Center on European Union Law presents
The European Union after COVID-19
November 9, 2020 12 p.m. - 1:30 p.m. EDT Zoom Webinar
CLE COURSE MATERIALS Table of Contents
1. Speaker Biographies (view in document)
2. CLE Materials
The European Union after COVID-19
CLE Panel Discussion Boot, Arnoud W. A. et al. (2020) : The Coronavirus and financial stability, SAFE Policy Letter, No. 78, Leibniz Institute for Financial Research SAFE, Frankfurt a. M. (view in document)
Alemanno, Alberto. The European Response to COVID-19: From Regulartory Emulation to Regulatory Coordination (2020) (view in document)
Renda, Andrea; Castro, Rosa. Skadden. Towards Stronger EU Governance of Health Threats after COVID-19 Pandemic (2020) (view in document)
World Trade Organization. The Trips Agreement and COVID019. (15 October, 2020) (view in document) The European Union after COVID-19 Speaker Bios
Professor Alberto Alemanno Department of Law, HEC Paris Alberto Alemanno is Jean Monnet Professor in European Union Law & Policy and one of the leading voices on the democratization of the European Union. His research has been centered on how the law may be used to improve people’s lives, in particular through the adoption of power-shifting reforms countering social, economic, and political inequalities within European societies and beyond. He has written extensively on risk regulation, public health, consumer rights, food policy as democratic innovation and participatory democracy. Due to his commitment to bridge the gap between academic research and policy action, Alberto was named Young Global Leader by the World Economic Forum in Davos in 2015 and Ashoka fellow in 2019. In addition to his academic writings in law, and public policy, he regularly publishes in The Guardian, Le Monde, Poltico Europe, Bloomberg, and his work has been featured in The Financial Times, The Economist, Science and Nature among others. He’s the author of more than forty scientific articles and several academic books such as 'Nudge and the Law – A European Perspective' and the more accessible Lobbying for Change: Find Your Voice to Create a Better Society', which provides a timely analysis and guide to levelling the democratic playing field by empowering ordinary citizens to speak up and inform policy decisions at local, national and international level. Alberto is also permanent visiting professor at the University of Tokyo School of Public Policy, the College of Europe, in Bruges and a scholar at the O’Neill Institute for National and Global Health Law as well as fellow at The Rutgers Institute for Corporate Social Innovation at Rutgers University. Alberto has pioneered innovative forms of academic and civic engagement and activism in the EU transnational space via his civic start up The Good Lobby. Its mission is to equalize access to power by strengthening the advocacy capacity of civil society and making corporate political influence more accountable and sustainable. Alberto has been involved in dozens of campaigns, ranging from the first European Citizen Initiative putting an end to international roaming to the adoption of plain-packaging of tobacco products, from the drafting of the EU whistleblower directive to a decade-old campaign for EU transnational lists and the recently launched ‘Voters without Borders’ asking for full political rights for EU citizens regardless of where they live across the continent. Professor Alemanno has worked extensively with policymakers, funders, advocacy groups as well as progressive companies, in developing strategies and novel approaches to questions of democracy, political inequality, and corporate political behaviour. He regularly provides advice to international organizations, including the Organization for Economic Cooperation and Development (OECD), the European Commission, the European Parliament, the World Health Organization, dozens of non- governmental organizations as well as states. He sits on the board of several civil society organisations, such as European Alternatives, VoxEurop, Friends of Europe, Access Info Europe, as well as the citizens’ campaigning movement We Move, which operates transnationally. Alberto qualified as an attorney-at-law in New York and clerked at the Court of Justice of the European Union (2005-2009). He established and directed the EU Public Interest Law Clinic in collaboration with the New York University School of Law, where he has been Global Professor of Law (2014-2018). He holds LL.M. from Harvard Law School and the College of Europe as well as a PhD in international economic law from Bocconi University. He is the founder as well as the editor-in-chief of the European Journal of Risk Regulation (published by Cambridge University Press), member of the Editorial Committee of the Journal of Consumer Policy, and of that of the Revue du Droit de l 'European Union , and founder of the Lobbying Summer Academy (in its twelfth edition). Alberto served as visiting professor at Georgetown University (2011-2014), the University of Amsterdam (2017), University of Tokyo (2014-2020), the LUISS University in Rome (2013) as well as at the University of St Gallen (2006-2016) and at the College of Europe in Bruges (2007-present).
Professor Rainer Haselmann Department of Finance, Goethe University of Frankfurt
Academic / Professional Positions Since December 2019 CEPR Research Fellow Since November 2018 Director of The Center for Advanced Studies on the Foundations of Law and Finance Since October 2014 Professor of Finance, Accounting and Taxation at Goethe-University, Frankfurt 2011 - October 2014 Professor of Finance, University of Bonn 2009 - 2011 Assistant Professor of Finance 2006 - 2009 Postdoctoral Researcher, Mainz University 2006 - 2007 Postdoctoral Researcher, Columbia Business School Education 2002 - 2006 PhD (summa cum laude), Leipzig Graduate School of Management 1998 - 2002 Master Money and Banking, Maastricht University
Professor R. Daniel Kelemen Department of Political Science, Rutgers University R. Daniel Kelemen is Professor of Political Science and Jean Monnet Chair in European Union Politics at Rutgers University. Kelemen's research interests include the politics of the European Union, law and politics, comparative political economy, and comparative public policy. His most recent book - Eurolegalism: The Transformation of Law and Regulation in the European Union (Harvard University Press, 2011) won the Best Book Award from the European Union Studies Association. He is also author of The Rules of Federalism: Institutions and Regulatory Politics in the EU and Beyond (Harvard University Press, 2004), as well as over forty book chapters and articles in journals including the American Political Science Review, World Politics, International Organization, Comparative Political Studies, West European Politics, Journal of Public Policy and Journal of European Public Policy. He is editor of Lessons from Europe? What Americans Can Learn from European Public Policies (CQ Press, 2014) and co-editor of The European Union: Integration and Enlargement (Routledge, 2014), The Power of the European Court of Justice (Routledge, 2012), and The Oxford Handbook of Law and Politics (Oxford University Press, 2008). He serves on the editorial boards of the Journal of European Public Policy and West European Politics and is a former member of the Executive Committee of the European Union Studies Association. Kelemen previously served as the Director of the Center for European Studies at Rutgers University. Prior to Rutgers, Kelemen was Fellow in Politics, Lincoln College, University of Oxford. He has been a Member of the Institute for Advanced Study at Princeton, visiting fellow in the Program in Law and Public Affairs (LAPA) at Princeton University, a Fulbright Fellow in European Union Studies at the Centre for European Policy Studies in Brussels and a visiting fellow at the Center of International Studies at the Woodrow Wilson School of Public and International Affairs at Princeton University. He was educated at Berkeley (A.B. in Sociology) and Stanford (M.A. and Ph.D. in Political Science).
Dr. Dr. Julia Puaschunder Columbia University & The New School & Parsons School of Design Julia Margarete Puaschunder studied Philosophy/Psychology (MPhil, University of Vienna, 2003, highest entry exam), Business (MBA, Vienna University of Economics and Business, 2007), Public Administration (MPA, Maxwell School, 2008, full tuition waiver Fulbright Scholar with placements in Washington D.C. and New York City), Social and Economic Sciences (Doctor, Vienna University of Economics and Business, 2006, merit-based ad personam position, Dean’s list), Natural Sciences (Doctor, University of Vienna, 2010, summa cum laude), Global Political Economy and Finance (courses at Columbia University, Princeton University and The New School), Law and Economics (Qualifying Exam passed with honors). From 2019, Julia Puaschunder pursues a Habilitation (Venia docendi, Professorship) in Germany, Europe. Trained as a behavioral economist with Doctorates in Social and Economic Sciences as well as Natural Sciences and Masters in Science, Business, Public Administration and Philosophy/Psychology, she about 20 years of experience in applied social sciences empirical research in the international arena. Julia M. Puaschunder has launched and administered research projects in Australia, Austria, Canada, China, Germany, Indonesia, Switzerland, and the United States. She conducted interdisciplinary science and governance projects as well as held or holds advisory, board member, evaluator, committee, contributor, observer, referee and representative privileges for the
• Academic Council on the United Nations System • Academy of Behavioral Finance and Economics • Alpbach Laxenburg Group • Austrian Academy of Sciences • Austrian Chamber of Commerce New York • Austrian Consulate San Francisco • Austrian Economic Association • Austrian Federal Ministry of Science and Research • Austrian Federal Ministry of Science Research and Economy • Austrian General Consulate New York • Austrian Office of Science and Technology Washington D.C. • Austrian Scientists in North America Association • Austrian Society for New Institutional Economics • Breaking Down Barriers EU-Russia Inauguration Conference • Cambridge Scholars Publishing • Discovery Innovation Growth (DiG) Talent Development Network • EURO working group on Behavioural Operational Research • EcoWellness Group • European Commission • European Corporate Governance Institute • European Horizons Conference • European Liberal Forum • European Parliament • European Scientific Institute Journal of Economics, Law and Politics • Finance, Risk and Accounting Perspectives Conference at University of Cambridge • Fritz Thyssen Foundation • Fulbright Commission • German Forum • Harvard Association for Law and Mind Sciences • Harvard Club of Austria • Harvard University Center for the Environment • Honor Society • Horizon 2020 • Human Resources Management and Services • INtegrated ART Holding AG • International Institute for Applied Systems Analysis • International Journal of Economic Behavior and Organization • International Journal of Environmental Protection and Policy • International Journal of Sustainable Entrepreneurship and Corporate Social Responsibility • Israel Science Foundation • Janeway Center • Journal of Applied Accounting Research • Kollegium Kalksburg Altkalksburger Vereinigung • London Journals Press Rosalind Member • Netherlands Organisation for Scientific Research • Oikos International New York City Chapter • Oxford Academic Research Network • Research in Management and Learning Education Unconference • Research Association for Interdisciplinary Studies • Society for International Development Vienna Chapter • Society of Authors • The Max Kade Foundation New York • The Neue Galerie New York • The New Austria and Liberal Forum Science Lab • Tishman Environment and Design Center • The U.S. Department of Education • Vienna Foundation • Vienna International Conference on Mathematical Modelling • Viennese Opera Ball New York International Business Committee • Virtus Corporate Governance Experts Global Repository • World Economic Forum The Great Reset Programme She served as expert participant Austrian Consulate conference calls on Artificial Intelligence Ethics and as participant in a U.S. White House conference call on environmental justice. She served as advisor about Artificial Intelligence Diplomacy to the Austrian Diplomatic Academy in Vienna, Austria. She recently advised the European Parliament on Artificial Intelligence, robotics and big data in the healthcare sector on behalf of the European Liberal Forum. She served as expert interviewée for a New York Times Journalist on capitalism crowding out fertility. Before starting a Prize Fellowship in the Inter-University Consortium of New York working for the New School (Deans Office, Department of Economics, Department of Politics, Economics of Climate Change Project, Eugene Lang College, Parsons School of Design, School of Public Engagement and the Schwartz Center for Economic Policy Analysis) as well as Columbia University (Department of Economics, Graduate School of Arts and Sciences) and Princeton University, Julia M. Puaschunder held positions at the University of Vienna and the Vienna University of Economics and Business. For several years she was an Associate of the Harvard University Faculty of Arts and Sciences and serves as Contributor to the Harvard Law School Law and Mind Sciences Initiative Situationist. At the Harvard University Center for the Environment, she conducted research on intergenerational equity in cooperation with Harvard Business School and Harvard Kennedy School. Apart from academic appointments in Austria, Julia was a scholar at The Australian National University, Columbia University in the City of New York, George Washington University, Harvard University, Haskayne School of Business, Ludwig-Maximilians-University of Munich, Princeton University, and The Open Society Institute & Soros Foundation New York. She conducted research as a Prize Fellow in the Inter-University Consortium of New York. Throughout her academic career, Julia was invited to present her research at Harvard University, Princeton University, Columbia University, Yale University, Georgetown University, Brown University, Johns Hopkins University, Oxford University and Cambridge University as well as The Academic Council on the United Nations System. In 2018, she was invited to give a Keynote Speech at Wagner College in Staten Island, New York. On Artificial Intelligence Ethics, Julia advised the Austrian Consulate, Austrian Diplomatic Academy, The New Austria and Liberal Forum and a communication agency. In 2019, she served as Keynote moderator for a panel on ‘Europe in a Changing World Order’ and as Technology and Internet Governance workshop coordinator for the European Horizons Conference at Yale University. She published with Harvard University, Columbia University, Cambridge University and Oxford University outlets among other distinct journals and international publishing houses (e.g., Edward Elgar, Emerald, Palgrave Macmillan, Routledge, Springer International & Nature, Taylor & Francis, Vernon, Wiley). Her writings are held with Harvard University, Columbia University, Princeton University, Yale University and University of Chicago among other distinct academic institutions in the international arena. Her books have been released and introduced at Harvard University, The New School, Princeton University and George Washington University. Her ground-breaking work on climate change winners and losers has been cited by Nature. For the Academy of Behavioral Finance & Economics she serves as Associate Editor for the Journal of Behavioral Finance & Economics. She served as a reviewer for major publishing houses and distinct journals, for instance Springer, Routledge and Nature. She serves as the Editor in Chief of the European Scientific Institute’s European Journal of Economics, Law and Politics. Julia organized conferences and public speakers from the Harvard Business School and Princeton University in North America and Europe. Since 2015 Julia Puaschunder supports the Economics of Climate Change Project Speaker Series hosted at The Schwartz Center for Economic Policy Analysis of The New School for Social Research in New York City. Julia helped initiate the 2017 Unconference at The New School New York in cooperation with the New School for Public Engagement and served on the Scientific Committee of the 2017 Finance, Risk and Accounting Perspectives Conference as well as the Social and Sustainable Finance and Impact Investing Conference 2017 at University of Cambridge. Julia served as a scientific board member of the 2018 Vienna International Conference on Mathematical Modelling at the Technical University Vienna and as Chairman Chief of the Research Association for Interdisciplinary Studies (RAIS) conferences at the Erdman Center for Princeton University in 2018 and 2019. She serves as a conference board member of the 2018 and the 2019 Annual Conference of the Academy of Behavioral Finance and Economics in New York. She also serves on the Scientific Committee of the Finance, Risk and Accounting Perspectives Conference (FRAP) 2019 of the Oxford Academic Research Network at Hanken School of Economics in Helsinki, Finland. She was invited to attend the Inauguration of the Yale University Environmental Program in Honor of Natasha Chichilnisky- Heal and the Creation of its External Advisory Board at Yale University. Since 2018 Julia is listed in the ‘Marquis Who’s Who in America and in the World’ among the top 3% professionals around the globe. She was awarded the 2018 Albert Nelson Marquis Lifetime Achievement Award. After having captured social responsibility in corporate and financial markets in Europe and North America with attention to Financial Social Responsibility and Socially Responsible Investment; Julia Puaschunder pursued the idea of Eternal Equity — responding to Western world intergenerational equity constraints in the domains of environmental sustainability, overindebtedness and demographic aging with focus on law and mind sciences. Currently, Julia dedicates interest to Humanness, Automated Control and Artificial Intelligence Ethics in the digital age.
