📰 Officials sitting on vaccine manufacturing potential need to be charged with manslaughter: Delhi HC
‘Lot of scope and infrastructure for manufacture of vaccine in India’
•Government officials who are sitting on the “untapped potential” of India to manufacture COVID-19 vaccine should be charged with “manslaughter”, the Delhi High Court warned on Wednesday.
•“There is a lot of scope and infrastructure for manufacture of vaccine in India. And this matter, you (Centre) must really consider. This untapped potential has to be utilised. Your officers are not realising this,” a Bench of Justice Manmohan and Justice Najmi Waziri said.
•The court’s observation came while hearing a plea of Delhi-based Panacea Biotec, which has sought the release of an arbitral award passed in its favour and against the Centre, saying it needs funds at the earliest in the larger interest of humanity as it has already manufactured trial batches of Sputnik V vaccine in collaboration with Russian Direct Investment Fund and wants to scale it up.
‘Palpable disquiet’
•The court said the Centre must expedite the process of clearing samples of Panacea Biotec, noting “there is such an element of palpable disquiet in the country. Everybody wants vaccine. We have to cut this short”.
•Additional Solicitor General Balbir Singh informed the court that the Indian government has decided to procure Sputnik V vaccine from Dr. Reddy’s alone. He said Panacea has to go through ethnicity and efficacy tests for any adverse effect on the population.
•Reacting to this, the court remarked, “Then the bridge trials should have been conducted even with regard to the imported vaccine. You have done away with it for the imported vaccine. Why insist on it for the domestic manufacturer but not for the manufacturer abroad?”
•“And the rule itself empowers you to actually waive this (tests), if you in your wisdom like to waive it. In the end they are identical products, one is imported and another manufactured here,” the court said.
•“The problem is of fear psychosis that some vigilance enquiry will take place, audit will take place, police investigation will take place. Tell them (officers), this is not the time to be wary of these investigations and audit reports. This is leading to deaths today... Actually some people need to be charged with manslaughter if they have been sitting over this untapped potential," the court remarked.
•The High Court further said that the population in Himachal Pradesh, Rajasthan, Punjab and other States around Delhi can be supplied with the vaccines which are manufactured in north India. “Half the country can be fed from here only. There is a really amazing urgency,” it said.
•The High Court also highlighted that the Centre in its affidavit had admitted to not having any information or knowledge about the vaccine manufacturing capability of Panacea.
•“In ordinary circumstances you may be right that people have to approach you. But these are extraordinary circumstances,” it said, directing the Centre to come back with some “positive” instruction on the issue by Friday, the next date of hearing.
•During the hearing, the ASG argued that “the entire issue of procuring and manufacturing of vaccines, including Sputnik, is pending before the Supreme Court and therefore this court should not pass any order in the present application”.
If passed by States and UTs, it will prescribe norms for lease agreements, deposits, dispute handling and other aspects of rental properties
•The Union Cabinet on Wednesday approved the Model Tenancy Act to be sent to the States and Union Territories to enact legislation or amend laws on rental properties. The meeting was chaired by Prime Minister Narendra Modi.
•“It will help overhaul the legal framework with respect to rental housing across the country, which would help spur its overall growth…It will enable creation of adequate rental housing stock for all the income groups thereby addressing the issue of homelessness,” a government statement said.
•The model Act, if passed by the States and UTs, would prescribe the norms for lease agreements, deposits, dispute handling and other aspects of rental properties. “It will enable institutionalisation of rental housing by gradually shifting it towards the formal market and facilitate unlocking of vacant houses for rental housing purposes,” the government said.
📰 UNGA head: India to vote for Maldives
Decision will disappoint Afghanistan, which has Zalmai Rassoul in the race
•India will vote in support of Maldives’ Foreign Minister Abdulla Shahid in the election of the President of the United Nations General Assembly next week, a decision which will disappoint another close neighbour, Afghanistan, which has former Foreign Minister Zalmai Rassoul in the running.
•The race between the South Asian neighbours for the post, which is being chosen this time from the Asia-Pacific grouping, will be decided in the election on June 7.
