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How can countries work together to better prevent crises?
The global spread of the Covid-19 pandemic has highlighted the interconnected nature of today’s world. But the international response has not been equal, with huge differences in the capacities of high income and low income countries to control the spread of the coronavirus and to pay for vaccination programmes. The disparities have highlighted the need for a stronger system of international cooperation and equity, not just in the health field but across a range of issues.
Many of the world’s most pressing problems cannot be solved by national action alone. They include global poverty and security; climate change; the protection of the oceans; and the regulation and taxation of transnational corporations operating across national boundaries. The 17 Sustainable Development Goals, adopted at the United Nations in 2015, embody the international community’s economic, social and environmental priorities.
Over recent years international cooperation has been in decline, particularly in multilateral fora such as the United Nations and the G20. The return of great power rivalries, particularly between the US and China, along with the impact of economic weakness and Brexit on the unity and reputation of the European Union, have led to a fracturing of international relations. The UK government, for its part, has declared a new post-Brexit vision of a ‘Global Britain’, but what this should mean is not always clear.
In this context a wide range of voices have been calling for a revival of international and multilateral cooperation and for a new, positive role for the UK.
Describing the crisis faced by low-income countries, former Prime Minister Gordon Brown has called a ‘$2tn 21st-century Marshall Plan for the developing world’, including a new issuance of ‘Special Drawing Rights’ at the IMF to fund debt relief in Africa (paywalled).
In an essay for the Observer Research Foundation in India, Amrita Narlikar argues that a renewal of multilateralism will require a new ‘bargain’ to distribute the benefits of globalisation more fairly and reform of existing rules and institutions to meet new challenges.
Calling for a revival of multilateralism, an international group of former UN Secretaries-General, Presidents and Prime Ministers (known as The Elders) have set out a new agenda for international cooperation, with a particular focus on strengthening global health systems, increasing ambition on climate change, and achieving the Sustainable Development Goals.
In their report Finding Britain’s Role in a Changing World, the Foreign Policy Centre and Oxfam argue that ‘Global Britain’ needs an underpinning statement of principles against which UK foreign policy can be assessed. The pledge to spend 0.7% of Gross National Income on aid must be restored.
Chatham House Director Robin Niblett argues for a new foreign policy for the UK. Rather than reincarnating itself as a miniature great power, the UK should serve as the broker of solutions to global challenges, such as promoting international peace and security, tackling climate change, and championing global tax transparency and equitable economic growth.
Covid-19 vaccination programmes in most low-income countries have been proceeding much more slowly than in richer countries. This is both because of lack of finance, and because most of the available supply has been bought by the global North. It is generally accepted that the pandemic will only end when almost everyone in the world is vaccinated, since without this there will be a high risk of new variants being transmitted across borders. Universal vaccination will also hasten global economic recovery. But in practice ‘vaccine nationalism’ has so far dominated.
A global scheme for vaccine distribution, Covax, has been established, and high income countries have pledged money and vaccines to it. But both finance and supply are running well behind demand.
Many proposals for reform focus on the dominant private sector-led model of vaccine development and supply, which it is argued puts profit and the retention of intellectual property rights ahead of meeting human need.
Before the G7 Summit in 2021, the US had signalled its support for patents on Covid vaccines to be temporarily waived in order to facilitate their production in the Global South. But Germany, the EU and the UK resisted this. Instead, vaccines will be bought from pharmaceutical firms using public money and then donated to lower income countries.
New international frameworks for financing and developing vaccines, medicines and health services in the global South have been proposed.
Olivier Wouter and colleagues in The Lancet review the challenges of producing affordable global vaccines at scale, warning that the lack of a global approach to vaccine allocation by national governments is both an economic and ethical failure.
Reviewing the UK’s overseas aid health programmes, Action for Global Health warns argues that a new strategy is needed. Save the Children warns that the UK seems to be reducing its emphasis on supporting global health.
A blog from the IMF head Kristalina Georgieva and others outlines A Proposal to End the COVID-19 Pandemic, setting out targets to vaccinate at least 40% of the global population by 2021 with estimates of financing requirements; through upfront grants to COVAX, investing in additional vaccine production capacity and test and tracing capabilities.
The People’s Vaccine Alliance is calling for public funding for research and development to be conditional on research institutions and pharmaceutical companies freely sharing all, data, biological material and intellectual property, and all vaccines priced at cost.
Analysing how the pharmaceutical industry currently develops new drugs and health treatments, the UCL Institute for Innovation and Public Purpose propose a new health innovation model which would reward public investment, keep prices low and therefore support more equal global access to healthcare.
The World Health Organisation describes the aspiration for universal health coverage (UHC), giving all individuals and communities the health services they need without suffering financial hardship. Writing in Nature Medicine, Stéphane Verguet and colleagues propose how this can be achieved in low and middle income countries.
Over recent years many countries have reduced their tax rates on businesses, hoping to attract inward investment from multinational corporations. But this can easily lead to a ‘race to the bottom’, in which tax competition leaves all countries with lower revenues. Low-income countries are hurt the most, and corporations are the beneficiaries.
Multinationals anyway find it easy to avoid high tax rates by ‘profit shifting’ and ‘transfer pricing’, the creative accounting methods by which profits are allocated to the countries and states where taxes are lowest. It is estimated that this costs governments globally up to 10% (approximately $240bn) of corporate tax revenues every year, money that could have been spent on public services, or that must instead be found from smaller businesses and citizens. Some large multinationals pay almost no corporate taxes in the UK (and other countries) at all.
At the same time both corporations and wealthy individuals have been able to make extensive of tax havens, usually small nations which seek to attract foreign capital by exempting it from tax altogether.
Proposals for international tax cooperation coordinated by the OECD have been given a boost by President Biden’s commitment to internationally agreed minimum corporation tax rates. At the G7 Summit in 2021, finance ministers agreed in principle to a global minimum corporate tax rate of 15%, marking major progress in the taxation of multinational companies.
A number of proposals have also been made for national taxes on multinationals, and for closing tax havens.
Economist Gabriel Zucman explains how multinationals engage in profit-shifting between different countries to lower their tax liabilities – and how governments can overcome this.
The Independent Commission for the Reform of International Corporate Taxation (ICRICT) argues for a globally agreed minimum corporation tax rate of 25%. Where countries levied lower rates, corporations’ home states (such as the US) would ‘top up’ the companies’ tax to the agreed rate. More detail here.
Public Services International explains the ‘unitary principle’ under which a multinational would be taxed as a single entity, not as separate companies in different countries. The Tax Justice Network proposes a ‘Minimum Effective Tax Rate’ to allocate the taxes due on a company’s global profits.
IPPR proposes an ‘Alternative Minimum Corporation Tax’ as a unilateral measure to tax multinationals consistently reporting low or zero profits. It would apportion a firm’s global profits according to its UK sales. Richard Murphy provides an illustrative example of how this would work.
TaxWatch proposes a digital services tax on the giant tech companies such as Google, which typically charge their subsidiaries royalties on their ‘intellectual property’, which they then claim is located in low-tax jurisdictions.
Author of Treasure Islands Nicholas Shaxson explains how tax havens work, and sets out a series of measures to tax offshore wealth used by both individuals and companies.