Moderator: Professor Martin Gelter Fordham University School of Law An expert in comparative corporate law and governance, Professor Martin Gelter joined Fordham Law School in 2009. Previously, he was an Assistant Professor in the Department of Civil Law and Business Law at the WU Vienna University of Economics. He also has been a Terence M. Considine Fellow in Law and Economics and a John M. Olin Fellow in Law and Economics at Harvard Law School, and a Visiting Fellow at the University of Bologna. His scholarship has been published in distinguished journals including Harvard International Law Journal, NYU Journal of Law and Business, and Fordham International Law Journal. Previous experience includes:
• Visiting Professor, National Taiwan University College of Law • Visiting Professor, Université Paris-II Panthéon-Assas • Assistant Professor, WU Vienna University of Economics and Business, Department of Civil Law and Business Law • Terence M. Considine Fellow and John M. Olin Fellow in Law and Economics, John M. Olin Center for Law, Economics, and Business, Harvard Law School • Visiting Fellow, Institute of Advanced Studies, Department of Law “Antonio Cicù” and Department of Economics, University of Bologna • Professional Affiliations • European Corporate Governance Institute (nominated as research associate in 2006) • American Law and Economics Association • European Association for Law and Economics • Selected Publications (see CV for full list) • Centros and Defensive Regulatory Competition: Some Thoughts and a Glimpse at the Data, 20 EUR. BUS. ORG. L. REV. 467-492 (2019) [working paper download]. • Opportunity Makes a Thief: Corporate Opportunities as Legal Transplant and Convergence in Corporate Law [with Geneviève Helleringer], 15 BERKELEY BUS. L.J. 92-183 (2018). • GLOBAL SECURITIES LITIGATION AND ENFORCEMENT (edited with Pierre-Henri Conac, Cambridge University Press 2018). • EU Company Law Harmonization between Convergence and Varieties of Capitalism, in RESEARCH HANDBOOK ON THE HISTORY OF CORPORATION AND COMPANY LAW 323-352 (Harwell Wells ed. 2018) [working paper download]. • Centros, the Freedom of Establishment for Companies and the Court’s Accidental Vision for Corporate Law, in EU LAW STORIES: CONTEXTUAL AND CRITICAL HISTORIES OF EUROPEAN JURISPRUDENCE 309-337 (Fernanda Nicola & Bill Davies eds. 2017) [working paper download] . • Lift not the Painted Veil! To Whom are Directors’ Duties Really Owed? (with Geneviève Helleringer), 2015 U. ILL. L. REV. 1069-1118 . • Whose Trojan Horse? The Dynamics of Resistance against IFRS (with Zehra G. Kavame), 36 U. PA. J. INT’L L. 89-190 (2014). • Citations to Foreign Courts - Illegitimate and Superfluous, or Unavoidable? Evidence from Europe, 62 AM. J. COMP. L. 35-85 (2014) (with Mathias M. Siems) [working paper download]. • Risk-shifting through Issuer Liability and Corporate Monitoring, 14 EUR. BUS. ORG. L. REV. 497-533 (2013) [working paper download]. • The Pension System and the Rise of Shareholder Primacy, 43 SETON HALL L. REV. 909-970 (2013). • Why do Shareholder Derivative Suits Remain Rare in Continental Europe?, 37 BROOKLYN J. INT'L L. 843-892 (2012). • The Dark Side of Shareholder Influence: The Connection between Managerial Autonomy and Stakeholder Orientation in Comparative Corporate Governance, 50 HARV. INT’L L. J. 129-194 (2009). • The Transatlantic Divergence in Legal Thought: American Law and Economics vs. German Doctrinalism, 31 HASTINGS INT’L & COMP. L. REV. 295-360 (2008) (with K. Grechenig). • Constraining Dominant Shareholders' Self-Dealing: The Legal Framework in France, Germany and Italy, 4 EUR. COMPANY & FIN. L. REV. 491-528 (2007) (with Pierre-Henri Conac & Luca Enriques). • The Subordination of Shareholder Loans in Bankruptcy, 26 INT’L REV. L. & ECON. 478-502 (2006) [working paper download]. Education Columbia University, M.A., 2018 Harvard Law School, SJD, 2009, LLM, 2003 (waived for SJD fellowship) WU Vienna University of Economics and Business, Dr. rer.soc.oec., 2003, Mag.rer.soc.oec., 1998 University of Vienna, Dr. iur., 2001, Mag. iur., 1998 A Service of
Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics
Boot, Arnoud W. A. et al.
Research Report The Coronavirus and financial stability
SAFE Policy Letter, No. 78
Provided in Cooperation with: Leibniz Institute for Financial Research SAFE
Suggested Citation: Boot, Arnoud W. A. et al. (2020) : The Coronavirus and financial stability, SAFE Policy Letter, No. 78, Leibniz Institute for Financial Research SAFE, Frankfurt a. M.
This Version is available at: http://hdl.handle.net/10419/214882
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Arnoud Boot Elena Carletti Rainer Haselmann Hans-Helmut Kotz Jan Pieter Krahnen Loriana Pelizzon Stephen Schaefer Marti Subrahmanyam
The Coronavirus and Financial Stability
SAFE Policy Letter No. 78 | March 2020
The Coronavirus and Financial Stability
Arnoud Boot1, University of Amsterdam Elena Carletti, Bocconi University and Florence School of Banking & Finance Rainer Haselmann, Goethe University Frankfurt Hans-Helmut Kotz, Harvard Center for European Studies and SAFE Jan Pieter Krahnen, Goethe University Frankfurt and SAFE Loriana Pelizzon, Goethe University Frankfurt and SAFE Stephen Schaefer, London Business School Marti Subrahmanyam, NYU Stern Business School
March 2020 Abstract
The spreading of the Covid-19 virus causes a reduction in economic activity worldwide and may lead to new risks to financial stability. The authors draw attention to the urgency of the targeted mitigation strategies on the European level and suggest taking coordinated action on the fiscal side to provide liquidity to affected firms in the corporate sector. Otherwise, virus-related cashflow interruptions could lead to a new full-blown banking crisis. Monetary policy measures are unlikely to mitigate cash liquidity shortages at the level of individual firms. Coordinated action at European level is decisive to prevent markets from losing confidence in the resilience of banks, particularly in countries with limited fiscal capacity. In contrast to the euro crisis of 2011, the cause of the current crisis does not lie in the financial markets; therefore, the risk of moral hazard for banks or states is low.
I. The issue: Coronavirus and the real economy
Since the turn of the year, Covid-19 – a novel virus – is spreading globally. With a large number of infected people particularly in China, Korea, Italy, and Iran, the perception of an uncontrolled pandemic has already caused many to change their daily lives. The resulting reduction in economic activity worldwide is threatening to tip several countries into recession and do damage to financial stability. There is, as yet, no vaccine against the virus. To prevent further infection, several governments have mandated strict regulations to avoid unnecessary contact with those already infected, especially the vulnerable segments of the population, the sick and the old. This has prompted the pre-emptive closure of schools, universities, factories and businesses, casting a pall on the whole world in a manner not witnessed for decades.
1 SAFE policy letters represent the authors‘ personal opinions and do not necessarily reflect the views of the Leibniz Institute for Financial Research SAFE or its staff. The implications for economic activity – production and, on an increasing scale, consumption – are severe. Importantly, it affects supply chains all over the world, particularly relating to goods and components imported from China, creating shortages throughout the production and distribution cycles. Therefore, items that are widely used in mobile phones, car parts, and other products cannot be manufactured as usual. Once inventories are depleted, production may slow down or even grind to a halt. Starting locally, the consequences have spread quickly to ever larger regions, as is mirrored in the worldwide slide in stock prices.
It should be added that the impact of the virus is far from being limited to supply interruptions to the manufacturing sector. Massive interruptive effects can be observed in the services industries, including travel, tourism, mass events, fairs, as well as at schools and universities. Furthermore, anxiety among consumers and workers will bear on individual consumption and, in turn, firm revenues.
In contrast to the 2008 financial market crash, in 2020 the corporate sector has been massively affected, and the impact is rising by the day, due to the high level of interconnectedness of manufacturing and distribution around the world. While an interruption in economic activity initially would cause liquidity problems for firms and their banks, their interconnectedness would most likely transform the liquidity problem, if left untreated, into a solvency problem for firms and, concurrently, for banks.
II. The channel: Coronavirus, banking, and financial stability
With cashflows drastically reduced, companies struggle to pay their suppliers, their employees, and ultimately their bankers, even though the underlying business model of affected firms may not be in doubt. Yet, the coronavirus-induced fall in production is a temporary, interruptive event, as opposed to a lasting, disruptive event. Once the virus disappears, either because a medication has been found, or because the epidemic dies out naturally, earnings are likely to jump back to their pre-shock level.
Thus, in an ideal world with full information and perfect financial markets, the virus epidemic poses a major liquidity problem for the real economy and its firms, not one of long-run viability. In reality, however, information spreads slowly and imperfectly, and access to funding may well be denied. Firms facing a liquidity squeeze due to the interruption may quickly face a solvency problem, once their inventories and cash reserves are depleted. Some affected firms that have no ready access to funding may face default or even bankruptcy. In many countries, particularly in Europe, the main creditors of firms typically are banks – which, in turn, have to build loan loss provisions, and will thus suffer deterioration in their capital adequacy positions. We are already witnessing this chain of events in Europe; in particular in Italy, where banks have started to grant moratoria on their outstanding loans, in an attempt to provide relief to their corporate clients, to avoid a looming default. In turn, the cashflow shortfall at the firm level translates into a cashflow loss at the level of the banks. But the infection chain does not necessarily stop here. Next in line may be those governments trying to offer a helping hand to the banks in their countries (on top of the direct support to non-financial firms and families). If sovereign debt levels are as high as in Italy, for example, the extra funding capacity of the state is quite limited, as the debt terms of the sovereign will spiral downwards as well. When push comes to shove, the doom loop between the escalation of bank default risk and sovereign default risk, the source of the 2011 euro crisis, returns ominously.
Note, however, that the 2020 virus situation cannot simply be compared with the 2011 euro crisis, because today’s increasing default expectations in countries such as Italy are not driven by the same questionable lending standards as back then. The strong exogeneity of the current crisis reduces greatly the role of moral hazard concerns, if not eliminating it altogether, that prevented a coordinated action and international risk sharing back in 2011.
The potential stress for the banking system may also be exacerbated from the deposit side. Absent a credible European deposit insurance, there may be doubt about the resilience of a national, largely pay-as-you-go backed deposit insurance system, particularly in smaller and weaker countries. Depositors may join the flight to quality, asking for redemption – and a bank run may get under way. Non-protected institutional depositors will run in any case, and wholesale funding will dry up. This is how the current health crisis may translate into a full-blown banking crisis.
III. The answer: mitigation strategies
The general lesson of our situational analysis is this: The virus epidemic carries the risk of a financial pandemic, a form of systemic risk. Moreover, the financial pandemic may even spiral into a global phenomenon, yielding a case for some form of a joint and mutual insurance scheme – compensating firms for crisis-induced cashflow shortfalls, though not for “legacy” poor performance, and thus limiting (or avoiding) the knock-on effects in production, consumption and banking.
We hasten to emphasize a sense of urgency at the European level. While the diagnosis of common action is straightforward, the implementation is an immensely complex challenge. If it fails, we may look at the current episode as a run-up to the next financial crisis in Europe. However, if it is managed well, it may pave the way towards a European Hamiltonian moment. This common action may define the type of risk sharing that renders Europe’s Banking Union sustainable and shows solidarity without being hit by the typical moral hazard and transfer union framing.
Almost daily now, governments are taking political and financial actions aiming to stabilize the economy. At the beginning of last week, the Group of Seven (G7) – Germany, France, Italy, Japan, Canada, the United Kingdom, and the United States – agreed to work together and to find appropriate political actions to mitigate damage to global growth. A few days later, the US Federal Reserve cut its interest rate and other central banks followed. Among other measures, the Bank of Japan increased the purchase of government bonds in an attempt to maintain liquidity in the market. So far, the ECB has taken no action but has stated that it would be ready to intervene.
Following our above analysis, we would suggest taking joint action on the fiscal side, and letting monetary policy take a more limited role. Given the reasons for the looming insolvency of firms in the corporate sector, lower interest rates or increased asset purchases are unlikely instruments to deal with the cash liquidity shortage at the level of individual firms, mostly because banks are constrained by capital requirements on top of their liquidity buffers. What is really needed is a quick and targeted provision of liquid funds to those firms that face a break in production and/or their supply chain, and also to those that have suffered a large decline in demand.
The current challenge for Europe has two dimensions: first, to find instruments to measure, in a timely manner, the corona-induced cashflow shortfall at the level of firms; and second, to find a way to effectively channel funds to the affected individuals, firms, and banks.
A tried and trusted way to reach firms directly, and in targeted way, could be via Kurzarbeit-schemes, which are well established in Germany. In such schemes, firms with cashflow shortfalls can temporarily externalize part of the wage bill. Under this scheme, employees work part-time rather than full-time, 60% for example, and receive 84% of their usual pay, since the national unemployment insurance scheme, funded by social security contributions, covers 60% of the wage reduction. Thus, there is, for a limited period, employment risk sharing among workers, conditional on the firm being eligible. The eligibility criteria limits exposure to moral hazard – a precondition for the scheme to be both, economically efficient and politically acceptable.
Alternative schemes are conceivable that meet similar criteria. For example, a firm-level cashflow shortfall may be estimated from reported value-added tax (VAT) payments. Using previously paid VAT payments as a benchmark, a firm’s liquidity shortfall can be estimated. The shortfall amount may then be offered – fully or partly – to the firm as a government-backed loan.
State development banks, like the KfW in Germany, and similar institutions in France and some other European countries, may serve as channels to reach eligible solvent firms. Supranational financial institutions, notably the European Investment Bank and the European Bank for Reconstruction and Development, through their access to banks and capital markets across Europe, may provide the necessary funding. The scheme, if applied successfully, would provide a bridge over the corona period, to help affected firms escape bankruptcy proceedings.
https://doi.org/10.1017/err.2020.44 The European Response to COVID-19: From . . Regulatory Emulation to Regulatory Coordination?
Alberto ALEMANNO* https://www.cambridge.org/core/terms
Due to its borderless nature, COVID-19 has been a matter of common European interest since its very first detection on the continent. Yet this pandemic outbreak has largely been handled as an essentially national matter. Member States adopted their own different, uncoordinated and at times competing national responses according to their distinctive risk analysis frameworks, with little regard1 for the scientific and management advice provided by the European Union (EU), notably its dedicated legal framework for action on cross-border health threats.2 Tojustifysuchan outcome as the inevitable consequence of the EU’s limited competence in public health is a well-rehearsed yet largely inaccurate argument3 that calls for closer scrutiny.
, subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , * Jean Monnet Professor of European Union Law, HEC Paris, Editor-in-Chief of the European Journal of Risk Regulation (EJRR) and Editor of the EJRR Special Issue “Taming COVID-19 by Regulation”; email: alemanno@ hec.fr. Due to the temporal proximity of our research to the events studied, the contributions to this special issue – although subject to peer review – rely on a unique, unconventional mix of academic sources and journalistic reporting. As such, they represent an illustration, albeit modest, of “action research”. This is a form of research that unfolds along with the events it studies and that may help the practitioner, all the more so in a situation of emergency. Action research carries its own epistemic risk – the risk of error versus the risk of missing the truth. By accepting our
06 Nov 2020 at 21:18:43 at 2020 Nov 06 invitation to contribute to this collection in the present unfolding circumstances of a major, uniquely complex event, each and every author showed an unprecedented readiness to take such a risk. This takes courage. It needs courage as Plato , on on , defines it. It needs the best of what the best among us can give, and the help of everybody. 1 On 25 January, the European Centre for Disease Prevention reported: “In light of the currently available information, ECDC considers that the potential impact of 2019-nCoV outbreaks is high and further global spread is likely”, available at
. IP address: address: IP . On this point, see, in this special issue, eg, K Purnhagen, A de Ruijter, ML Flear, TK Hervey and A Herwig, More Competences than You Knew? The Web of Health Competence for Union Action in Response to the COVID-19 Outbreak” (2020) European Journal of Risk Regulation doi:10.1017/err2020.35. For an examination of the EU public health competence beyond Art 168 TFEU, see also A de Ruijter, EU Health Law & Policy: The Expansion of EU Power in Public Health and Health Care (Oxford, Oxford University Press 2019); A Alemanno and A Garde, “The Emergence of an EU Lifestyle Policy: The Case of Alcohol, Tobacco and Unhealthy Diets” (2013) 50(6) Common Market Law Review 1745; A Alemanno and A Garde, “Regulating Lifestyles in Europe: How to Prevent and Control Non-Communicable Diseases Associated with Tobacco, Alcohol and Unhealthy Diets?” (2013) 7 Swedish Institute for European Policy Studies diets-20137>. https://www.cambridge.org/core European Journal of Risk Regulation, 11 (2020), pp. 307–316 doi:10.1017/err.2020.44 © The Author(s), 2020. Published by Cambridge University Press. This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited. Downloaded from from Downloaded 308 European Journal of Risk Regulation Vol. 11:2 This article makes a first attempt at unpacking how such fragmented, uncoordinated but ultimately converging national responses to COVID-19 came into being under the EU legal order. To do so, it systematises the European response into separate stages. Phase 1 – the https://doi.org/10.1017/err.2020.44 . . emergency – has been characterised by the adoption of national emergency risk management measures that, albeit country specific, were inspired by a common objective of pandemic suppression (ie to reduce disease transmission and thereby diminish pressure on health services) under the by now well-known “flatten the curve” imperative. Phase 2 – the lifting – is about the attempt at relaxing some of the national risk responses in a coordinated fashion to avoid creating negative spill-overs or distortions – be they sanitary and/or financial – across the EU. Lastly, this article strives to define, and possibly predict, the regulatory policy framework that might be governing the next phases of the European risk management response to this pandemic as they will emerge from a widely undefined https://www.cambridge.org/core/terms yet inescapable dialectic between the EU and its Member States. I. PHASE 1: FROM DIVERGENCE TO CONVERGENCE THROUGH REGULATORY EMULATION Caught by surprise by the spread of the virus across the continent,4 national and EU political leaders found themselves overtaken by an emergency situation. Yet, a pandemic disease of these proportions not only had been predicted,5 but also had been identified in the preceding weeks as a high-impact, imminent threat to the European region (and the rest of the world) by both the World Health Organization (WHO) and the European Centre for Disease Prevention and Control (ECDC).6 , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , Due to such unpreparedness combined with the gradual time–spatial transmission of COVID-19, the outbreak prompted initially different risk regulatory responses across EU Member States. However, despite some hesitation and a few controversial outliers, notably the UK and Sweden,7 Member States have swiftly converged on a very similar risk response: suppression as opposed to mere mitigation of the virus.8 06 Nov 2020 at 21:18:43 at 2020 Nov 06 4 Officials believe Italy’s Patient Zero, the first person to have brought COVID-19 to the country, is likely a German , on on , who travelled to northern Italy around 25 January 2020; see, eg, R Donadio, “ICan’t Stop Thinking About Patient One”, The Atlantic, 16 April 2020. 5 Although the specifics of a pandemic are unknowable, a variety of sources have predicted over the years a pandemic presenting the features of COVID-19. Most recently, a 2019 report by the Global Preparedness Monitoring Board, 70.126.217.81 published under the auspices of the World Health Organization (WHO), made a compelling case for preparedness: “The world is at acute risk for devastating regional or global disease epidemics or pandemics that not only cause loss of life but upend economies and create social chaos”; “A World at Risk: Annual Report on Global Preparedness for Health Emergencies”, September 2019. . IP address: address: IP . 6 See also, eg, the WHO published its first Disease Outbreak News on the new virus on 5 January 2020. It contained a risk assessment and advice and reported on what China had told the WHO about the status of patients and the public health response on the cluster of pneumonia cases in Wuhan: Healthcare Demand”, Imperial College London, 16 March 2020 2020 The European Response to COVID-19 309 https://doi.org/10.1017/err.2020.44 . . https://www.cambridge.org/core/terms Figure 1. Illustration of the objectives of social distancing measures to reduce and delay the peak of the epidemic and protect healthcare capacity. Suppression entails the reduction of the reproduction number (the average number of secondary cases each case generates), R, to below 1.9 Suppression pursues a dual aim (Figure 1): (i) To reduce disease transmission; (ii) Thereby reducing pressure on health services. , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , As Member States gradually converged on suppression as the ultimate goal of their individual and collective interventions, they embraced “social distancing” as the preferred non-pharmaceutical approach (NPA) to attain their goal. The chosen NPA essentially translates into a set of specific “social distancing measures”, operationalised through regulatory requirements and/or recommendations. 06 Nov 2020 at 21:18:43 at 2020 Nov 06 Social distancing measures can be listed from the least intrusive and targeted to the , on on , most wide in scope: (1) isolation of cases (infected); (2) quarantine of contacts (healthy individuals); (3) stay-at-home recommendations; (4) school closures; (5) workplace closures; (6) measures for special populations, such as long-term health 70.126.217.81 facilities or jails; (7) mass gathering cancellations; (8) cordon sanitaire/mandatory quarantine of a building or residential area(s); and ultimately (9) social distancing of . IP address: address: IP . entire population. In the latter case, all households reduce contact outside the household, school or workplace, as they cannot leave their house unless to buy essential products or other contingencies strictly defined.10 9 The ultimate aim of suppression is to reduce the reproduction number (the average number of secondary cases each case generates), R, to below 1, and hence to reduce case numbers to low levels or (as for SARS or Ebola) eliminate human-to-human transmission. 10 Although to slightly different degrees, the only EU Member States that have adopted such a draconian measure are https://www.cambridge.org/core Italy, Spain and France. See European Commission, “Governmental Measure Data Base” europa.eu/covidSt>. Downloaded from from Downloaded 310 European Journal of Risk Regulation Vol. 11:2 As a result, virtually all Member States, albeit affected to different degrees by the virus, required some forms of social distancing of the entire population. This, however, occurred through a different country-by-country “regulatory mix” of social distancing https://doi.org/10.1017/err.2020.44 . . measures, be they the prohibition of public gatherings or workplace and school closures (total or partial), as well as the introduction of travel restrictions11 – both for intra-state and intra-EU mobility. In addition, virtually all member states have been combining these mandatory interventions with other NPAs – mostly via voluntary measures12 – such as: (i) Personal protective measures (eg hand and respiratory hygiene, cough etiquette and use of respirators or facemasks); and (ii) Environmental measures (eg routine cleaning of frequently used surfaces, clothes https://www.cambridge.org/core/terms and objects, minimising the sharing of objects and ensuring appropriate ventilation). Ultimately, all Member States have prohibited public gatherings, closed (totally or partially) schools and – albeit to different degrees – home confined their populations and introduced some border/travel restrictions. In addition to the adoption of dedicated national COVID-19 risk management policies, more than half of the Member States have proclaimed states of emergency (Figure 2).13 Phase 1 of COVID-19 in the EU was therefore initially characterised by regulatory variation across Member States, but was promptly interrupted by spontaneous regulatory convergence. In this initial phase, albeit affected to different degrees by the virus, Member States realised that, given the inherent uncertainty surrounding the nature and spread of the disease, the most responsible course of action was to take , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , the most risk-averse position. Suddenly, the incentives for governments were no longer to identify the most effective course of action based on available context- specific costs and benefits, but rather to emulate the risk responses of the countries hit first by the pandemic. This occurred even when they harboured doubts as to whether they were the best approaches possible. This phenomenon of rapid regulatory 06 Nov 2020 at 21:18:43 at 2020 Nov 06 convergence prompted by an emergency and an inherent path-dependence dynamic , on on , has been defined “copycat coronavirus policies”.14 It fundamentally boils down to an instance of “regulatory emulation”, driven by a combination of unmeasurable uncertainty and public pressure in a situation of emergency.15 70.126.217.81 11 DThym,“Travel Bans in Europe: A Legal Appraisal,” VerfBlog, 19 March 2020 . IP address: address: IP . 12 While only a few countries have mandated the use of masks by the general population (eg Czechia, Austria, etc.), the unfolding of the COVID-19 outbreak has considerably accelerated the number of countries recommending their use. At the time of writing, the pan-European guidance by the ECDC states: “The use of face masks in the community should be considered only as a complementary measure and not as a replacement for established preventive measures, for example physical distancing, respiratory etiquette, meticulous hand hygiene and avoiding touching the face, nose, eyes and mouth”; see European Centre for Disease Prevention and Control, Using Face Masks in the Community (Stockholm, ECDC 2020). 13 As examined in the Verfassungsblog’s “Fighting COVID 19” debate Disasters: The Challenges of Emergency Risk Regulation (Cheltenham, Edward Elgar 2011). Downloaded from from Downloaded 2020 The European Response to COVID-19 311 https://doi.org/10.1017/err.2020.44 . . https://www.cambridge.org/core/terms Figure 2. Illustration of the national risk management responses to COVID-19 based on a common taxonomy. It is worth noticing that such an initial emulation and therefore convergence among EU Member States’ national responses occurred spontaneously, with no direct role played by , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , the EU and its cross-border health emergency coordination mechanisms. However, while emulation has led to a relatively rapid convergence of phase 1 national responses towards a common approach of generalised, indiscriminate social distancing aimed at suppression, these national responses translated into different mixes of regulatory interventions whose enforcement level significantly varied across Member 06 Nov 2020 at 21:18:43 at 2020 Nov 06 States. , on on , This explains why many of these national responses to COVID-19 raise, due to their inherent cross-border spill-overs, major concerns under EU law. Yet, surprisingly, only a few of them have been timidly denounced – at the time of writing – by the EU 70.126.217.81 Commission as the Guardian of the Treaties.16 It is a legitimate question to ask why and for how long the European Commission could continue to de facto suspend the enforcement of EU law across policy areas in the name of the unfolding emergency. . IP address: address: IP . This appeared all the more urgent given the progressive entry into phase 2 of the European response, which is instead characterised by the gradual or less gradual lifting of the national risk responses. Before providing an account and close legal examination of phase 2 of the EU response to COVID-19, let us turn to the legal framework that enabled the emergence of such “copycat coronavirus policies” during the emergency phase (phase 1) of the outbreak. https://www.cambridge.org/core 16 European Commission, COVID-19 Guidelines for border management measures to protect health and ensure the availability of goods and essential services, Brussels, 16.3.2020 C(2020) 1753 final. Downloaded from from Downloaded 312 European Journal of Risk Regulation Vol. 11:2 II. THE GENESIS AND LEGALITY OF EUROPEAN “COPYCAT CORONAVIRUS POLICIES” While in phase 1 the national risk responses eventually rallied around a common goal – https://doi.org/10.1017/err.2020.44 – . . that of suppressing the disease through social distancing this occurred more through a spontaneous regulatory emulation process than deliberate design. The question is then why and how this occurred in the first place. In other words, why was the EU unable to coordinate the national risk responses to COVID-19 through its public health powers? The emergence of uncoordinated national responses should not be seen as the inevitable consequence of the EU’s limited competence in public health. True, while the Treaty mandates that a high level of human health protection be guaranteed in all EU policies, Article 168(5) of the Treaty on the Functioning of the European Union (TFEU) explicitly excludes the possibility of the EU adopting public https://www.cambridge.org/core/terms health harmonising measures or organising and delivering health services and medical care on this basis. However, this very same provision entrusts the EU to play inter alia a complementing, supporting role by coordinating Member States – which maintain the main responsibility for public health – in the “fight against ::: serious cross-border threats to health”,and“also adopt incentive measures designed to ::: combat the major cross-border health scourges”. To protect citizens from such threats – notably, by “improving surveillance and preparedness for epidemics”–is one of the three strategic objectives of the current EU Health Policy.17 This alone suggests that the EU public health competence should not be read in isolation, but in conjunction with other health-related legal bases, such as inter alia disaster protection under Article 196 TFEU.18 Since the early 1990s, the EU set up a network to ensure the epidemiological surveillance of communicable diseases19 and an Early Warning Response System for , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , the prevention and control of these diseases. Following the SARS and H1N1 outbreaks, this network was upgraded to a fully-fledged legal framework for EU action on health emergencies – the Cross-border Health Threats Decision.20 This is coordinated by the Health Security Committee (HSC),21 which has been in existence since 2001 and is made up of representatives from the ministries of health. The HSC 06 Nov 2020 at 21:18:43 at 2020 Nov 06 builds upon the scientific input of the ECDC. In the case of COVID-19, an ad hoc , on on , advisory expert panel – composed of epidemiologists and virologists from different Member States and chaired by the EU Commission President – has been set up to formulate “EU guidelines on science-based and coordinated risk management 70.126.217.81 measures”.22 . IP address: address: IP . 17 Brussels, 16.3.2020 C(2020) 1799 final. Downloaded from from Downloaded 2020 The European Response to COVID-19 313 Following an alert notification,23 the Cross-border Health Threats Decision expressly requires Member States and the Commission to consult each other in the HSC24 with a view to coordinating Member States’ public health responses and crisis communication. https://doi.org/10.1017/err.2020.44 . . It is manifest that neither occurred until approximately mid-March 2020, after the Italian government activated the EU civil protection mechanism established under the “solidarity clause” foreseen in Article 222 TFEU. Yet, on 25 January 2020, the ECDC alerted all Member States that: In light of the currently available information ::: the potential impact of 2019- nCoV outbreaks is high and further global spread is likely.25 Member States failed to come together and enacted instead their national risk responses. https://www.cambridge.org/core/terms Several factors explain the ineffectiveness of the EU Cross-border Health Threats mechanism as currently designed and operationalised,26 but they essentially all point to a major structural cause. To ensure that EU-wide public health coordination could effectively happen presupposes the existence of a minimum level of coordination among Member States’ healthcare exclusive competence. Thus, for instance, EU public health emergency coordination presupposes the existence of common methods for data collection on the spread of the virus, the characteristics of infected and recovered persons and their potential direct contacts – an EU-wide common testing strategy for cross-border cooperation in healthcare emergency assistance. Virtually all of these areas fall under the exclusive healthcare competence of each Member State. The EU not only has none of these frameworks in place, but – as dramatically showed by COVID-19 – it , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , continues as well to lack a mapping of its Member States’ emergency preparedness plans.27 III. PHASE 2: FROM REGULATORY EMULATION TO REGULATORY COORDINATION? 