•According to a senior official in Kabul, the Ghani government has formally requested India to vote for Mr. Rassoul, and was still hopeful of securing support. However, at least three government officials aware of the process here have said that India has made it clear that it cannot vote for Afghanistan as it had committed support for the Maldives, and suggested that Mr. Rassoul’s candidature had been announced only in January, which was quite late for the race. “Normally it takes about a year to canvass for a position like the UNGA President,” said one official. “While Afghanistan had sounded us out earlier, they did take very long to announce the candidate, and by then we had already taken a call [on the Maldives].”
•Sources suggested that the announcement of Mr. Rassoul’s decision to run had taken many in Delhi by surprise, as they had hoped that Mr. Shahid to be a consensus candidate in the Asian grouping, which gets its turn once every five years.
•“A vote for the President of the GA is always very divisive both for the concerned regional group, as well as for the wider membership of the UNGA. Such a situation allows the major powers who have veto privileges outside the UNGA to use the elections to pursue their own agendas,” former Indian Permanent Representative to the United Nations Asoke Kumar Mukerji told The Hindu .
•In 2016, Fiji won the election after a bitter contest with Cyprus that saw the U.S. and China taking different sides.
•Officials suggested that in the current contest, China could support Afghanistan.
•While most countries have not disclosed their vote yet, India had confirmed its support to the Maldives during a virtual meeting between External Affairs Minister S. Jaishankar and Mr. Shahid in August 2020, and Foreign Secretary Harsh Shringla had made a public statement during a visit to Male last November.
•“With his vast diplomatic experience and leadership qualities, Foreign Minister Shahid has the best credentials to preside over the General Assembly in these tumultuous times,” Mr. Shringla had said.
•Given major global moves on Afghanistan as the U.S. prepares to pull out all troops in September this year, New Delhi is keen that its stand is not seen as taking a position against Afghanistan, and officials stressed that the vote was not an indicator of bilateral ties with either country.
📰 China, Pakistan, Afghanistan Foreign Ministers to hold talks amid U.S. withdrawal ‘uncertainty’
The trilateral dialogue, started by China, would address “new uncertainties” in the wake of “the unilateral withdrawal of U.S. and NATO forces at a critical stage” of the reconciliation process
•China on Thursday will chair a meeting with the Foreign Ministers of Afghanistan and Pakistan, as Beijing looks to step up its engagement with both Kabul and Islamabad amid the withdrawal of U.S. forces.
•China’s Foreign Ministry said on Wednesday the fourth meeting between the three countries’ foreign ministers will be held via video link and would be chaired by China. The trilateral dialogue, started by China, would address “new uncertainties” in the wake of “the unilateral withdrawal of U.S. and NATO forces at a critical stage” of the reconciliation process, the ministry said.
•The U.S. Central Command said this week between 30-44% of the withdrawal of troops had been completed, with President Joe Biden announcing in April a complete withdrawal by September 11 this year.
•The three countries’ vice foreign ministers, at a virtual dialogue in July, had "urged for an orderly, responsible and condition-based withdrawal”.
•Afghanistan’s Ambassador to China, Javid Qaem, was quoted as telling Chinese media this week that China’s “good relations with both Afghanistan and Pakistan” could see Beijing playing "a critical role in building trust between these two neighbouring countries”.
•The Afghan envoy "appreciated China's offer to facilitate Afghan peace talks in the future,” the official Xinhua news agency quoted him as saying, noting that Foreign Minister Wang Yi had in a May 17 phone call with Afghan National Security Advisor Hamdullah Mohib offered "to facilitate internal negotiations among various parties in Afghanistan, including creating necessary conditions for negotiations in China."
•He also called on India and China to work together despite their other bilateral problems. "Afghanistan being a stable country is in favour of countries such as the U.S., China and India,” the Communist Party-run Global Times quoted him as saying. "It is more important how we and Pakistan can build trust and how China and India can build trust regarding Afghanistan regardless of other issues."
📰 Burnt-out container ship sinking off Sri Lanka
It has 350 tonnes of oil in its fuel tanks
•A burnt-out container ship that has already caused Sri Lanka’s worst maritime environmental disaster was sinking on Wednesday with nearly 350 tonnes of oil in its fuel tanks.
•The MV X-Press Pearl , carrying hundreds of containers of chemicals and plastics, burned for 13 days just outside Colombo’s harbour before rescue workers finally extinguished the blaze on Tuesday. Dutch salvage firm SMIT attempted to pull the still-smoking wreckage of the 31,600-tonne vessel into deeper water on Wednesday but the effort stalled.
