Revised on 25 June 2020, 8:30 a.m.
Any substantive changes in this HillNote that have been made since the preceding issue are indicated in bold print.

(Disponible en français : COVID‑19 et commerce de fournitures médicales nécessaires)

On 3 March 2020, the World Health Organization (WHO) said that lives are at risk because of the COVID-19–induced global shortage of ventilators and personal protective equipment (PPE), such as respirators, surgical face masks, gloves, goggles and garments. It also advised against export restrictions, and recommended that countries should implement measures aimed at incentivizing increased domestic production of needed medical goods.

Moreover, in a 20 April 2020 joint statement, the directors-general of the WHO and the World Trade Organization (WTO) urged countries to keep trade in medical supplies “as open and predictable as possible” to help address the COVID-19 pandemic.

However, to meet domestic requirements for these goods, some jurisdictions have imposed export bans or licensing requirements. These jurisdictions include some of Canada’s trading partners and members of the Ottawa Group on WTO Reform.

This HillNote identifies a number of these export restrictions and provides perspectives from selected international organizations and policy makers about them. It also discusses the trade-related measures concerning import tariffs and procedures that Canada has implemented in an effort to secure an adequate supply of needed medical goods.

Export Restrictions

Bans and Licensing Requirements

According to a 23 April 2020 WTO report, by 22 April 2020, 80 jurisdictions had restricted their exports of PPE, ventilators or medicines as a result of the COVID-19 pandemic. However, to date, Canada has chosen not to use export restrictions to address shortages of such goods.

Table 1 presents export bans and licensing requirements that were being applied by selected jurisdictions on certain medical goods as of 17 June 2020.

Table 1 – Export Restrictions on Certain Medical Goods, Selected Jurisdictions, as of 17 June 2020

Notes: * indicates jurisdictions with which Canada has a free trade agreement. The Canada–European Union Comprehensive Economic and Trade Agreement will continue to apply to the United Kingdom until at least 31 December 2020.
† indicates members of the Ottawa Ministerial on WTO Reform (the Ottawa Group), which was created in October 2018 with the goal of strengthening the World Trade Organization’s functioning. The Ottawa Group comprises Australia, Brazil, Canada, Chile, the European Union, Japan, Kenya, Mexico, New Zealand, Norway, Singapore, South Korea and Switzerland.
Effective 15 March 2020, the European Union – which is Canada’s trading partner and a member of the Ottawa Group – imposed a licensing requirement concerning surgical face masks, gloves, garments and goggles. The requirement was terminated on 25 May 2020.
An export licence is a government-issued export control document that is designed to monitor the exportation of certain products, such as sensitive technologies, radioactive substances or goods that are in short supply in the domestic market. The government must approve such exports.

Source: Table prepared by the author using information obtained from: World Trade Organization, COVID-19: Trade and trade-related measures and International Trade Centre, Tracking of COVID-19 temporary trade measures.  

On 3 April 2020, U.S. President Donald Trump signed a memorandum directing that export restrictions be applied on certain medical goods. On 7 April 2020, the U.S. Federal Emergency Management Agency (FEMA) issued a temporary rule, which was published in the U.S. Federal Register on 10 April 2020,  banning U.S. exports of respirators, surgical face masks and gloves without its explicit approval.

FEMA’s temporary rule exempts U.S. manufacturers that meet two requirements: they had export contracts prior to 1 January 2020; and they distributed at least 80% of their production within the United States in the preceding 12 months. Additional exemptions were published on 21 April 2020, and include shipments to overseas U.S. military bases and embassies, diplomatic shipments from foreign embassies in the United States to their home countries, and exports of the covered medical goods by not-for-profit organizations for donation to foreign charities or governments.

On 9 April 2020, U.S. Customs and Border Protection issued guidance regarding the memorandum signed by President Trump and FEMA’s temporary rule. This guidance identifies exclusions from the export ban, including shipments to Canada and by 3M.

Perspectives from Selected International Organizations and Policymakers

A number of international organizations have commented on export restrictions that are being applied on certain medical goods. For example, on 24 March 2020, the WTO’s director-general asked countries to be transparent about any new trade-related measures implemented as a result of the COVID-19 pandemic.

Similarly, according to a 10 April 2020 Organisation for Economic Co-operation and Development report, countries should honour their commitments to notify the WTO about trade-related measures they are taking in response to COVID-19. It suggests that countries could use a shared and transparent information base to formulate national policy responses and to maintain international cooperation regarding trade in needed medical goods.