06 Nov 2020 at 21:18:43 at 2020 Nov 06 , on on , After weeks of strictly enforced social distancing measures across the European continent, it became clear that a policy of indiscriminate social distancing could not last indefinitely: while these restrictive measures seemed necessary to slow down the 70.126.217.81 23 Under Art 9 of the Cross-border Health Threats Decision, national competent authorities or the Commission shall notify an alert in the Early Warning Response System where the emergence or development of a serious cross-border threat to health fulfils the following criteria: (1) it is unusual or unexpected for the given place and time, or it causes or . IP address: address: IP . may cause significant morbidity or mortality in humans, or it grows rapidly or may grow rapidly in scale, or it exceeds or may exceed national response capacity; (2) it affects or may affect more than one Member State; and (3) it requires or may require a coordinated response at the Union level. 24 Art 11(1) of Decision No 1082/2013/EU of the European Parliament and of the Council of 22 October 2013 on serious cross-border threats to health and repealing Decision No 2119/98/EC Text with EEA relevance, OJ L 293, 5.11.2013, pp 1–15. 25 ECDC, “Communicable Disease Threats Report, 19–25 January 2020, week 4” a Systematic Comparison of National Laws” (2017) 121(10) Health Policy 1021. Downloaded from from Downloaded 314 European Journal of Risk Regulation Vol. 11:2 spread of the virus and have saved tens of thousands of lives, they came at high social and economic costs. Although justified in the beginning under a cost–benefit analysis performed during the https://doi.org/10.1017/err.2020.44 . . initial emergency – showing that the benefits from strict social distancing in terms of lives saved significantly outweigh the economic costs28 – their justification weakened over time, due to the gradual manifestation of major economic, social and distributive costs.29 As our knowledge of the virus and the disease evolves, as well as that of the effects of different risk suppression measures, a continuous assessment on whether national responses are still proportionate is needed. If different national risk responses inevitably produce cross-border effects, these are in turn amplified when these measures are lifted – or fail to be reintroduced – as the epidemiological situation evolves. This explains why the EU stepped in when Member States moved to phase 2 of the https://www.cambridge.org/core/terms COVID-19 crisis and lifted some of their restrictions.30 This greater involvement is not only required in order to eventually discharge its Treaty mandate – that of pursuing a high level of health protection across all policy areas – but also to ultimately save lives. If the uncoordinated national responses during phase 1 eventually converged on a fundamentally common approach of social distancing, thus contributing to slowing down the spread of the virus while saving tens of thousands of lives, an uncoordinated exit approach may lead to the opposite outcome. As the emergency phase winds down, Member States find themselves incentivised to experiment with new “regulatory mixes” by lifting some restrictions and introducing new risk management measures. A good example is offered by countries such as Austria and Czechia that have accompanied the lifting of some major restrictions with new , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , requirements such as the use of masks, be it in shops, on public transport or in any public space. This calls for an EU-wide coordinated approach to the lifting of restrictive measures (and potentially their reintroduction) over the next phases of the pandemic and requires an adequate enforcement. In response to the European Council Members’ call for an exit 06 Nov 2020 at 21:18:43 at 2020 Nov 06 strategy that is coordinated with Member States, the EU Commission and the Council , on on , itself prepared a Joint European Roadmap towards lifting COVID-19 containment measures (hereinafter “EU Exit Roadmap”). This document takes into account how the specific epidemiological situation, territorial organisation, healthcare service 70.126.217.81 arrangements, population distributions or economic dynamics might affect Member States’ decisions on where, when and how measures are lifted. . IP address: address: IP . 28 For a US study, see M Greenstone and V Nigam, “Does Social Distancing Matter? (30 March 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-26. Available at SSRN: measures_0.pdf>. Downloaded from from Downloaded 2020 The European Response to COVID-19 315 The EU Exit Roadmap offers three main criteria to assess whether the time has come to begin to relax the confinement for each and every Member State31: https://doi.org/10.1017/err.2020.44 An epidemiological criterion . . - showing that the spread of the disease has significantly decreased for a sustained period of time; - Sufficient health system capacity (ie the extent to which the different healthcare systems can cope with future increases in infection rates after lifting of the measures); - Appropriate monitoring capacity, including large-scale testing capacity to detect and monitor the spread of the virus combined with contact tracing and quarantine capacity in case of the reappearance and further spread of infections. This rather unusual guidance document strikes a fine balance between the need for https://www.cambridge.org/core/terms EU-wide coordination and Member States’ different country-specific needs and cost– benefit calculus. It essentially introduces a set of meta-criteria or benchmarks framing the exercise of Member States’ public health prerogatives. In so doing, it also leaves each Member State the choice, depending on their size and organisation, regarding “what level of compliance with the criteria above should be assessed” (eg the regional or macro-regional level rather than at the national level). This roadmap, together with a flurry of new documents freshly produced under time pressures by the EU Commission through its above-described public health emergencies bodies, represents an attempt at internalising the cross-border effects that are inherent to any national risk response in a highly integrated and interdependent EU. These guidance documents include the “COVID-19 Guidelines for Border Management Measures to Protect Health and Ensure the Availability of Goods and Essential Services”,32 the , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , “Guidelines on EU Emergency Assistance in Cross-Border Cooperation in Healthcare relatedtotheCOVID-19crisis”,33 the “Recommendation App on Contact Tracing (The Toolbox)”34 and the proposed “Guidance for Common Testing Strategies”. While adopted in a situation of emergency, these guidance documents show a timid yet auspicious attempt by the EU to operationalise untested competences contained in 06 Nov 2020 at 21:18:43 at 2020 Nov 06 the Treaties and to do so in a situation of emergency. , on on , The question is then if and to what extent the Commission will be invoking those guidelines – and ensuring the compliance with them – notably the EU Exit Roadmap, in the next stages of the COVID-19 crisis. 70.126.217.81 Due to the intertwined application of both positive and negative integration provisions, the EU – notably the EU Commission – is called upon to discharge its duty to balance public health benefits against other social and economic impacts, and to do so within the . IP address: address: IP . limits of the EU-conferred competences. What if a given Member State lifts its COVID-19 restrictions too early (ie in the absence of a “significant decrease of the spread of the disease for a sustained period of time”)? What if it does so despite not having “sufficient health capacity” in case of 31 ibid. 32 Brussels, 16.3.2020 C(2020) 1753 final. https://www.cambridge.org/core 33 Brussels, 3.4.2020 C(2020) 2153 final. 34 the reappearance and further spread of the infection? Or what if a country fails to reintroduce restrictions when the spread of the virus has significantly increased? Far from constituting EU legal acts under the meaning of Article 289 TFEU and https://doi.org/10.1017/err.2020.44 . . producing legal effects invocable by third parties, these guidelines are set to raise legitimate expectations vis-à-vis EU citizens, companies and also Member States. While they may certainly be used to contextualise the examination of the legality of these national measures under EU law, in particular their proportionality, it remains unclear what their most immediate and long-term legal implications may be. Theoretically, should they go through the legislative process and be transformed into legislative acts, the EU COVID-19-related guidelines could qualify as “incentive measures” under the new and untested Article 168(5). Incentives measures would emerge as a novel tertium genus falling in between existing coordination public https://www.cambridge.org/core/terms health measures and prohibited harmonisation of public health measures. Be that as it may, by testing the outer limits of the EU public health competence, COVID-19 is set to go down in history as a major catalyst in the advancement of EU health emergency action. In the meantime, COVID-19 is a painful, tangible reminder that EU coordination competences do matter. Indeed, legally defining – or redefining – who does what, how and when under EU law is a matter of life or death as never before across the continent. , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , 06 Nov 2020 at 21:18:43 at 2020 Nov 06 , on on , 70.126.217.81 . IP address: address: IP . https://www.cambridge.org/core Downloaded from from Downloaded https://doi.org/10.1017/err.2020.34 Towards Stronger EU Governance of Health . . Threats after the COVID-19 Pandemic Andrea RENDA* and Rosa CASTRO** https://www.cambridge.org/core/terms I. INTRODUCTION In just a few months, COVID-19 – a disease caused by a novel coronavirus known as SARS-CoV-2 – appeared in China and quickly spread to the rest of the world, including Europe and the USA. With confirmed cases surpassing 1.2 million, reported deaths approaching 70,0001 and dramatic projections for the next months,2 many governments are now facing tragic choices, such as imposing harsh containment and quarantine rules, while a few are betting on “herd immunity” by letting the virus spread widely (this latter strategy was initially announced and later abandoned by the UK,3 while it is being adopted to a certain extent in The Netherlands4 and Sweden5). Healthcare workers have been constrained to choose which patients to save and which ones to let die,6 and professional health societies 7 , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , have been prompted to issue guidance for these hard choices. In a triumph of path * Professor of Digital Innovation, College of Europe, Bruges, Belgium; Senior Research Fellow, Centre for European Policy Studies, Brussels, Belgium; email: [email protected]. ** Senior Scientific Policy Officer, Federation of European Academies of Medicine (FEAM), Brussels, Belgium. The opinions expressed in this article are personal and do not necessarily represent the official position of FEAM or any of its member academies. 06 Nov 2020 at 21:20:00 at 2020 Nov 06 1 Figure based on the 6 April 2020 situation report, which is published daily by the World Health Organization at < > , on on , https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports . 2 See MD Shear, M Crowley and J Glanz, “Coronavirus May Kill 100,000 to 240,000 in U.S. Despite Actions, Officials Say”, New York Times, 31 March 2020 . IP address: address: IP . 5 B Pancevski, “Inside Sweden’s Radically Different Approach to the Coronavirus”, Wall Street Journal, 30 March 2020 European Journal of Risk Regulation, 11 (2020), pp. 273–282 doi:10.1017/err.2020.34 https://www.cambridge.org/core © The Author(s), 2020. Published by Cambridge University Press. This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike licence (http://creativecommons.org/licenses/by-nc-sa/ 4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the same Creative Commons licence is included and the original work is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use. Downloaded from from Downloaded 274 European Journal of Risk Regulation Vol. 11:2 dependency, most European Union (EU) Member States have taken gradual, sparse and inconsistent steps, such as closing intra-EU borders and limiting the free circulation of medical devices and protective equipment. All of a sudden, the EU – a project that took https://doi.org/10.1017/err.2020.34 . . decades to build – is on the verge of collapse; trust between countries is declining, while trust between citizens is surprisingly on the rise. Fear of the unknown is leading citizens around the world to look for the solidarity of their neighbours and gradually lose interest in what happens across the border, in what economists and historians have already started to term “de-globalisation”.8 Investors witness the most dramatic nosedive in the recent history of stock exchange indexes and market operators start preparing for the worst economic crisis since World War II. In this article, we argue that the pandemic was predictable, and yet the level of preparedness shown by countries around the world, including most advanced https://www.cambridge.org/core/terms economies, was wildly insufficient. For what concerns the EU, more coordinated action would have been desirable and has also been sought by the European Commission; however, such attempts arrived too late, and were hampered by fragmented governance, as well as by the lack of an EU-wide risk and crisis management framework. II. THE COVID-19 OUTBREAK: CHRONICLE OF A FORETOLD PANDEMIC? While many have rushed to describe the outbreak as a “black swan”9 – an unpredictable event with extremely severe consequences such as the 2008 financial crisis, the dot.com bubble or 9/11 – we have argued elsewhere that COVID-19 was not only predictable ex post but it was amply predicted ex ante.10 , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , Unlike the typical “black swan” event, there is no evidence that the SARS-CoV-2 virus was human-made.11 More importantly, an outbreak of pandemic dimensions was widely predicted beforehand. The threat of such a pandemic was to be expected, yet it was ignored, despite repeated warnings by experts,12 the press13 and expert groups such as the 2016 Report of the “High-level Panel on the Global Response to Health Crises”, “ 06 Nov 2020 at 21:20:00 at 2020 Nov 06 which warned about the need to address existing gaps and enhance global capacity ” 14 , on on , to rapidly detect and respond to health crises ; as well as the 2019 Global Preparedness Monitoring Board (an independent monitoring and accountability body be/professioneel/nieuws-professioneel/ethical-principles-concerning-proportionality-of-critical-care-during-the-covid- 70.126.217.81 19-pandemic-advice-by-the-belgian-society-of-ic-medicine>. 8 See H James, “A Pandemic of Deglobalization”, Project Syndicate, 28 February 2020 9 Crises to ensure preparedness for global health crises, hosted by the World Health Organization (WHO)), which concluded that “the world is not prepared for a fast-moving, virulent respiratory pathogen pandemic”.15 A simulation exercise in the USA in October 2019 https://doi.org/10.1017/err.2020.34 . . confirmed “major unmet global vulnerabilities and international system challenges posed by pandemics that will require new robust forms of public–private cooperation”,16 and around the same time, the Global Health Security Index report reiterated this warning.17 Very useful lessons could be learned through several epidemics that occurred over the past decades (SARS, H1N1 and Ebola). And indeed, some of the countries that were most exposed to those pandemics, especially in South-East Asia, have shown an enhanced level of preparedness compared to many others. However, the pandemic has clearly exposed the lack of preparedness at global, EU and national levels. These gaps are https://www.cambridge.org/core/terms now threatening many peoples’ lives, healthcare systems, the world economy and even the future of the EU. III. GLOBAL PREPAREDNESS AND RESPONSE TO PANDEMICS The WHO has worked extensively on pandemic preparedness, adapting its strategy to the lessons learned from past outbreaks such as HIV, Ebola, H1N1 and SARS.18 The global framework for preparedness for global health emergencies is based on the binding WHO International Health Regulations (IHR 2005). However, important gaps have been identified both at the level of WHO governance (eg funding, lack of coordination between headquarters and regional offices and lack of transparency and accountability),19 20 , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , as well as at the level of national implementation of the IHR. While a Joint External Evaluation framework exists for countries to assess their national capacities within the IHR, only 17 countries in the wider European region (which comprises 53 countries) have submitted their reports, while five others are preparing to do so. For example, to date, no report is available for Italy, France or Spain.21 06 Nov 2020 at 21:20:00 at 2020 Nov 06 The Ebola crisis had already evidenced gaps in funding, health system capacities and , on on , reporting. It also unveiled the unnecessary and uncoordinated use of travel bans, trade restrictions and quarantines. In addition, the WHO Director General was also accused of waiting too long before declaring a Public Health Emergency of International 70.126.217.81 Concern (PHEIC), which only happened around four months after the Ebola outbreak 15 Global Preparedness Monitoring Board, “AWorldatRisk”, Annual report on global preparedness for health . IP address: address: IP . emergencies, September 2019 21 spread internationally.22 Importantly, public budget cuts imposed after the financial crisis (2008) were reportedly part of the problem. Other problems that emerged in the case of Ebola included the absence of sufficient incentives for coordinating research and https://doi.org/10.1017/err.2020.34 . . development activities and important gaps in information and data sharing between institutions, in particular for the coordination of non-pharmaceutical interventions (including quarantines, social gathering restrictions or cordon sanitaire). In the case of COVID-19, a worldwide race has emerged to develop new therapies, vaccines and diagnostic tests, although the ultimate availability and affordability of such technologies would still need to be figured out.23 However, a limit in worldwide and even pan- European data sharing has persisted and manifested itself on an even larger scale.24 https://www.cambridge.org/core/terms IV. EU MECHANISMS TO DEAL WITH PANDEMICS: HIGH EXPECTATIONS, LIMITED TOOLS A peculiarity of COVID-19 is that it is not only affecting countries with structural deficiencies in their healthcare systems, but also countries that normally have well- functioning and well-funded healthcare systems, including EU Member States such as France, Italy and Spain. According to the Treaty on the Functioning of the European Union (TFEU), the EU has a shared competence with Member States in public health matters for aspects defined by the Treaty. Article 168 TFEU calls the EU to act on global health issues by fostering cooperation with third countries and competent international organisations; however, it also establishes that the responsibility of organising their health systems remains in the hands of Member States. 