•Navy spokesman Indika de Silva said the stern had sunk to the bottom at a depth of 22 metres. “The bow is still afloat, but the stern is resting on the sea bed,” Mr. de Silva said.
•The 186-metre ship was still tethered to a powerful tug as experts mulled whether to attempt to refloat it. A huge amount of plastic debris has inundated beaches, and authorities now fear an even greater disaster should the ship’s 297 tonnes of heavy fuel oil and 51 tonnes of marine fuel oil leak into the Indian Ocean. Some oil was already visible near the beaches of Negombo, about 40 kilometres from Colombo, although it was not clear if it was from the stricken ship.
📰 India’s trade deficit hits 8-month low
Exports rise 67% in May 2021
•India exported merchandise worth $32.21 billion in May 2021, 67% higher on a year-on-year basis and nearly 8% over May 2019’s pre-pandemic numbers.
•The country’s merchandise trade deficit shrank to an eight-month low, as imports over the month amounted to $38.53 billion, 68.54% over May 2020 and 17.47% lower than May 2019.
•Major sectors that saw a spurt in exports in May, compared to the pre-COVID times, included cereals, iron ore, cotton yarn and handloom products, jute, rice and ceramics. However, leather, tea, readymade garments, oil seeds, handicrafts and gems and jewellery, saw a significant dip over the same period.
•The Federation of Indian Exporters’ Organisations chief Sharad Kumar Saraf said that 19 out of 30 major product groups have recorded impressive growth over May 2020, and the gradual opening up of major global markets is bolstering orders.
•ICRA chief economist Aditi Nayar attributed the contraction in the trade deficit to $6.3 billion in May from $15.1 billion in April 2021 to the State wise restrictions that widened over May and curbed domestic demand for both gold and oil.
•“A predominant 63% of the decline in the trade deficit in May 2021 relative to April 2021 was on account of the collapse in gold imports, with the balance led by a narrower oil deficit, led both by higher exports and lower imports,” she said, adding that exports had displayed a mixed trend.
•“There is a sharp sequential rise in oil exports, even as non-oil exports dipped for the second consecutive month to US$26.9 billion in May 2021 from US$ 31 billion in March 2021. Importantly, non-oil, non-gold imports remained largely steady over April and May. To an extent, rising global commodity prices would have masked a dip in domestic demand,” she said.
•“The need of the hour is to soon notify the RoDTEP (Remission of Duties and Taxes on Export Products) rates to remove uncertainty and help expedite new contracts with foreign buyers. The government must address some of the key issues including priority status to exports sector, release of the necessary funds for MEIS and clarity on SEIS benefits, among others,” Mr Saraf said.
•Engineering Exports Promotion Council president Mahesh Desai said the release of assured duty refunds will provide a major push to the sector which recorded a 53% growth in May over last year and 16% over May 2019 levels. “This will not only improve the profit margins of the pandemic-hit exporters but also boost sentiments considerably,” he said.
📰 Embracing children: On children orphaned by COVID-19
Speedy implementation of relief schemes for children orphaned by COVID-19 is essential
•Well begun is not always half done, and, in any case, half done is never good enough. The Centre’s response to the Supreme Court that the modalities of the expansive assistance programme for children orphaned by COVID-19, announced by the Prime Minister, were yet to be formulated comes as a disappointment. While rightly feted for its announcement of a comprehensive programme for the most vulnerable section of the population during this COVID-19 pandemic, children, the Centre did not lay down procedural formalities for implementation. It is clear from the National Commission for Protection of Child Rights’ submission in the Supreme Court that nearly 10,000 children are in need of immediate care and protection. They include children aged between zero and 17 years orphaned or abandoned during the COVID-19 pandemic since March 2020. The total was 9,346 children who have been affected, including 1,742 children who lost both parents, 7,464 who have lost one parent, and 140 who have been abandoned from March 2020 to May 29, 2021. It further told the apex court that these children run a high risk of being pushed into trafficking and the flesh trade. There is thus no doubt that time is of the essence here.
