Recovery

Strengthening international cooperation

Last Updated:
20.8.21
The Issues
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The need for international cooperation

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.  

Vaccines and global health cooperation

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. New international frameworks for financing and developing vaccines, medicines and health services in the global South have been proposed.

International tax cooperation

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. A number of proposals have also been made for national taxes on multinationals, and for closing tax havens.

In Depth

Trade after Brexit

Now it has left the EU, the UK is seeking to negotiate new trade agreements with countries around the world. But trade agreements have been the source of much controversy over recent years. Critics argue that they are too often used to reduce protections and standards in areas such as labour rights, the environment and consumer standards. They also often allow multinational corporations to sue governments which introduce new laws or regulations that might affect their future profits, effectively elevating the rights of companies over the democratic rights of governments. Increasingly therefore there are calls for a new approach to trade deals altogether, which raise labour and environmental standards rather than lower them. Increasing trade for its own sake tends no longer to be seen as such an important goal.
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In Depth

International debt and economic recovery

The Covid-19 pandemic has dealt a terrible blow to many low-income countries, pushing millions of people into poverty and many countries deeper into debt. Although the rich nations of the G20 have initiated a debt postponement scheme, it has not had much impact, and there are now widespread calls for a more comprehensive debt relief package. This could include ‘debt-for-nature’ and ‘debt-for-climate’ swaps in which debt is reduced in return for environmental commitments. There are also strong hopes that the IMF will be able to agree a new money creation initiative for poorer countries, so-called Special Drawing Rights. More widely, as the UK is criticised for reducing its aid budget, there are proposals to rethink the whole concept of development ‘aid’, and move towards a ‘Global Public Investment’ approach.
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In Depth

COP26 Summit

The next United Nations climate summit will be held in Glasgow in November 2021. Known as COP26, the summit will be the most significant since the landmark 2015 Paris Agreement, at which the world committed to keep global temperature rise to below 2 degree celsius.
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