25 , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , The EU Decision on Serious Cross-border Threats to Health provides the framework for EU action related to crisis preparedness and responses to cross-border health threats, including the Early Warning and Response System (EWRS) and a Health Security Committee (HSC), which coordinates responses to outbreaks and pandemics, both within and outside the EU. – 06 Nov 2020 at 21:20:00 at 2020 Nov 06 A dedicated agency the European Centre for Disease Prevention and Control – ’ , on on , (ECDC) was set up in an attempt to strengthen Europe s response capability and to provide technical support to Member States. The ECDC is in charge of the surveillance, detection and risk assessment of threats, epidemiological surveillance 70.126.217.81 and the operation of the EWRS. Consensus on the need for an agency emerged after the SARS outbreak in 2003, and the ECDC became operational already in 2005. Its work was found to be relevant and meaningful in a recent external evaluation, which . IP address: address: IP . particularly praised the relevance of the Centre’s activities during the Zika and Ebola outbreaks.26 However, the same document also reported weaknesses “in the Centre’s 22 ibid. 23 DP Mancini, “Big Drugmakers under Pressure to Share Patents against Coronavirus”, Financial Times, 30 March 2020 report.pdf>. Downloaded from from Downloaded 2020 Towards Stronger EU Governance of Health Threats 277 capacity to adapt to changes in the Member States, particularly reduced national public health spending”; and that the Centre has not been able to adequately cover its staff costs and hire additional staff. Most worrying is the reported lack of adequate cooperation by https://doi.org/10.1017/err.2020.34 . . Member States, in particular in the Epidemic Intelligence Information System (EPIS) and the European Surveillance System (TESSy), a situation now also aggravated by the effects of Brexit.27 In spite of having a legally binding instrument (the EU Decision on Serious Cross- border Threats to Health) and a dedicated agency (the ECDC), the EU governance framework remains a work in progress. This is critical for cross-border health threats, the quintessential case calling for harmonisation and coordinated action superseding national borders.28 Significant gaps remain on the implementation of the EU Decision on Serious Cross-border Threats to Health,29 and the EU framework remains highly https://www.cambridge.org/core/terms limited by the need to respect the competences of EU Member States.30 The main coordinating agency – the ECDC – is also understaffed and under-budgeted. Moreover, several aspects will require enhanced attention if the EU wants to improve its preparedness and responsiveness in light of future pandemics. First, early warning and prevention strategies need to be better integrated with responses. Especially for zoonoses (diseases spreading from animals to humans), collaboration between the animal health and human health sectors is critical. Because many pandemics, including the one caused by SARS-CoV-2, are zoonoses, prevention strategies need to emphasise cross-sectorial collaborations under an integrated One Health approach.31 While the current EU approach coordinated by the ECDC is inspired by such an integrated One Health approach, lack of resources and limited information exchange hamper early warnings of diseases at the intersection of animal , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , and human health. Second, limiting EU competences on public health is highly inefficient during a pandemic response.32 During the current outbreak, the ECDC has issued recommendations, including on the criteria for discharging COVID-19 patients, social distancing33 and contact tracing.34 The European Commission also published 35 06 Nov 2020 at 21:20:00 at 2020 Nov 06 recommendations for testing strategies. However, these recommendations are not , on on , 27 M Flear, A de Ruijter and M McKee, “Coronavirus Shows How UK Must Act Quickly before Being Shut Out of Europe’s Health Protection Systems” (2020) 368 BMJ m400. 28 See R Martin and A Conseil, “Public Health Policy and Law for Pandemic Influenza: A Case for European 70.126.217.81 Harmonization?” (2012) 37 Journal of Health Politics, Policy and Law 1091, reviewing arguments in favour of and against harmonisation at the EU level. 29 European Court of Auditors special report no 28, Dealing with Serious Cross-Border Threats to Health in the EU: Important Steps Taken but More needs to be Done (Luxembourg, Publications Office of the European Union 2016). . IP address: address: IP . 30 M Anderson, M McKee and E Mossialos, “Covid-19 Exposes Weaknesses in European Response to Outbreaks” (2020) 368 BMJ m1075. 31 ECDC, “Towards One Health Preparedness”, Technical Report, Expert consultation 11–12 December 2017, highlighting that “One Health implementation was made more difficult by poor communication of early warning signals and surveillance results”. 32 ibid. 33 35 binding on EU Member States, and national authorities are currently deciding who to test, whether or not to trace contacts and how often and what types of social distancing measures to adopt. While clearly the adoption of severe measures such as quarantines, https://doi.org/10.1017/err.2020.34 . . school closures and suspension of economic activities often needs to be adapted at national or even regional and local levels, there is also a need for coordinating measures to contain or mitigate the spread of communicable diseases. Both the intended and unintended effects of such measures in any one Member State may have important consequences in others (especially at the border). For instance, early announcements of lockdowns in some cities or countries have prompted a large number of people to flee from severely affected areas, possibly aggravating an already difficult situation.36 Closing some activities in one Member State while leaving them open in others also had similar effects.37 https://www.cambridge.org/core/terms Third, data sharing is key to understanding the evolution of an outbreak and adapting measures as needed. While the ECDC has competences to collect and share data, one important limitation that emerged during the COVID-19 outbreak is the lack of consistency across data. While EU Member States are sharing data, in many circumstances the level of quality and detail varies significantly. For example, not all countries are sharing data on the number of cases by age and sex. And key information such as the criteria adopted for testing, which have a direct effect on the number of confirmed cases and deaths reported, was not fully shared, which also fostered a lack of trust between Member States.38 All of these factors have so far limited the ability of EU institutions to learn in real time from data at the EU level, thereby limiting the EU’s ability to respond to the pandemic.39 , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , V. FROM EU GOVERNANCE TO NATIONAL RESPONSES AND HEALTHCARE INVESTMENTS Global rules (the WHO IHR of 2005) and EU coordination (the EU Decision on cross- 06 Nov 2020 at 21:20:00 at 2020 Nov 06 border threats to health and the ECDC) are two elements in setting up a coordinated , on on , response plan. An effective approach to prepare and respond to pandemics also needs to rely on strong national institutions. In 2017, a study found many gaps in Member States’ legislation, and a staggering lack of available and transparent information 70.126.217.81 about national frameworks, in spite of clear information-sharing obligations set up at EU and global levels.40 Against this backdrop, EU Member States have been reluctant to invest in measures . IP address: address: IP . to tackle low-risk, high-consequence occurrences. In a world dominated by the quest for economic efficiency, with financial markets ready to award a premium to governments 36 a Systematic Comparison of National Laws” (2017) 121 Health Policy 1021. Downloaded from from Downloaded 2020 Towards Stronger EU Governance of Health Threats 279 reducing public spending and thereby taxes, there is little place for resilience-orientated policy. The resulting paradox is that those events that scare citizens the most are tackled by many politicians with a macabre taste for risk. https://doi.org/10.1017/err.2020.34 . . In Europe, the financial crisis led many Member States to impose drastic spending cuts on healthcare in almost every country. Evidence of cutbacks and “an overall declining share of health expenditure going to public health” in the post-financial crisis period has been recently reported.41 For instance, the Organisation for Economic Co-operation and Development (OECD) reported that following the economic crisis, health investments per capita in Italy decreased until 2013 and only started to increase very slowly after then.42 To capture the capacity of EU healthcare systems to respond to a crisis, the EU Commission and the OECD have developed a series of indicators reflecting on the long-term stability of resources and efficient and strong https://www.cambridge.org/core/terms governance responses, including to plan and forecast healthcare infrastructure and workforce.43 Given the rigidity of most public spending on healthcare, cuts inevitably end up affecting research, as well as overall preparedness strategies; as a result, ordinary administration is somehow (barely) guaranteed, but low-probability, high- consequence events such as COVID-19 are often disregarded by public authorities. Lombardy (a crown jewel of Italy when it comes to healthcare) almost collapsed due to the lack of intensive care beds, leaving many patients unattended and many deaths occurring at home rather than in hospitals. Summing up, both the global44 and EU45 governance of pandemics appear too fragmented and insufficiently coordinated. Most countries are wildly unprepared, and the existing coordination mechanisms appear too weak to effectively prevent collective action problems, as well as fragmented and sparse reactions, to proliferate. In Europe, , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , the ECDC is likewise insufficiently endowed to effectively coordinate Member States in providing a meaningful response. As in many global governance settings, the current situation can easily lead to collective action problems, as well as strategic behaviour. 06 Nov 2020 at 21:20:00 at 2020 Nov 06 VI. TOWARDS A STRENGTHENED EU AFTER THE PANDEMIC , on on , Once the current emergency is over, and perhaps even before then, EU institutions will have to work in the direction of strengthening EU governance in various ways. First, there is a need to strengthen the resilience and sustainability of healthcare 70.126.217.81 systems. Health has been found to be a key concern for European citizens and an area for which the EU has been asked to expand its competences and powers.46 Apart . IP address: address: IP . 41 B Rechel, “Funding for Public Health in Europe in Decline?” (2019) 123 Health Policy 21. 42 OECD and the European Observatory on Health Systems, State of Health in the EU, Italy: Country Health Profile (2019) Eurobarometer 91 (2019) Spring 2019 Public Opinion in the European Union. Downloaded from from Downloaded 280 European Journal of Risk Regulation Vol. 11:2 from generating important returns for society as a whole,47 investment in healthcare should be fostered as a way to increase both the resilience and the sustainability of Member States’ economies by enabling a transition towards measures that protect, https://doi.org/10.1017/err.2020.34 . . prepare and transform the economy and society.48 Resilience also entails cross-border effects and goes beyond pandemic preparedness, both within and outside the health domain. For example, the area of antimicrobial resistance has already been singled out by the United Nations (UN), the WHO, the EU and some national institutions as representing a massive global health and security risk. Reducing vulnerability and increasing resilience are also essential in response to other threats, such as climate change and the protection of biodiversity. However, emphasis on resilience has been frustrated by a generalised quest for cost cutting and short-term economic efficiency in economic policy, which led to the elimination of all redundancy and excess https://www.cambridge.org/core/terms capacity in critical infrastructures, including healthcare. Increasing resilience will not be possible if worldwide, international institutions continue to emphasise unconditional fiscal discipline and financial markets continue to be tied to quarterly reports on public spending. This, too, will have to change. The same applies to the European Semester: re-orientating it towards sustainable development, as the von der Leyen Commission seems willing to do, would require providing more visibility to existing health, social inclusion and sustainability indicators as well as adding new indicators and monitoring tools, including a careful planning of preparedness for health and other risks (see below). So far, despite the emphasis on a “Triple A” for social policy in the Juncker Commission, the Stability and Growth Pact has largely prioritised fiscal discipline over resilience-orientated investment. The European Semester also potentially supports investment in health:49 , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , however, so far it has clearly prioritised fiscal discipline over access to healthcare and promotion of health, putting further pressure on already strained healthcare systems.50 Second, beyond resilience, more centralisation in healthcare governance is needed, especially to address health emergencies. The recent evaluation of the EPIS within the ECDC has highlighted important flaws, mostly on the side of Member States.51 06 Nov 2020 at 21:20:00 at 2020 Nov 06 The voluntary nature of this multi-level cooperation resembles closely the lack of full 52 , on on , coordination experienced in a neighbouring field, cybersecurity. Moreover, the shortage of medical devices and medicines, an already existing problem in the EU, 70.126.217.81 47 R Masters, E Anwar, B Collins, R Cookson and S Capewell, “Return on Investment of Public Health Interventions: A Systematic Review” (2016) BMJ Journal of Epidemiology and Community Health 8/827>. See also European Commission, supra, note 43. . IP address: address: IP . 48 ARR Manca, P Benczur and E Giovannini, “Building a Scientific Narrative towards a More Resilient EU Society, Part 1: A Conceptual Framework” (2017) EUR 28548 EN 26 November 2018 became more apparent and critical in the current emergency:53 problems in the supply of ventilators, protective masks and medicines have shown existing gaps and unveiled opportunities for Europe to act more effectively. A strategic stockpile of medical https://doi.org/10.1017/err.2020.34 . . devices (rescEU)54 has now been set up to address the emergency: this, however, occurred only after Member States attempted to implement export bans for critical medical equipment, ignoring any form of solidarity. A stronger role of the EU would have been advisable also with respect to the plethora of policy measures adopted at all levels of government to contain and delay the spread of the virus. Social distancing, travel bans and other similar measures are thought to be ineffective or even dangerous unless enacted in a concerted and coordinated way. The EU has now issued ad hoc recommendations on testing strategies55 and community measures,56 but this took far too long, putting individuals and healthcare systems unnecessarily at risk. https://www.cambridge.org/core/terms Third, Europe should ramp up its preparedness for a wider range of large-scale risks, beyond pandemics, and even beyond healthcare. It is important to avoid the repetition of a “panic–neglect–panic” cycle in the face of crisis. On the one hand, Europe must avoid adopting a “disease-by-disease” strategy: as suggested by a UN High-level Panel57 that reviewed in 2016 the experience with the Ebola outbreak, governments should avoid the temptation to emphasise “vertical” programmes focusing on specific diseases or too- narrow policy considerations (eg pandemic preparedness) and prioritise comprehensive, whole-of-government programmes aimed at strengthening all aspects of their national health systems. On the other hand, Europe must also avoid a “threat-by-threat” siloed strategy: even if COVID-19 was not human-made, the extent of the disruption it is creating will certainly entice bioterrorists, and it is clear that the rising role of digital technology in supplementing economic activities could make a combined attack , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , (biological and digital) lethal for the world economy. The mounting awareness that most cyberattacks are hybrid (military and civilian) should spread towards analysing the likelihood of multi-vector attacks. Against this background, even if it has already engaged in extensive risk mapping,58 Europe does not have a dynamic, agile centre for the prevention of catastrophic risks. The use of high-performance computers, large 06 Nov 2020 at 21:20:00 at 2020 Nov 06 datasets and advanced risk analysis techniques can support resilience in Europe , on on , without requiring massive investment in new facilities and infrastructure for each sector. Such a centre for the prevention of catastrophic risks could coordinate with existing non-executive agencies in specific sectors (eg the European Network and 70.126.217.81 Information Security Agency (ENISA), the ECDC, the European Security and Markets Authority (ESMA) and the European Banking Authority (EBA)) to alert policy-makers on outstanding threats and evolving risks, including multi-vector ones. . IP address: address: IP . 