•Given the urgency of rescuing these children, the Government cannot dawdle over figuring out implementation strategies. A swift laying down of processes and monitoring mechanisms to kick start rescue and relief, besides undertaking the continuing process of estimating beneficiaries is needed. Children have little or no agency of their own and are still dependent on adults to get by, and the disruption that COVID-19 has wrought on their lives is devastating. The experience of States that sprang to the assistance of children orphaned by the Indian Ocean tsunami can be factored in — they were embraced into the safety net of the social security system, and funds were placed in a trust for them for use when they reach a certain age. While the plans announced under the PM CARES Fund include this, and are far more expansive looking at funding schooling, higher education, even health insurance, a promise is nothing if not fulfilled. The responsibility of the Government now is to go the full mile to ensure that these benefits reach every child fitting the criteria, besides making sure that the children are not exploited with an eye on the eventual bounty. Several States have announced their child-care packages on similar lines too, with some setting up monitoring committees to ensure implementation. Sincere implementation through committed staff, and using existing systems such as 1098 for periodic identification of children in need would be the cornerstones of such a project, especially at a time when the onslaught of COVID-19 is far from over.
📰 Exam fear: On Class XII exam cancellation
The CBSE Class XII exam has been cancelled, but the Centre must act to secure education
•Several anxieties faced by students, parents and schools have been calmed by the decision to cancel the Central Board of Secondary Education Class XII examination following a review by the Centre. Shaken by the carnage wrought by the second wave of the pandemic, the Government had little choice but to act against possible fresh clusters of infection, although that will mean considerably limited opportunities for students. Hopes for predictability in 2021, after the traumatic experience of students all through last year, have been dashed by the emergence of the double mutant variant of the coronavirus that has spread far and wide because of superspreader events. The Government and Prime Minister Narendra Modi were obviously anxious to be seen as acting decisively on the examination question, after a long phase of dithering in formulating a national response. The decision to cancel the crucial Class XII public examination and replace it with an objective assessment for certification will help boards of education in the States to move in the same direction. Some pointers to an assessment scheme can be found in the CBSE’s submission to the Supreme Court last year, when the pandemic prevented the completion of Class XII examinations: for students who could not take the examination, as in Delhi, the internal, practical, and project assessment was proposed as a proxy to arrive at results, with an option to improve performance at a subsequent examination. The Board must now come up with a model scientific scheme.
•The decision to cancel the examination in 2021 may have resolved a prickly issue, but the question of national entrance examinations — such as NEET and JEE — need to be addressed. Importantly, the Centre must recognise that major factors such as non-availability of enough vaccine doses, absence of a systematic vaccine coverage plan, and poor understanding of where virus variants are spreading, contributed to the second wave, and may, in fact, cause a third. For instance, there is better comprehension in Britain of where the variant of concern initially isolated from India, B.1.617.2, is spreading in that country because it has a robust genome sequencing programme. Such sharp insight, together with the availability of free and widespread testing, is crucial to stop waves of infections that threaten to hobble the country. The plight of students, which is engaging governments, has to become a top priority. Singapore has just approved mRNA vaccine coverage for children 12 years and older, just as the U.S. regulator FDA has for 12 to 15-year-olds. Britain has thought of 100 extra tuition hours for schools from 2022. There cannot be an interminable wait for vaccines to trickle down to all. The Centre must take responsibility to provide them to everyone, including students.
📰 Adverse changes, federalism imperilled
There needs to be a federal coalition to preserve the idea of a plural India, in terms of culture and politics
•When Dr. Vinod K. Paul, NITI Aayog Member (Health), asserted last week that it was the lack of centralisation that has led to poor management of the ongoing COVID-19 vaccination drive, States joined issue with this statement. Going by the response to this assertion from State governments, it was clear that this claim was not backed by good evidence. Not many could have misread the subtext of this claim for centralisation. It lies within, and simultaneously contributes to, a narrative and practice of the growing centralisation of power by the current government. This sits well with the growing incursions of the Union government into sectors where State governments have a primary responsibility to govern such as health, education and agriculture. Slogans such as ‘one nation-one tax, one market and one ration’ are again part of such appeals to a narrative of a strong nation state rather than one of governance.
Union encroachment
•To be sure, such moves to erode the powers of State governments are not new. In post-independent India, the Centre, on several occasions, has used its powers to dismiss or use the Governor to intimidate democratically elected governments. During the Emergency, education was moved to the Concurrent list which was until then a State subject under the constitutional division of responsibilities. However, the adverse changes to federal relations at present are more systemic.
