Europe renews push to slash global tariffs on medical goods

Bloomberg

The European Union (EU) is pressing for a global deal to eliminate tariffs on pharmaceuticals and medical supplies in an effort to guard against the kind of supply-chain shock triggered by the coronavirus pandemic.
The European Commission, the EU’s executive arm, outlined options for encouraging worldwide commerce in health-care goods in a policy paper due to be discussed by the 27-nation bloc’s trade ministers in a June 9 video conference.
The goal would be to end customs duties on drugs including antibiotics, penicillins and vaccines and on equipment such as masks, gloves and gowns. The initiative would also aim to give countries less room during health crises to curb international trade in such goods through, for example, export restrictions.
“Facilitating international trade in health-care products contributes to making supply chains more resilient and diversified,” the commission said in the internal paper obtained by Bloomberg News. “International trading opportunities also incentivise greater production in the sector, as companies can serve the global as opposed to only the domestic market.”
The commission proposes that the EU seeks an international agreement open to all World Trade Organisation Members for participation, for the duties cut. “Tariff elimination would be conditioned on reciprocity among countries representing a significant share of world trade in the sector,” according to the memo.
As countries around the world emerge from lockdowns triggered by the pandemic, the EU wants to use trade as a tool to help revive devastated economies and prevent commercial barriers from re-emerging during future health scares.
Global market-opening measures for health-care goods would also help the least-developed nations cope with future crises, according to the commission.
The EU, the world’s most lucrative single market, has itself faced criticism for temporarily requiring an authorisation this year for the sale outside the bloc of personal protective equipment needed to fight the coronavirus. The EU let the export controls, introduced in mid-March, lapse last week.

Europe’s economy slowly emerging from a record slump
Europe’s economy is slowly emerging from a record slump that’s destroyed businesses and jobs and could lead to a near double-digit contraction year.
A gauge of economic activity in the 19-nation euro region rose in May to highest in three months after an easing of lockdown restrictions allowed companies and shops to resume business. Yet the measure still signals a sharp contraction in manufacturing and services, according to IHS Markit, which estimates a 9% economic slump this year.
Governments across the euro area are working on fiscal-stimulus plans to restart growth, complementing
the European Central Bank’s unprecedented monetary support. The European Commission is adding $837 billion in grants and loans, with those countries most affected by the pandemic set to receive particular help.
Aid prospects have bolstered confidence in Italy, where the coronavirus has claimed more than 33,000 lives. A measure for future activity in the private sector climbed above the key 50 level for the first time in three months.
Optimism also returned to France, with pessimism easing in the rest of the bloc.
For the euro area, IHS Markit’s headline Purchasing Managers Index rose to 31.9 in May from just 13.6 in April.
“The planned lifting of lockdowns will inevitably help boost business activity and sentiment further in coming months,” said Chris Williamson, an economist at IHS Markit. “However, the outlook is scarred by the prospect of demand remaining weak due to household spending being hit by high levels of unemployment and corporate spending being subdued.”
Euro-area employment declined sharply in May despite evidence that companies made use of furlough schemes, and orders continued to shrink significantly.