53 of_risks_2.pdf>. Downloaded from from Downloaded 282 European Journal of Risk Regulation Vol. 11:2 With such a support network, the European Commission could create an executive structure that would coordinate emergency responses by identifying the most effective sequence of measures and enable possible redistribution of materials and resources https://doi.org/10.1017/err.2020.34 . . across Member States to ensure the resilience of the whole Union. Finally, there are many ways to pursue enhanced resilience and responsiveness, but not all of them are compatible with sustainability and democratic values. The challenge is to find an adequate policy mix that safeguards individual rights and liberties, protects the economy and at the same time strengthens government preparedness for cases of epidemics and pandemics. Building healthcare facilities at the national level based on the (current) needs during a pandemic outbreak makes little sense from a policy perspective; increasing capacity should rather be part of a more comprehensive preparedness strategy that includes the ability to react quickly and increase the https://www.cambridge.org/core/terms number of beds, ventilators or other healthcare facilities in times of emergency. Overstocking medicines at the national level is less efficient than doing so at the pan- European level. Using technology to track the movement of citizens, as is done in China, is incompatible with individual liberties and fundamental rights and can give rise to widespread social discrimination over time.59 In the current emergency, the EU has a chance to show that risk management and governance is possible without sacrificing individual fundamental rights and jeopardising solidarity and the bloc’s commitment to sustainable development. The President of the European Commission, Ursula von der Leyen, is facing an uphill battle as Member States repeatedly fail to resist the temptation of closing their borders and refusing to cooperate with their neighbours. The COVID-19 emergency is thus becoming an existential challenge for the “geopolitical Commission”, and for the EU project as a whole. A cutting-edge , subject to the Cambridge Core terms of use, available at at available use, of terms Core Cambridge the to subject , approach to risk detection, analysis and management coupled with far-reaching economic stimuli, the responsible use of technology and the commitment to openly sharing research solutions can preserve the role of the EU as a guiding light in these troubled times. This is, of course, a non-exhaustive list of possible measures that would contribute to 06 Nov 2020 at 21:20:00 at 2020 Nov 06 better governance and preparedness in the years to come. They are measures to be , on on , adopted in quieter times: as John F. Kennedy once famously said, the time to fix the roof is when the sun is shining. It is essential that, once COVID-19 gradually disappears, the lessons learned from these months of lockdown become the 70.126.217.81 foundations of a new approach to risk governance at EU and global levels. The Global Preparedness Monitoring Board raised this same issue very clearly in its latest annual report: “for too long, we have allowed a cycle of panic and neglect when it . IP address: address: IP . comes to pandemics: we ramp up efforts when there is a serious threat, then quickly forget about them when the threat subsides”.60 This time will hopefully be different: remembering what went wrong in times of crisis is essential to avoid repeating the same mistakes in the future. 59 A Renda, “Will Privacy Be One of the Victims of COVID-19”, CEPS in Brief, 23 March 2020 60 Global Preparedness Monitoring Board, supra, note 15. Downloaded from from Downloaded 15 October 2020 Page: 1/13 Original: English THE TRIPS AGREEMENT AND COVID-19 INFORMATION NOTE1 Key points • A full response to the COVID-19 crisis requires wide access to an extensive array of medical products and other technologies, ranging from protective equipment to contact tracing software, medicines and diagnostics, as well as vaccines and treatments that are yet to be developed. The way in which the intellectual property (IP) system is designed – and how effectively it is put to work – can be a significant factor in facilitating access to existing technologies and in supporting the creation, manufacturing and dissemination of new technologies. This is framed by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) which represents the most comprehensive multilateral agreement on IP. • Collaboration and cooperation among health technology developers, governments and other stakeholders can be positively supported by the IP system as well as by guidance on lawful cooperation among competitors under a country's domestic competition policy regime. • From the beginning of the crisis, governments and stakeholders have considered how innovation is promoted, regulated and managed, including through the IP system, and the contribution that this could make to address the pandemic. A number of initiatives have addressed the voluntary sharing and pooling of IP rights (IPRs), thus responding to the spirit of collaboration that is required for any global effort to tackle the COVID-19 pandemic. Equally, a range of policy options confirmed under the TRIPS Agreement, as implemented in domestic law, remains available to WTO members as tools to deal with public health issues where needed. • For example, the TRIPS Agreement allows compulsory licensing and government use of a patent without the authorization of its owner under a number of conditions aimed at protecting the legitimate interests of the patent holder. All WTO members may grant such licences and government-use orders for health technologies, such as medicines, vaccines and diagnostics, as well as any other product or technology needed to address COVID-19. One member has already issued a government-use licence for a potential treatment. In some other members, the parliament has requested the government to issue compulsory licences to ensure access to medicines, vaccines or diagnostics for COVID-19 and others have updated or clarified their laws in the light of the pandemic. • The need for an urgent response to the COVID-19 pandemic has led national and regional IP offices to take initiatives to expedite or simplify their administration of the IP system, especially concerning patents and trademarks, and to provide practical support for firms seeking to develop products of potential benefit in combating the pandemic. • Transparency and the availability of up-to-date information is an immediate and critical need that embraces both trade and health-related legal and policy areas. Ensuring maximum transparency of legal and policy measures taken by WTO members in the field of IP to address the pandemic is in the mutual interest of all stakeholders. It supports governments and economic operators to keep up to date in a rapidly evolving trade landscape, provides much-needed clarity and enables mutual learning. Updated lists of IP measures undertaken 1 This document has been prepared under the WTO Secretariat's own responsibility as a factual overview and is without prejudice to the positions of WTO members or to their rights and obligations under the WTO. 1 by governments in the context of COVID-19 are available on the WTO's COVID-19 webpage2 and the WIPO COVID-19 IP Policy Tracker.3 1 INTRODUCTION This note sets out the role and key contributions that the global IP system, including its policy options and flexibilities as implemented in domestic law, can make to address COVID-19. It also provides an overview of measures taken by WTO members within this framework since the start of the crisis. The WTO's TRIPS Agreement is the most comprehensive multilateral agreement on IP. It provides for certain basic principles (such as non-discrimination), situates the IP system in terms of promoting innovation and disseminating technology for the public's welfare, sets forth minimum standards of protection in respect of each of the areas of IP covered by the TRIPS Agreement, contains provisions that deal with domestic procedures and remedies for IP enforcement, and makes disputes between members about respect for TRIPS obligations subject to the WTO's dispute settlement procedures. The global IP system provides a framework in which urgently needed innovation in relation to COVID-19 can be encouraged, shared and disseminated. Innovation in health can be seen as a cycle: it covers the stages from initial invention to the supply to the public of a product or service. Within a balanced IP system, the exclusive rights conferred by IPRs can serve as an incentive for investment at each stage of the innovation cycle, and as a mechanism for combining and trading in technology inputs from different sources. Policy choices with respect to the design and implementation of the IP system made at the regional and national levels, along with the management of IP, can also directly influence research and development (R&D) outcomes and access. Article 7 of the TRIPS Agreement describes the objectives of the IP system in terms of a balance of rights and obligations. The objectives refer to the protection and enforcement of IPRs in a manner which contributes to "the promotion of technological innovation", "the transfer and dissemination of technology" to the mutual advantage of both "producers and users of technological knowledge", and also "social and economic welfare". Article 8 states that members may adopt measures necessary to protect public health and nutrition and to promote the public interest in sectors of vital importance to their socio-economic and technological development that are consistent with the provisions of the TRIPS Agreement. The Doha Declaration on the TRIPS Agreement and Public Health, a landmark declaration adopted at the WTO Ministerial Conference in 2001, reaffirmed the objectives and principles of the Agreement as guidance for the implementation of TRIPS provisions in a manner that is responsive to public health objectives. WTO members affirmed that the TRIPS Agreement "can and should be interpreted and implemented in a manner supportive of Members' right to protect public health and, in particular, to promote access to medicines for all". The Doha Declaration also clarified certain policy options, or "flexibilities", within the framework of the TRIPS Agreement. It is thus a well-established principle that the TRIPS Agreement can be interpreted and implemented in line with public health policy objectives and that it provides wide latitude for members to take action to protect public health. While much public health policy attention has focused on the patent system as a key element of the system for innovation and dissemination of medical technologies, other areas of IP covered by the TRIPS Agreement are also significant.4 Trade secrets and clinical trial data are subject to protection, and the way that this is applied by members can be critical in ensuring that new technologies are carried forward without overly burdening generic followers. A well-run trademark system has a valuable role in ensuring accurate information for medical practitioners and consumers, while safeguarding against potential confusion with critical terms such as the international non-proprietary 2 www.wto.org/covid 3www.wipo.int/covid19-policy-tracker 4 The delegations of South Africa and India have called for a holistic approach that takes account of TRIPS flexibilities in the area of patents, copyright, design rights and trade secrets. See the minutes of the TRIPS Council meeting held on 30 July 2020, WTO official document no. IP/C/M/95/Add.1 (all WTO official documents are available at https://docs.wto.org/); see also the Communication from South Africa on Intellectual Property and the Public Interest: Beyond Access to Medicines and Medical Technologies Towards a More Holistic Approach to TRIPS Flexibilities, WTO official document no. IP/C/W/666, and the Communication from South Africa and India on Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19, WTO official document no. IP/C/W/669. 2 names that are used to identify pharmaceutical substances and ingredients. A balanced copyright system that takes due account of the interests of rights-holders and the public at large to access copyright-protected works can support R&D activities and enable the development of digital solutions to support diagnostics and treatment. IP systems are only one element of the innovation cycle that includes the discovery, development and delivery of new health technologies. An integrated approach to respond to the COVID-19 pandemic implicates numerous policy areas, including tariffs and import licensing, government procurement, regulatory standards, health services and competition policy.5 A standalone section in the 2020 study jointly published by the World Health Organization (WHO), the World Intellectual Property Organization (WIPO) and the WTO, Promoting Access to Medical Technologies and Innovation: Intersections between public health, intellectual property and trade (second edition),6 on COVID-19 was added at the start of the publication to map the multiple challenges posed by the pandemic in relation to the integrated health, trade and IP policy frameworks set out in the study. 2 VOLUNTARY COLLABORATION Most new health technologies entail the incorporation of multiple inputs from different sources. They must also be rigorously tested for safety and efficacy before being distributed to the public. In this light, collaboration and cooperation among health technology developers, governments and other stakeholders can be positively supported by the IP system. IPRs generally take the form of a limited "exclusive" right granted under national law to a creator over the use of the creation for a certain period of time. This allows the right-holder to extract economic value from the IPRs by using them directly or by authorizing others to do so. For example, an owner of a patent can allow its use voluntarily with third parties through licensing agreements. A licence is a contract in which the patent-holder allows another party to use the IP, either in return for a payment of royalties (or some other consideration) or free of charge. The licence may be limited to a certain field of use or in a certain territory. It also allows the right-holder to exercise control over the quality of the production. Non-commercial players, such as academic institutions and philanthropic initiatives, have used patent licences to leverage specific public interest applications of their technology, thus not limiting licensing strategies to economic interests alone. Where collaborative arrangements are taking place between firms that would normally compete against each other, competition policy and principles apply. The Organisation for Economic Co- operation and Development (OECD) recommends that governments provide guidance on lawful cooperation between competitors to maximize efficiencies in arrangements between competitors for the development of key health products (e.g. vaccines or essential drugs) on the one hand, and to ensure that relevant arrangements are limited in time and do not include hardcore restrictions on competition, such as price fixing, on the other hand.7 Where IP rights are involved, members may take appropriate measures against practices which unreasonably restrain trade or adversely affect the international transfer of technology in line with Article 8.2 of the TRIPS Agreement. Article 40 provides expressly for scope for members to address anticompetitive licensing practices. Sharing IP and clinical trial data The sharing of relevant IP and the exchange of clinical trial data can facilitate cooperation for research and development of COVID-19-related health technologies. In particular, it can help expedite the development, manufacturing and marketing of tests, treatments and vaccines. Many examples of action undertaken in support of such voluntary collaborative efforts have been witnessed by stakeholders, including governments, private sector actors and international bodies (see Box 1). 5 WTO reports related to COVID-19 and world trade are available at www.wto.org/covid. 6 https://www.wto.org/english/res_e/publications_e/who-wipo-wto_2020_e.htm. 7 See OECD (2020), "COVID-19: Competition policy actions for governments and competition authorities," available at https://www.oecd.org/daf/competition/COVID-19-competition-policy-actions-for- governments-and-competition-authorities.pdf. 3 Box 1: Examples of voluntary collaborative efforts Permissive licences to allow open access to design files and software for ventilators and transfer of know-how Medtronic, a medical device company, made freely available the design specifications and software for their Puritan BennettTM 560 (PB560) ventilator. It also launched the Ventilator Training Alliance to transfer know- how required for the use of ventilator technology.8 Non-enforcement or waiver of patent rights AbbVie, a biopharmaceutical company, waived patent rights relating to lopinavir/ritonavir (LPV/r), a second- line treatment recommended by the WHO for the human immunodeficiency virus (HIV), being studied as a coronavirus treatment.9 Moderna, a company developing a messenger RNA vaccine against COVID-19 and holding a number of patents relevant to the vaccine, announced that it will not enforce those patents during the pandemic to allow other COVID-19 vaccines in development to use the technology. For the period after the pandemic, it also stated its willingness to license the company's intellectual property for COVID-19 vaccines to competitors upon request.10 Free global licences to use IP Under the Open COVID Pledge, several multinational technology companies including Microsoft, Amazon, IBM, Intel, Hewlett Packard and Facebook, among others, have committed to grant time-limited licenses for some or all of their IP for the purposes of ending and mitigating the COVID-19 pandemic.11 Sharing of IP to develop vaccines A potential vaccine developed at Oxford University in the United Kingdom was licensed to an originator pharmaceutical company for manufacture. Development and manufacture are supported by US$ 750 million in funding from the Coalition for Epidemic Preparedness Innovations (CEPI), which finances independent research projects to develop vaccines against emerging infectious diseases, and Gavi, the Vaccine Alliance. The company has committed to supplying the vaccine globally on a no-profit basis and has signed an agreement with an Indian-based manufacturer, allowing the latter to supply low- and middle-income countries.12 Initiatives to transfer technology and know-how to make, adapt or use COVID-19-related technologies The COVID-19 Clinical Research Coalition, a coalition of scientists, physicians, funders and policymakers, promotes open sharing of research knowledge and data and advocates for equitable and affordable access to COVID-19-related health technologies.13 Free access to COVID-19 publications protected by copyright Over 30 publishers make their COVID-19 and coronavirus-related publications freely accessible in public repositories.14 Free availability of standards protected by copyright The European Committee for Standardization and the European Committee for Electrotechnical Standardization, in collaboration with their members, agreed to make freely available certain copyrighted European standards for certain medical devices and personal protective equipment.15 8 http://newsroom.medtronic.com/news-releases/news-release-details/medtronic-shares-ventilation- design-specifications-accelerate and https://www.medtronic.com/covidien/en-us/ventilator-training- alliance.html. 9 https://www.medspal.org/licence/?uuid=4e7317ed-ed68-4167-84c2-62309223fdb1. 