•To understand what has changed, at the risk of repetition, there has been increasing centralisation in resource allocations and welfare interventions. The gap between the revenue that State governments are allowed to generate and the expenditure that they are expected to incur has been widening, particularly with the implementation of Goods and Services Tax (GST). The shortfall of GST this year and the Centre’s lackadaisical response to demands for compensation by State governments are again known.
•On the other hand, the Centre has been encroaching into domains under State government control through centrally sponsored schemes in sectors such as education and health where States are required to spend about 85% and 82% of public expenditure, respectively (https://bit.ly/3z734Ai). Though some of these have been initiated and supported by previous governments, the intensification of this process is aligned strongly with the rise of the Bharatiya Janata Party (BJP) since 2014. This is particularly visible across the following three domains. While we identify these domains based on Tamil Nadu’s experience, they are equally relevant to States such as Assam, Kerala, Punjab and West Bengal.
State-capital relations
•While coalition governments in the past enabled the rise and the visibility of regional businesses in post-reform India, the current dispensation is working towards centralising economic power in conjunction with political centralisation. It is becoming clear that aligning politically with the BJP is critical to do business. While the rise of yoga guru Baba Ramdev’s business empire is indicative of this, the decline of business groups from southern India over these last few years suggest the reverse of this process.
•We can also see the consolidation and expansion of a few big business groups seen to be close to the BJP, probably at the expense of smaller players. On the one hand, the Centre has sought to insulate Indian big business from global competition by choosing not to enter into the Regional Comprehensive Economic Partnership (RCEP), but has eroded the power of small businesses through support for GST and the call for a single national market. Clearly, bigger players are more likely to benefit from a removal of State-level barriers to trade at the expense of smaller regional players. This re-calibration of State-capital relations works against smaller entrepreneurs and entrepreneurship.
•The BJP also seeks to centralise rent-seeking in parallel to restrict the political financing of regional parties. Regional parties tend to rely on region-specific rent-thick sectors for political funding such as mining and real estate. The BJP has sought to curtail this through a levelling of corruption allegations and the use of central agencies to keep them in check. The reduced avenues for accumulation among regional capital weaken the ability of regional parties to compete with the BJP electorally.
Institutional transgression
•The second challenge is in the use of executive and legislative aggression. Central institutions are increasingly weakening the policy levers of State institutions. Institutions such as the Income Tax Department, the Enforcement Directorate and the National Investigation Agency are being used to intimidate opponents. Appointments are not untouched either.
•For instance, the Centre has been meddling with the appointments of vice-chancellors in universities funded and run by State governments. Direct transfers to beneficiaries of welfare schemes bypassing States are also contributing to this dynamic. Further, as recent events suggest, the Centre is increasingly ignoring elected representatives of State governments, holding meetings with State secretaries and district collectors on issues that are primarily under State control. An example was a recent meeting by Minister of Education Ramesh Pokhriyal Nishank with State Education Secretaries on implementation of the New Education Policy.
•Such transgressions, often with the help of Governors, allow the BJP to actively control administrative decisions including faculty recruitments to align with a majoritarian agenda. Governors perform active administrative roles instead of their signatory roles. Importantly, such moves are also meant to ensure national uniformity in educational institutions. One such example is NEET, or the National Eligibility cum Entrance Test in medical education, which subverts the affirmative action policies developed at the regional level in response to local political demands.
•This is evident in the domain of health as well. Apart from imposing a national lockdown during the first wave of the novel coronavirus pandemic without consulting State governments, the Centre has now put State governments at a disadvantage in vaccine usage by fixing differential pricing for procuring vaccines for them. This forces State governments to pay more even as they are deprived of their revenue shares.
Socio-cultural foundation
•The third and crucial challenge lies in the social-cultural foundations of federalism. As Partha Chatterjee argues, beside the legal-constitutional aspects of federalism, it is diversity in cultural foundation of regions that sustains Indian federalism. Regional identities and cultural traditions have worked against the homogenisation agenda of the BJP. However, this diversity is being challenged at present. Markers of regional identities and regional socio-cultural practices are now interpreted as belonging to a pan-Indian Hindu tradition. Tamil, which has stood as a symbol of an anti-Vedic tradition, is now seen as a segment of that Hindu past, with Tamil Muslims and Christians becoming outsiders. ‘Dravidian’ is attacked as a creation of the British with support from Christian missionaries, emptying the term of its anti-caste politics. Tamils, therefore, need to be mainstreamed by reuniting them with their ‘Hindu’ past. A similar narrative is being built in other regions — Muslims and Christians become less Malayalee, less Bengali and less Assamese. In Bengal, the BJP tried a strategy of linking “Sonar Bangla” to a Hindu past.
