of measures does not further increase their debt burden through taking on more public and private debt; and that conditionalities attached to these financial instruments do not further undermine states’ capacity to invest in public health systems, combat pandemics and withstand economic shocks emanating from such health crises.
6. Business and Human Rights
Corporate responses to the COVID-19 pandemic demonstrate how business operations and activities can exacerbate the human rights harms caused by the pandemic, as well as how businesses can proactively take steps to mitigate their impacts. The crisis exposes the dangers of business models relying on insecure employment, with staff getting laid off at a moment’s notice, and businesses failing to pay employees appropriate sick leave or make reasonable accommodations for employees to self-isolate. Such business models undermine internationally recognized human rights, including (but not limited to) the rights to health, just and favourable conditions of work, adequate standard of living, housing, and social security. More broadly, when businesses engage in or facilitate the hoarding of goods or price-gouging, they limit access to necessary supplies for others, undermining human rights to food, water, and (again) health.
States must respond to the risks businesses pose to human rights. This generally means greater regulation. During this crisis that would include requiring businesses to continue to employ and pay employees on insecure contracts, prohibiting rental evictions, and requiring reasonable accommodations so people can work from home in a sustainable manner, and where necessary balance work with increased caring responsibilities. This demands sustainable economic and structural support for small- and medium-sized businesses (SMEs) to transition to sustainable practices. Over the past decades, the market has driven many SMEs to adopt policies and processes that were always unsustainable but legally permissible. These policies are now extremely harmful to HR. The lessons learned in this crisis should facilitate long-term changes to the market’s model of sustainability, and governments to lead these efforts through clearer regulation and greater training and practical support.
The UN’s authoritative guidance on business and human rights also recognizes that businesses have an independent responsibility to respect human rights, meaning to avoid harming rights. Businesses need to evaluate how their established policies and processes are harming HR and take steps to mitigate those impacts. We have seen numerous success stories of businesses operating independently of the state to secure continuity of benefits for employees on insecure employment, facilitate working from home or to limit hoarding and price-gouging, and even to proactively respond to these threats by producing and donating necessary goods. Those businesses have carried out HR due diligence, even if they called it something else. This now needs to be replicated throughout their operations and with greater attention paid to the full range of HR they might harm.
7. Investment Law and Investor-State Dispute Mechanisms (ISDS)
As indicated in the previous section, states must respond to the risks businesses pose to human rights, but some of the regulatory measures adopted by states to respond to economic, social or humanitarian crises have historically been grounds for claims for damages and compensation by foreign investors. It is therefore foreseeable that, once the effects of the measures taken by states to tackle the CoViD-19 outbreak will become clear, a number of states will face claims by foreign investors before investment arbitral tribunals because such measures may breach international investment agreements. International law provides for circumstances precluding wrongfulness to protect states in situations of necessity or force majeure, and more recent bilateral investment treaties, for example, allow for exceptions to investment protection when measures are taken to protect public health. However, the differences in measures taken by states in response to the CoViD-19 pandemic provide for an exceptional opportunity for investors to exploit the system. The fact that different states have dealt with the pandemic in different ways means that states will have to prove that the measures taken were indeed necessary, whilst foreign investors will be absolved from having to prove that such measures were not necessary. The magnitude of damages awarded for breaches of standards of investment protection means that states already struggling to cope with the aftermath of the pandemic might be additionally burdened by impossible compensations to investors and arbitration costs.
8. The Pandemic of Social Reproduction
Analyses of the impact of COVID-19 often ignore a key aspect of IEL: care and unpaid work. Care work can be commodified and regulated as paid employment or provided as unpaid work. Feminist scholars have coined the term ‘social reproduction’ work to refer to the labour that goes into the daily and generational maintenance of the population. Social reproduction work is unequally distributed in society according to gender, race, class, migration status and geographical locations; and the reliance on its value increases in times of crisis. Care workers, including medical professionals, are required to supplement the capacity of the public healthcare system undermined by years of cuts, privatizations and multinational corporations’ control over access to medicines and supplies. Self-care and self-isolation shift responsibility onto individuals, increasing the gendered and racialised vulnerabilities of households forced to rely on precarious zero-hours contracts and loans via universal credit or forms of retail finance; while solidarity networks mitigate the impact of governments’ long-term inability to adopt adequate welfare measures such a meaningful universal basic income, a job guarantee and an internationalist Green New Deal.
Instead, the herd immunity invoked by some governments mirrors the economic rules that have governed our lives over the last 50 years: the most vulnerable are forced to rely on their and others’ social reproduction, or die. Yet self-care practices have a richer and longer history as part of collective struggles for the recognition of the rights of women, disabled people, and many other minoritized groups. That history and care ethics can inspire us as we continue supporting one another, whilst also holding governments and companies to account for the role they have played and continue to play in this and many other crises around the world, including through international economic legal mechanisms.
9. Conclusion: The Crisis Across and Beyond IEL
The COVID-19 pandemic is an extraordinary occurrence, extraordinary not because it represents an aberration of the normal functions of the global economy and global society but because of the potential of it disrupting a mode of doing, thinking and being that for the most part of history has been premised on exploitation, dislocation and marginalization of vulnerable people. The orthodox logic that has been imprinted into our global collective consciousness about the inherent sensibility of a self-correcting neoliberal market order, sustained by an international legal framework that constitutes it, is rapidly fraying at the seams along with the realisation that unfettered and deregulated private markets are imperfect instruments for dealing with and responding to crises and for supplying public goods and services.
In many ways, the current pandemic is less rupture than continuity, the eruptions of which follow familiar patterns of behaviour from policymakers, market actors and the public. The problematic nature of our international economic architecture is a petri dish for the emergence of the pandemic and for some of the inadequate responses from national and international institutions. But the pandemic surely offers us, scholars and practitioners of IEL and beyond, an opportunity to review, rethink, and reimagine the current legal order so that, when we emerge on the other side, it will not revert to business as usual. It is time, while we are confined within physical borders, to imagine and plan for breaking out of the epistemological, methodological and ideological borders that have led to this and other global crises.
The IEL Collective will be launching a project to collate thoughts, ideas and reflections on this reimagination. If you would like to contribute to our project, please send us an email to firstname.lastname@example.org. We would love to hear from you.
* The IEL Collective is a community formed by like-minded scholars and practitioners to provide a space for critical reflections on IEL. This article was written collectively by Donatella Alessandrini, School of Law, University of Kent; Daria Davitti, Faculty of Law, Lund University and School of Law, University of Nottingham; Luis Eslava, School of Law, University of Kent; Clair Gammage, School of Law, University of Bristol; Annamaria La Chimia, School of Law, University of Nottingham; Serena Natile, School of Law, Brunel University London; Karina Patricio Ferreira Lima, School of Law, University of Durham; Celine Tan, School of Law, University of Warwick; Tara Van Ho, School of Law, University of Essex; Amaka Vanni, Independent Scholar and President-Elect, African Society of International Economic Law; Paolo Vargiu, School of Law, University of Leicester; and Anil Yilmaz Vastardis, School of Law, University of Essex.