Nonetheless, according to a 23 April 2020 WTO report, transparency at the multilateral level regarding countries’ export restrictions on medical goods is lacking. The report notes that 39 of the 72 WTO members that had imposed export restrictions had notified the WTO about its new measures.

Policymakers are also focused on trade in such goods. For instance, in a 30 March 2020 joint statement, the G20 trade ministers said that any needed emergency measures designed to address COVID-19 should meet certain requirements.

In particular, the ministers agreed that such measures should be targeted, proportionate, transparent, temporary and consistent with WTO rules. They also stated that these measures should not create unnecessary barriers to trade or disrupt global supply chains.

Consistent with their national requirements, these ministers also committed to implement measures intended to facilitate trade in essential medical goods at affordable prices and in places where they are most needed.

Furthermore, on 7 April 2020, the ministers of foreign affairs of Australia, Brazil, Canada, France, Germany, Indonesia, Morocco, Peru, Singapore, South Africa, Turkey and the United Kingdom stressed “the critical need to ensure the cross-border flow of essential goods and to keep supply chains intact during this ongoing crisis, especially for medical supplies and personal protective equipment.”

More recently, through the Ottawa Ministerial on WTO Reform (the Ottawa Group), 13 jurisdictions – Australia, Brazil, Canada, Chile, the European Union, Japan, Kenya, Mexico, New Zealand, Norway, Singapore, South Korea and Switzerland – are working to ensure transparency concerning export restrictions in the context of COVID-19. On 15 June 2020, the Ottawa Group’s ministers of trade released a joint statement in which they committed to “withdraw any trade restrictive measures that they introduced in response to COVID-19 as quickly as possible.” The statement also called for “analysis and consideration” of new initiatives for WTO members to facilitate trade in medical goods.

Canada’s Trade-Related Measures to Increase the Availability of Needed Medical Goods

In an effort to secure adequate supplies of needed medical goods, the Government of Canada has implemented measures designed to increase domestic production of specific goods. It has also taken trade-related actions to waive import tariffs on goods required for an emergency and to change import procedures.

Import tariffs

Since the onset of the COVID-19 pandemic, supplies of certain medical goods have been limited, leading to upward pressure on the prices of such goods. For example, according to a media report, in March 2020, a package of 20 face masks manufactured by 3M and sold by an unauthorised reseller had a price of US$387; the normal retail price was about US$14.99.

On 16 March 2020, in an effort to alleviate the financial pressure on entities that buy medical goods that are limited in supply, the Government of Canada announced the temporary removal of tariffs applied on goods required for an emergency. Any unused goods that are imported tariff-free must be exported from Canada when they are no longer required.

The goods eligible for tariff-free treatment as of that date include surgical face masks, gloves and ventilators imported by, or on behalf of, health care centres and first response organizations. These organizations include those employing police officers, fire fighters and medical response teams. On 6 April 2020, this tariff-free treatment was extended to imports of such goods by, or on behalf of, public or private care residences, such as seniors’ residences, retirement homes and shelters.

Import procedures

Under the Food and Drugs Act and the Medical Devices Regulations, Health Canada regulates the manufacture, importation and distribution of ventilators, respirators, surgical face masks and garments.

In an attempt to address the shortage of certain medical goods, on 18 March 2020, the Minister of Health issued the Interim Order Respecting the Importation and Sale of Medical Devices for Use in Relation to COVID-19. The Interim Order enables expedited authorization concerning the importation and sale of medical devices used in the diagnosis, treatment, mitigation or prevention of COVID-19.

In essence, the Interim Order exempts firms from the labelling requirements under the Medical Devices Regulations, and expedites Health Canada approvals for firms that apply for an authorization to import and sell:

• new COVID-19–related medical devices that are not yet licensed in Canada or other jurisdictions;
• existing medical devices licensed under the Medical Devices Regulations that now also have COVID-19–related uses; and
• COVID-19–related medical devices that have already been approved by a foreign regulatory authority.

Firms must meet certain recordkeeping requirements in relation to these devices. In particular, there are requirements concerning the reporting of incidents and voluntary recalls, and the distribution of such devices.

Additional Resources

Global Trade Alert, Tackling COVID-19 together: the trade policy dimension, 23 March 2020.

World Trade Organization, Trade in medical goods in the context of tackling COVID-19, 3 April 2020.

Author: Offah Obale, Library of Parliament

Categories: Business, industry and trade, COVID-19, Economics and finance, Health and safety

Tags: Coronavirus, COVID19, Medical goods, Pandemic, Personal protective equipment (PPE), Public health, Trade, World Health Organization