Key variables
•This erosion of federal relations is often countered through appeals to restore the constitutional powers of States. However, history tells us that such calls may not amount to much in the absence of regional political assertion. Constitutional powers including fiscal relations are inherently biased towards the Centre. Vesting of all residuary powers with the Centre and giving over-ruling powers to the Centre on matters in the Concurrent list are the primary sources of this bias. What is seldom recognised is that the degree of federalism in India has depended largely on two variables: the nature of political coalitions at the Centre and role of States in such coalitions (the period 1996 to 2014 for example), and the cultural diversity of regions. Hence, what is needed is a federal coalition that looks beyond the legal-constitutional aspects of federalism to preserve the idea of a plural India in terms of both culture and politics.
📰 Asking the right questions
The Naomi Osaka episode is a deeply nuanced issue and calls for a larger conversation
•Naomi Osaka attended a post-match press conference at Brisbane in 2019 in her usual style — a paradoxical mixture of uneasy calm and assured self-deprecation. A reporter questioned her on the upcoming round, and she answered in jest, “Do you have anything interesting to ask? I’m sorry. You guys are so serious.” The room burst into guffaws. “Just doing our jobs,” the reporter ploughed on.
•It is this part of the job that has catapulted Osaka into a controversy, leading to an abrupt withdrawal from the ongoing French Open tournament. Predictably, the entire episode has garnered polarising reactions, most lacking any nuance or understanding of an issue that is comprised of many angles.
What went wrong
•Osaka has been a voice of reason on several issues in the past. This time, too, with her media boycott, she stood up for the mental well-being of athletes. But the timing and method of her announcement left much to be desired. Osaka posted a poorly-worded statement on social media barely four days before the tournament. The Grand Slams are sticklers for tradition and post-match pressers, which are considered sacrosanct and which players are mandated to attend irrespective of whether they win or lose. Of course, rules pertaining to players can and must change in an ever-evolving sport, but that requires time and conversation.
•Osaka was expectedly fined $15,000 after missing her round-one press conference. But being the highest-paid female athlete in the world as per the latest reports, she can afford penalties till the dawn of Championship Day. Other players, who may be living on a shoestring budget, struggling to merely qualify tournaments without any support system, cannot. The conversation surrounding players’ mental health must accommodate all.
•The four Grand Slams, in a joint statement, threatened Osaka with defaults and suspensions in future tournaments. If the governing bodies were worried about optics, then firing such heavy artillery was hardly a genius move. It backfired horribly — they wanted Osaka to talk about the tennis she was playing, but she has now stopped playing because she does not want to talk about it.
•Osaka’s statement after her withdrawal was telling, hinting at larger battles such as depression and anxiety. But she acknowledged that the press has always been kind to her. The fact that Osaka could tell the media to do a better job by asking “interesting questions” and be rewarded with laughs and not scorn shows what she is — a media darling. Her popularity is as much about her forehand shots as it is about how the media has portrayed her, which has been fairly positive. It explains why several journalists are surprised at the suggestion that their questions caused her anxiety. It is yet another example of the disconnect between what critics and spectators interpret the gruelling nature of this sport to be and what it actually is.
•There exists a larger question of what we expect from our sporting icons. Are we satisfied with them just doing their job — playing, winning — or do we want to get to know the person, the tactical genius, behind the champion? It takes a particular brand of mental fortitude to thrive in a punishing and lonely sport such as tennis. It is this trait that journalists most often want to probe and showcase. The ideal way to do that would be through long-winded, private chats. But those are offered only to a select few. Others are then left with only one avenue — the press conference. If it is such an integral part, the powers that be must then focus on making it more player-friendly and nurturing a connection with journalists based on trust and empathy.
•The effect of a star’s presence, both on and off-court, permeates deeply. It means more coverage, and, in turn, more income for the sport, which trickles down to every player. A champion’s night match increases television ratings. In this case, a few minutes spent in an interview room can make millions in sponsorship deals. Hopefully, the sport and its players will be able to figure out ways to work together on this.