10 See Statement on Intellectual Property Matters During the COVID-19 Pandemic, 8 October 2020, https://investors.modernatx.com/news-releases/news-release-details/statement-moderna-intellectual- property-matters-during-covid-19. 11 https://opencovidpledge.org/. 12 https://www.astrazeneca.com/media-centre/press-releases/2020/astrazeneca-takes-next-steps- towards-broad-and-equitable-access-to-oxford-universitys-covid-19-vaccine.html. 13 https://covid19crc.org/. 14 https://wellcome.ac.uk/press-release/publishers-make-coronavirus-covid-19-content-freely-available- and-reusable. 15 Further details, including links to officials sources, are available at: https://www.wto.org/english/tratop_e/covid19_e/trade_related_ip_measure_e.htm. 4 ASTM International, an international standards developing organization, is providing no-cost public access to some copyrighted ASTM standards used in the production and testing of personal protective equipment, including face masks, medical gowns, gloves and hand sanitizers.16 Open-source licensing and open access initiatives During the health crisis, some IPR owners have turned to open-source licensing. This is the practice of licensing IPRs, possibly free of charge, for use by third-parties in commercial applications for a specific purpose, such as using, modifying or sharing the source code, blueprint or design, typically on the condition that any improvements that are developed are made available on the same terms (see Box 2). Box 2: Examples of open-source or open-access initiatives Open-source software for contact-tracing technology Singapore has made copyrighted software related to a contact-tracing solution for COVID-19 freely available under an open-source licence.17 Open-source hardware to resolve supply-chain weaknesses Open-source hardware projects include testing material, open lung ventilators, etc.18 Open access to research results Medicines for Malaria Venture created the COVID Box, which contains a set of 80 marketed drugs or compounds in development with known or predicted activity against COVID-19 in research publications. Recipients of the Box will be asked to publish their findings in the public domain.19 Technology pools Solutions for pooling technologies have found increased attention during the COVID-19 pandemic. A technology pool is an agreement between at least two IPR owners to group their rights relating to a specific technology and to license the rights to use these rights to each other and to third parties, subject to certain conditions, such as the payment of royalties. The Solidarity Call to Action, signed by the WHO Director-General and the President of Costa Rica on 29 May 2020 and initially endorsed by nearly 40 WHO member states, calls upon governments and other key stakeholders to pool knowledge, IP and data relevant for the development of medicines, vaccines and diagnostics to combat COVID-19.20 To operationalize the Solidarity Call to Action, the COVID-19 Technology Access Pool (C-TAP) will compile pledges of commitment made under the Solidarity Call to Action to voluntarily share COVID-19 health technology-related knowledge, IP and data. To do so, it collaborates with existing mechanisms, such as the Medicines Patent Pool (see Box 3).21 Box 3: Example of a technology pooling initiative The Medicines Patent Pool (MPP) was established in 2010 by Unitaid, a global health initiative, as a public health patent pool. The MPP negotiates IP licence agreements with patent-holding pharmaceutical companies, wherein the patent-holder allows the MPP to grant sublicences to manufacturers in low and middle-income countries to make and sell generic versions in a certain territory. The MPP’s mandate was initially focused on HIV, then expanded to include tuberculosis (TB) and hepatitis C, and, in 2018, was expanded to include patented essential medicines more broadly.22 16 https://www.astm.org/COVID-19/. 17 https://bluetrace.io/. 18 https://opensource.com/article/20/3/open-hardware-covid19. 19 https://www.mmv.org/mmv-open/covid-box/about-covid-box. 20 https://www.who.int/emergencies/diseases/novel-coronavirus-2019/global-research-on-novel- coronavirus-2019-ncov/covid-19-technology-access-pool/solidarity-call-to-action 21 https://www.who.int/emergencies/diseases/novel-coronavirus-2019/global-research-on-novel- coronavirus-2019-ncov/covid-19-technology-access-pool. 22 https://medicinespatentpool.org/who-we-are/strategy/. 5 On 3 April 2020, MPP's Board decided to temporarily expand MPP's mandate to include any health technology that could contribute to the global response to COVID-19 and where licensing could facilitate innovation and access.23 3 GOVERNMENT ADMINISTRATIVE OPTIONS Acquisition and maintenance under the TRIPS Agreement Some IPRs – notably patents, trademarks and registered designs – are only granted after going through administrative procedures such as examination. The TRIPS Agreement establishes general principles concerning the acquisition and maintenance of such IPRs. Part IV of the Agreement is to ensure that unnecessary procedural difficulties in acquiring or maintaining IPRs do not impair protection if and when required by the Agreement. It provides (in Article 62) that compliance with reasonable procedures and formalities may be required for the acquisition and maintenance of IP rights, and that these should not be too costly or protracted. But neither the TRIPS Agreement nor the Paris Convention24 mandates specific procedures or lays down detailed procedural requirements. As a result, members have room to manoeuvre in developing an approach to IPR acquisition and maintenance procedures tailored to their specific needs and circumstances. Within this framework, national and regional IP offices have taken initiatives to expedite or simplify their administration of the IP system, especially concerning patents and trademarks, and to provide practical support for firms seeking to develop products of potential benefit in combating the pandemic. Patent examination or application procedures Some IP or patent offices have expedited the patent examination process of inventions that contribute to a public policy objective. The goal of accelerated patent examination procedures, or so-called "fast-track" procedures, is to facilitate the development and eventual dissemination of certain types of technology, such as technologies with healthcare impacts. Some members have adopted accelerated patent examination or fee deferral or waiver procedures for COVID-19-related technologies (see Box 4). Box 4: Example of patent examination or application procedures25 In Brazil, under Ordinance (Portaria, in Portuguese) No. 149/2020, the Brazilian National Institute of Industrial Property (INPI) will prioritize the examination of patent applications related to innovations that can be used to fight COVID-19 from 7 April 2020 to 30 June 2021. In the United States, the United States Patent and Trademark Office (USPTO) launched the COVID-19 Prioritized Patent Examination Pilot Program, under which it will grant requests for prioritized patent examination for applicants which qualify for small and micro-entity status with respect to applications that cover a product or process that is subject to US Food and Drug Administration (FDA) approval for use in the prevention and/or treatment of COVID-19. The USPTO has also implemented a deferred-fee provisional patent application pilot programme and collaboration database to promote the expedited exchange of information about inventions designed to combat COVID-19. Under this programme, the USPTO permits applicants to defer payment of the provisional application filing fee until the filing of a corresponding non-provisional application. In turn, applicants must agree that the technical subject matter disclosed in their provisional applications will be made available to the public via a searchable collaboration database maintained on the USPTO website. In the Russian Federation, a Decision of the Russian Federal Service was taken for IP on accelerated consideration of applications for inventions and utility models in the field of technologies for combating viruses and associated diseases (such as pneumonia) without charging an additional fee. 23 https://medicinespatentpool.org/what-we-do/our-work/covid-19/. 24 The TRIPS Agreement incorporates by reference provisions of various WIPO-administered IP treaties, including Articles 1 to 12 and Article 19 of the Paris Convention for the Protection of Industrial Property (1967). 25 Further details, including links to officials sources, are available at: https://www.wto.org/english/tratop_e/covid19_e/trade_related_ip_measure_e.htm. 6 Trademark examination or application procedures According to Article 15.1 of the TRIPS Agreement, any sign, or any combination of signs, capable of distinguishing the goods and services of one undertaking from those of other undertakings must be eligible for trademark protection. Article 15.2 recognizes that members may also refuse the registration of a trademark in their territory on grounds other than those addressed in Article 15.1 – for example, lack of distinctiveness or contrary to morality or public order, provided they do not derogate from the provisions of the Paris Convention. To monitor COVID-19-related trademark applications, some members have introduced guidance for IP offices. Other members are offering assistance to trademark registration applicants (see Box 5). Box 5: Example of trademark examination procedures26 In Australia, the Trade Mark COVID-19 Helpline supports and assists small to medium Australian businesses that are having to quickly adapt to changing circumstances due to COVID-19 in exploring use of their trade mark/s on different goods and services to those currently covered under the respective trademark application or registration. In China, the Notice of the Office of the State Intellectual Property Office (SIPO) on Strictly Fighting the Act of Acting on Abnormal Trademark Application Related to the New Coronary Pneumonia Epidemic Guozhiban Hanyunzi [2020] No. 149 introduced guidance to increase the monitoring or investigation of certain trademark applications related to COVID-19.27 SIPO statistics reportedly show that more than 1,500 trademark applications pertaining to COVID-19 have been received since the beginning of the pandemic.28 In Chinese Taipei, to help companies to apply quickly for trademark registration while lowering marketing risks, the IP office has produced a list of the names of pandemic prevention products and services and is offering a fee reduction with respect to trademark applications which designate goods or services identical to those on the list. In addition, the IP office launched a trademark consultation hotline in order to assist applicants with trademark searches. In the United States, the USPTO launched the Prioritized Examination Program for certain trademark and service mark applications, which allows COVID-19-related trademark applications to be prioritized and immediately assigned for examination. IP office measures to ease requirements Some members have taken measures to ease procedural requirements, deadlines or fees with respect to administrative IP matters. Generally, such measures appear to have been taken into account any difficulties caused by COVID-19 which applicants, right-holders or other stakeholders may encounter. Examples of measures that have been taken include extending deadlines, organizing hearings through videoconferencing, waiving fees or requiring an original handwritten signature. WIPO is tracking the measures taken by IP offices in certain jurisdictions within its COVID-19 IP Policy Tracker.29 In addition, some of those measures are listed on the WTO's COVID-19 webpage30 and mentioned in the 2020 WTO Trade Monitoring Report, which gathers together information on trade-facilitating and trade-restricting measures introduced by WTO members.31 26 Further details, including links to officials sources, are available at: https://www.wto.org/english/tratop_e/covid19_e/trade_related_ip_measure_e.htm. 27 http://www.gov.cn/zhengce/zhengceku/2020-03/06/content_5488018.htm and http://english.sipo.gov.cn/news/localipinformation/1146950.htm. 28 See https://news.cgtn.com/news/2020-04-23/Can-COVID-19-related-terms-be-registered-as- trademarks--PVvkAFu968/index.html. 29 https://www.wipo.int/covid19-policy-tracker/#/covid19-policy-tracker/ipo-operations and https://www.wipo.int/about-wipo/en/offices/singapore/news/2020/news_0003.html. 30 https://www.wto.org/english/tratop_e/covid19_e/trade_related_ip_measure_e.htm. 31 https://www.wto.org/english/tratop_e/tpr_e/trade_monitoring_e.htm (e.g. see pages 111-115 of WTO official document no. WT/TPR/OV/W/14). 7 4 GOVERNMENT POLICY OPTIONS The global IP system as a framework for innovation and technology diffusion The way in which the IP system is designed – and how effectively it is put to work – can be a significant factor in facilitating access to existing technologies and in supporting the creation, manufacturing and dissemination of new technologies. The policy choices made at the regional and national levels within the international legal framework are key to incentivizing research and development (R&D) investments, collaboration and outcomes, as well as to securing access to treatments, diagnostics, vaccines and other health technologies. The initiatives for voluntary sharing and pooling of IPRs represent one set of responses to the spirit of collaboration that dominates the global effort to tackle COVID-19. Equally, a range of policy options confirmed under the TRIPS Agreement, as implemented in domestic law, remain available to WTO member governments as tools to deal with public health issues where needed. This section reviews these options, which are available already in the laws of most WTO members. Exceptions to patent rights Patent rights are not absolute, and it is well established that they can be constrained by policy considerations and the broader public interest. For instance, in the absence of voluntary collaboration, patent exceptions and limitations define to what extent proprietary technologies can be used by others for research or the development of compatible products, and thus often determine to what extent existing technologies can be used for further innovation. Article 30 of the TRIPS Agreement states that members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with the normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. Two types of TRIPS Article 30 exceptions to patent rights which may be of particular relevance in the context of the current health crisis are the research and experimental use exception and the regulatory review (or "Bolar") exception.32 The research exception or experimental use exception is one of the most commonly used types of exceptions to national patent laws pursuant to Article 30 of the TRIPS Agreement. Under this exception, use of the patented product for scientific experimentation, during the term of the patent and without consent, is not an infringement. This exception enables researchers to examine the patented inventions and to conduct research on improvements without having to fear that they are infringing the patent. Another key exception to patent rights, confirmed in TRIPS dispute settlement practice, is the regulatory review (or "Bolar") exception.33 It allows potential competitors to use a patented invention during the patent term without the consent of the patent owner for the purpose of obtaining marketing approval for a prospective generic product. Because marketing approval may take several years, the inability to use the patented invention during the approval process, prior to patent expiration, would delay market entry of generic versions. The regulatory review exception mitigates this situation by entitling use of a patented invention during the patent term without the consent of the patent holder for the purposes of developing information to obtain marketing approval. In the context of COVID-19, this may be important in cases where the term of patent protection of possible treatments is approaching expiry. 32 Further details regarding certain aspects of national or regional patent laws are available at https://www.wipo.int/patents/en/topics/exceptions_limitations.html and https://www.wipo.int/scp/en/annex_ii.html (hyperlink not enabled) and https://www.wipo.int/scp/en/. 33 Panel Report, Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R, adopted on 7 April 2000, DSR 2000:V, page 2,289. 