📰 Close the vaccination gap, in global lockstep
Immunisation needs cooperation and is a prerequisite for lifting the restrictions holding back economies and freedoms
•By the end of May 2021, only 2.1% of Africans had received at least one dose of a COVID-19 vaccine. We need to close the vaccination gap between advanced economies and developing countries to avoid what the World Health Organization (WHO) Director-General, Dr. Tedros Adhanom Ghebreyesu has called “vaccination apartheid”. Doing so is both morally right and in everyone’s interest.
•Therefore, we need global multilateral action to increase the production of vaccines and accelerate the roll-out worldwide. Since the beginning of the novel coronavirus pandemic, this is the path chosen by the European Union (EU). It is now also the path defined by the G20 leaders at the Global Health Summit in Rome on May 21.
A worry
•The pandemic is still killing thousands of people every day and at the current pace, the whole world will not be vaccinated before 2023. Yet, a widely vaccinated world population is the only way to end the pandemic; otherwise, the multiplication of variants is likely to undermine the effectiveness of existing vaccines.
•Vaccination is also a prerequisite for lifting the restrictions that are holding back our economies and freedoms. These restrictions penalise the whole world, but they weigh even more heavily on developing countries. Advanced countries can rely more on social mechanisms and economic policy levers to limit the impact of the pandemic on their citizens.
•If the vaccination gap persists, it risks reversing the trend in recent decades of declining poverty and global inequalities. Such a negative dynamic would hold back economic activity and increase geopolitical tensions. The cost of inaction would for sure be much higher for advanced economies than what we collectively would have to spend to help vaccinate the whole world. Therefore, the EU welcomes the $50 billion plan proposed by the International Monetary Fund in order to be able to vaccinate 40% of the world population in 2021 and 60% by mid-2022.
EU’s lead role
•To achieve this goal, we need closely coordinated multilateral action. We must resist the threat posed by linking the provision of vaccines to political goals and “vaccine nationalism”. The EU has rejected both since the beginning of the pandemic. The EU has been vaccinating its own population, while exporting large volumes of vaccines and contributing substantially to the vaccines roll-out in low-income countries. Europeans can be proud of this record. India’s “Vaccine Maitri” is another example of global solidarity.
•In 2020, the EU supported the research and development of vaccines on a large scale and contributed significantly to the new generation of mRNA vaccines. The EU then became a major producer of COVID-19 vaccines with, according to WHO, around 40% of the doses used globally so far. The EU has also exported 240 million doses to 90 countries, which is about as much as we have used within the EU.
•The EU with its member states and financial institutions — what we call “Team Europe” — is also donating vaccines to neighbours in need, particularly in the Western Balkans. It aims to donate at least 100 million more doses to low- and middle-income countries before the end of 2021, as agreed at the last European Council. With €2.8 billion, Team Europe has also been the main contributor to the COVAX facility, which enables poorer countries to access vaccines; around one-third of all COVAX doses delivered so far have been financed by the EU. However, this effort is still far from sufficient to prevent the vaccination gap from widening.
•To fill this gap, countries with the required knowledge and means should increase their production capacities, so that they can both vaccinate their own populations and export more vaccines, as the EU is doing. In cooperation with vaccine manufacturers, we are working to increase the EU vaccine production capacities to more than three billion doses a year by the end of 2021.
•Our European industrial partners have committed to deliver 1.3 billion doses of vaccines before the end of 2021 to low-income countries at no-profit, and to middle-income countries at lower prices. They have also committed themselves to further deliver over 1.3 billion doses for 2022 — many of which will be delivered through COVAX.
Supporting Africa
•All countries must avoid restrictive measures that affect vaccine supply chains. We also need to facilitate the transfer of knowledge and technology, so that more countries can produce vaccines. For our part, we are strongly encouraging European producers to do so, especially in Africa. I participated at the Paris summit on financial support for Africa on May 18, where the continent’s leaders stressed that Africa imports 99% of its vaccines. This has to change. Team Europe is launching an initiative to this end — backed by €1 billion funding from the EU budget and European development financial institutions — with African partners to boost manufacturing capacity in Africa for vaccines, medicines and health technologies.
Issue of licensing
•Voluntary licensing is the privileged way to ensure such transfer of technology and know-how. If it turns out to be insufficient, the existing Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and the 2001 Doha Declaration already foresee the possibility of compulsory licensing. We have been listening carefully to countries complaining about how difficult it is to use these flexibilities. To speed up these technology transfers, the EU will come forward with a new proposal in the World Trade Organization framework by early June.