8 Compulsory or government-use licences The role of compulsory or government-use licences to address COVID-19 The TRIPS Agreement allows compulsory licensing as part of the Agreement’s overall balance between promoting access to existing technologies and promoting research and development into new technologies. Article 31 of the Agreement allows compulsory licensing and government use of a patent without the authorization of its owner under a number of conditions aimed at protecting the legitimate interests of the patent-holder. Patent-owners are, in principle, entitled to receive remuneration. The option to grant a compulsory licence under Article 31 for the purpose of manufacturing or import is available to all members. While there has been particular attention paid to use of compulsory licensing for pharmaceuticals, it applies to patents in any field. All members may grant such licences for health technologies, such as medicines, vaccines and diagnostics, as well as any other product or technology needed to combat COVID-19. To be prepared to respond to the pandemic, some members have eased procedures to grant compulsory or government use licences (see Box 6). One member has issued a government use licence for a potential treatment. In some other members, the parliament has requested the government to issue compulsory licences to ensure access to medicines, vaccines, or diagnostics for COVID-19. Compulsory licensing may serve as a useful policy tool to increase access to eventual treatments or vaccines for COVID-19, in particular in situations in which from a member's perspective access to affordable health technologies in sufficient quantities cannot be otherwise secured. Box 6: Examples of members which have undertaken actions relating to compulsory licences for COVID-19-related technology34 Bill C-13 amends Canada's Patent Act to empower the Commissioner of Patents, on the application of the Minister of Health, to authorize the Government of Canada or another specified person to supply a patented invention to the extent necessary to respond to a public health emergency that is a matter of national concern. These amendments include safeguards to protect the interests of patent-holders; for example, ensuring that a patent-holder receives adequate remuneration for the use of the patent, placing limitations on the duration of the authorization, providing the patent-owner with notice of the authorization, and ensuring that the patent-owner has recourse to the courts if any person authorized acts outside the scope of the authorization. Germany passed amendments to the German Act on the Prevention and Control of Infectious Diseases in Humans. Among other things, it authorizes the Ministry of Health to issue use orders in the context of an epidemic situation of national importance with respect to patented inventions related to medical products. Hungary declared special legal order (State of Danger). During this period, the government may adopt decrees by means of which it may, as provided for by a cardinal Act, suspend the application of certain Acts, derogate from the provisions of Acts and take other extraordinary measures. The Government Decree 212/2020 (16 May) on public health compulsory licences for exploitation within Hungary (hereinafter mentioned as Government Decree 212/2020), based on Article 31 of the TRIPS Agreement, created a public health compulsory licence for exploitation within Hungary. The special legal order (State of Danger) was terminated on 18 June 2020, and thus Government Decree 212/2020 ceased to have effect on that day. On 18 March 2020, Israel's Minister of Health issued a permit allowing the government to import generic versions of lopinavir/ritonavir from India for the purpose of exploring the possibility of treating COVID-19 patients. Regarding the basis for a compulsory or government use licence, the TRIPS Agreement does not specifically list the reasons that might be used to justify compulsory licensing and thus leaves members the freedom to define the grounds for issuing a compulsory licence. Many laws include national emergency as one of the grounds for issuing a compulsory licence. A number of members 34 Further details, including links to officials sources, are available at: https://www.wto.org/english/tratop_e/covid19_e/trade_related_ip_measure_e.htm. 9 have declared a national emergency in the context of the COVID-19 pandemic. For example, the patent law in New Zealand includes national emergency as grounds for the issuance of a government use licence. On 25 March 2020, New Zealand declared a nationwide state of emergency. Special compulsory licensing for export First introduced in 2003 by means of a waiver decision and now permanently incorporated in Article 31bis of the amended TRIPS Agreement, the Special Compulsory Licensing System has been conceived to facilitate access to affordable medicines for countries that rely on import of medicines to deal with a public health problem. For this purpose, it removes the condition in Article 31(f) that a compulsory licence be predominantly used for the supply of the domestic market. The trade-related compulsory licence under the Special Compulsory Licensing System is specifically designed to enable export to countries that are especially dependent on imports for medicines. It ensures a legal pathway for a country to permit the manufacturing of patented medicines under compulsory licence exclusively for export to countries with insufficient or no local manufacturing capacities in the pharmaceutical sector. All members may export medicines under the Special Compulsory Licensing System. Least- developed countries are automatically entitled to import under the system, and other countries can import by giving a simple notification. A number of industrialized countries elected not to use the system for imports.35 Several other members have said they would use it only for imports in situations of national emergency or other circumstances of extreme urgency. These positions were put on record at the time the system was established. As set out in the amended TRIPS Agreement, the Special Compulsory Licensing System covers pharmaceutical products, including medicines, vaccines and diagnostics, needed to address public health problems as set out in the Doha Declaration on the TRIPS Agreement and Public Health. Because of the wide range of products covered, the system therefore has potential as one tool among others in ensuring equitable access to COVID-19-related health technologies. As a mechanism designed to facilitate trade to countries in need, it can serve as a practical platform for WTO Members to strengthen their cooperation on facilitating affordable access to medical products by the most vulnerable countries. The System addresses a specific problem identified in the Doha Declaration: a member (importing member) lacks a specific patented pharmaceutical product, which cannot be produced locally, and hence has to be imported from a generic producer in another member (exporting member); the product is subject to patent protection in the exporting member; and thus there is a need to issue a compulsory licence in the exporting member enabling generic producers to manufacture the product exclusively for export to the importing member. Because of the plurality of development pipelines and the wide range of national needs and circumstances, it is very difficult to speculate in advance whether or when this specific problem would arise in relation to COVID-19 medical treatments and vaccines which are currently under development. Nevertheless, as indicated in the Doha Declaration itself, the very purpose of the system is to enable vulnerable countries to make “effective use” of compulsory licensing. The very identification of the potential for the system's use may be helpful in facilitating access, whether a compulsory licence is ultimately issued or exercised in any particular procurement scenario. As with conventional compulsory licensing, the system serves as a reminder that patent rights are not absolute and that public interest considerations can prevail. One way for a member to use this system would be for it to send a simple, brief notification to the WTO Secretariat of its expected requirements at a very early stage in its procurement of a COVID-19 vaccine or treatment; this would open up the widest possible range of potential suppliers, including through the System, if that was the avenue that yielded the preferred access to affordable and sustainable supply of the vaccine or treatment. 35 Footnote 3 of the Annex to the Amended TRIPS Agreement https://www.wto.org/english/docs_e/legal_e/31bis_trips_annex_e.htm#fnt-3 and footnote 3 of the 2003 waiver decision https://www.wto.org/english/tratop_e/trips_e/implem_para6_e.htm. It should be noted that the option to grant a standard compulsory licence under Article 31 is available to all members for the purpose of local manufacturing or import. 10 Policy options and flexibilities regarding other IPRs As mentioned in the introduction, the role of policy options in other areas of IP rights has also been raised in discussions about IP and COVID-19.36 Copyright Copyright, like other forms of IP, has to consider the balance between the rights of authors and owners and the larger public interest. Copyright provides exceptions and limitations that allow access to those works under certain special cases. Both copyright, on the one hand, and exceptions and limitations to copyright, on the other hand, are of particular importance when considering the question of access to medical technology and innovation. To aid responses to the COVID-19 pandemic, some copyright-holders have taken action to make copyright-protected content freely available to help address the pandemic.37 Article 13 of the TRIPS Agreement permits limitations or exceptions to copyright if they are confined to certain special cases; they do not conflict with a normal exploitation of the work; and they do not unreasonably prejudice the legitimate interests of the right-holder. In the context of health technology development, text and data mining (TDM) exceptions to copyright, for example, can be an invaluable technique for researchers to develop new technologies in health care. A company may apply technology to analyse thousands of molecules that might serve as drug candidates and predict their suitability for blocking the mechanism of a pathogen, or to mine large data sets of genetic information and medical records to identify linkages between genetic mutations and disease. New research techniques and diagnostic methods that involve TDM can be developed, due to the application of balanced copyright flexibilities for the development of medical innovations. Trademarks The trademark rules under the TRIPS Agreement also aim to provide for a balance between the rights of trademark-owners and the public interest. Article 17 of the TRIPS Agreement provides that members may provide for exceptions to the rights conferred by a trademark, provided that such exceptions are limited; take account of the legitimate interests of the owner of the trademark and of those third parties. Article 17 cites “fair use of descriptive terms” as an illustrative example of a limited exception. Industrial designs The protection of industrial designs, which are generally understood to refer to the ornamental or aesthetic aspect of an article rather than its technical features, may apply to a wide variety of products in the health industry. According to Article 26.2 of the TRIPS Agreement, exceptions to the rights conferred on the owner of industrial designs are allowed if these are limited, do not unreasonably conflict with the normal exploitation of protected industrial designs, and do not unreasonably prejudice the legitimate interests of the owner of the protected design, taking account of the legitimate interests of third parties. Some members' laws provide for exceptions such as private use, use for experimental or teaching purposes or prior use of a protected design. Clinical trial data and undisclosed information Access to clinical trial data can be particularly relevant to the development and marketing of COVID- 19 critical health technologies. Article 39.3 of the TRIPS Agreement requires WTO members to protect such data against unfair commercial use and disclosure, subject to certain conditions. It also provides for an exception to the obligation to protect such data against disclosure when this is necessary to protect the public interest. This may be included in domestic laws implementing the TRIPS Agreement. Finally, companies may hold trade secrets that are important for the use of COVID-19-relevant technologies. WTO members are required to protect undisclosed information as defined in Article 39.1 of the TRIPS Agreement. Consequently, trade secrets are protected by a wide range of legal 36 See references in footnote 4. 37 See Box 1 above. 11 instruments in WTO members. While these are diverse in character, they typically allow for exceptions to protect the public interest. 5 TRANSPARENCY Transparency of IPR measures As part of a longstanding transparency exercise in which the WTO Secretariat compiles regular reports on trade-facilitating and trade-restricting measures introduced by members of the G20 as well as by the WTO membership as a whole, the WTO Secretariat has compiled a list of measures regarding trade-related IPRs taken in the context of COVID-19 which is regularly updated. All the measures listed have been verified by the members concerned. Some members have also notified such measures to the TRIPS Council. The regularly updated, non-exhaustive list of IP measures is available on the WTO's COVID-19 webpage.38 TRIPS notification requirements and how to access information submitted by members in a searchable database have been set out in the WTO Information Note on Transparency – Why It Matters in Times of Crisis. Transparency of IPR information Easy access to patent documents for inventions related to the prevention, detection and treatment of COVID-19 may facilitate R&D and the dissemination of new innovations. For instance, scientists, industry, universities and other stakeholders working on developing technology for combating COVID-19 may use patent documents to determine how to build on existing technology. Additionally, easy access to such information may facilitate the procurement of COVID-19-related health technologies. Sufficient disclosure of an invention is required in order to grant a patent. Article 29.1 of the TRIPS Agreement sets out the rule that an applicant for a patent shall disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art. The information disclosed in the patent application may form the basis for patent landscapes (i.e. a snapshot of the patent situation at a given point in time, either within a given country or region, or globally) or patent document databases that can facilitate strategic research planning, investments, collaboration, technology transfer, the production of generics and procurement. The COVID-19 pandemic has given rise to a number of information-sharing initiatives facilitating access to patent information relevant to COVID-19-related technologies (see Box 7). Box 7: Examples of information-sharing initiatives39 Member countries of the Forum for the Progress and Development of South America (PROSUR) published reports of certain health technologies related to COVID-19. In addition, some PROSUR member countries, such as Argentina, Brazil, Colombia and Ecuador, have published patent landscapes with respect to COVID- 19-related technologies, such as diagnostics and ventilators. In Chile, as a way to collaborate in the effort to contain the expansion of COVID-19, the National Institute of Industrial Property (INAPI) prepared special editions of its reports on public domain technologies focused on elements for personal protection (face masks, safety goggles and gloves) designed to mitigate contagion. In Ecuador, the National Service for Intellectual Rights (SENADI) prepared an "Infosite on Technologies" used for the treatment and prevention of COVID-19. The Infosite contains government measures and official information issued by national institutions within the scope of their respective authorities as well as sanitary measures that have been adopted as a result of the emergency declaration in Ecuador. In addition, it provides information generated internationally on COVID-19 contained in dissemination platforms and technological bulletins prepared by international organizations and other national IP offices. The Infosite is constantly updated with information of interest to users. 38 A non-exhaustive list of measures regarding COVID-19 and trade-related IPRs, including measures collected by the WTO Secretariat and provided by members, is available at: https://www.wto.org/english/tratop_e/covid19_e/trade_related_ip_measure_e.htm. 39 Further details, including links to officials sources, are available at: https://www.wto.org/english/tratop_e/covid19_e/trade_related_ip_measure_e.htm. 12 In Greece, two bulletins were made available to the public via the Hellenic Industrial Property Organisation's website containing published patented medical technology related to vaccines and diagnostic methods and 3D printing patented technology for facial masques and respirators. In the Republic of Korea, the Korean Intellectual Property Office has made available patent information on technology relating to the diagnosis and treatment of COVID-19, including patent analysis and trend reports. In the Russian Federation, a special news section – "Patent of the week" – was created on the official internet site of the Russian Federal Service for Intellectual Property to promote inventions which represent technical solutions related to the fight against COVID-19. Additionally, there is a dedicated section of the website which contains information on patents relevant in the context of a pandemic (patent documents submitted by both domestic and foreign right-holders). Some members have launched databases specific to COVID-19 patent information. For example, the China Patent Information Center launched a freely accessible database for various coronavirus- related patents. Other members have undertaken efforts to facilitate the licensing of COVID-19-related technology. For example, the USPTO has launched a website called Patents 4 Partnerships, which lists patents and published applications relating to COVID-19 that the owners have indicated are available for licensing, along with contact information.40 In addition, WIPO has established a COVID-19 search facility within its global PATENTSCOPE database, which provides access to international Patent Cooperation Treaty (PCT) applications and to patent documents of participating national and regional patent offices, to identify technological areas relevant to the detection, prevention and treatment of COVID-19.41 The WIPO Pearl terminology database has added 1,500 COVID-related terms in 10 languages with the aim of fostering international collaboration and promoting access to information in patent documents and other public resources.42 The European Patent Office43 and a number of national patent authorities have developed similar search facilities. For example, in Chinese Taipei, the IP office has established a pandemic prevention section in its Global Patent Search System which enables users to find patent information relating to epidemic prevention. In addition, the office has released patent information relating to mask-producing facilities and technologies around the world in order to help prevent patent infringement by producers, and has released drug approval status and patent information of 52 potential medications for combating COVID-19. MedsPal, the Medicines Patent Pool's publicly available patents and licences database, promotes transparency regarding the patent status and licensing structures of medicines as well as the protection of clinical trial data.44 Initially limited to patented medicines needed to treat HIV/AIDS (acquired immune deficiency syndrome), hepatitis C and tuberculosis, and other essential medicines, it now includes patent information for medicines under investigation for possible treatment of COVID-19. 40 Further details, including links to officials sources, are available at: https://www.wto.org/english/tratop_e/covid19_e/trade_related_ip_measure_e.htm. 41 https://patentscope.wipo.int/search/en/covid19.jsf. 42 https://www.wipo.int/pressroom/en/articles/2020/article_0021.html. 43 See https://www.epo.org/news-events/in-focus/fighting-coronavirus.html. 44 https://www.medspal.org/?page=1. 13