•The COVID-19 pandemic has reminded us that health is a global public good. Our common global COVID-19 vaccine action to close the vaccination gap must be the first step toward genuine global health cooperation, as foreseen by the Rome Declaration recently adopted at the Global Health Summit.
📰 A far-reaching tax measure
The U.S. push for a global minimum corporate tax may help India, but it can also cause international disagreements
•The Pillar Two proposal was the Organisation for Economic Co-operation and Development’s (OECD) plan to plug the remaining Base Erosion and Profit Shifting (BEPS) issues and provide jurisdictions the right to “tax back” where other jurisdictions have either not exercised their primary taxing right or have exercised it at low levels of effective taxation. The move intends to achieve minimum effective taxation of more than 10%, possibly up to 15%, given the latest proposal put forward by the United States. The objective is to minimise tax incentives and ensure that companies choose to be situated in a particular country based on other commercial benefits.
•In its recent proposal, the U.S. sought to impose a global minimum tax on foreign income earned by U.S. corporations. The proposal is perhaps intended to disincentivise American companies from inverting their structures due to the increase in the U.S. corporate tax rate. The proposal is similar to Pillar Two, except for the rate of the effective minimum tax. While the OECD was considering a 10-12% rate, the U.S. proposed a 21% rate. This caused pushback from countries such as Ireland, which made a case for fiscal autonomy for smaller jurisdictions to compete with larger economies. The U.S. is now discussing a floor of 15% for the minimum tax rate despite the fact that it may have difficulty securing Congress support if the floor is too low. Even at 15%, it is unclear whether Ireland would agree, given its 12.5% marginal rate, thereby impacting a European Union-wide adoption of the 15% rate.
•India has been part of the Pillar Two discussions and has not objected in principle to the proposal. The proposal, along with the increased tax bill for U.S. companies, may benefit the Indian revenue department. The tax department might benefit even at a 10% rate since the proposal would cover offshore structures set up by Indian companies.
•Pillar Two acts as a set of controlled foreign corporation rules, where, for instance, if an Indian-headquartered multinational corporation (MNC) has an entity in Singapore or the Netherlands through which global operations are run, and its income from global operations is not taxed at an effective rate of 10% or 15%, then it can be taxed in India. The State of Tax Justice report of 2020 notes that India loses over $10 billion in tax revenue due to the use of offshore structures, particularly through investments made by Indian residents through Mauritius, Singapore and the Netherlands. This is supported by the overseas direct investment (ODI) data from 2000 to 2021 published by the Reserve Bank of India, where the cumulative ODI for the period primarily went through Singapore, Mauritius, the U.S., the Netherlands, and the United Kingdom.
•Start-ups and large Indian conglomerates commonly use offshore structures for conducting global operations. Revenue from such operations is often retained offshore and not repatriated to India. Tax advantages incentivise such structures, due to which taxes on such income are not paid in India. Once these proposals are implemented, Indian companies would have to pay additional taxes on their offshore structures to the extent that the effective rate of tax is lower than the global minimum tax rate.
Other major factors
•With tax incentives neutralised, countries may have to compete on other factors like better regulatory regimes, ease of doing business, access to global talent, among others. The U.S. proposal indicates that the country is pushing the OECD to swiftly achieve consensus on the global minimum tax rate, in the absence of which the U.S. proposes to apply its domestic law version of Pillar Two at a rate of 21% (which may now be 15%).
•Several countries have taken a different approach to the rate of global minimum tax. While France and Germany have expressed support, the EU has raised concerns regarding the high rate proposed by the United States. Countries have stated that the proposal infringes upon their tax sovereignty and that the fight against unfair tax competition should not become a fight against competitive tax systems. Given that the U.S. is now pushing for a 15% rate, the fate of Pillar Two will depend on whether this proposal is acceptable to other countries.
•The U.S. appears keen on closing the negotiations around the 15% floor, which should also benefit India. Presumably, the remaining obstacles to gaining a consensus are the issues with Pillar One. As economies struggle amid the COVID-19 pandemic, the necessity of encouraging trade and economic activity should be prioritised over disagreements on tax allocations. A tax-related trade war or entrenchment of unilateral levies may further harm both global and national economies.
