China took the lead in early 2020 by getting the pandemic under control and producing critical medical supplies. But regulatory obstacles and difficulties in cross-border transactions and payments caused serious delays in the delivery of Chinese medical products, impacting the global pandemic response.
Variations in standards and regulations have increased non-tariff trade barriers in the medical industry and caused endogenous problems for traditional regulatory models when major public health crises emerge. The different policies adopted by countries during the pandemic also created difficulties in cross-border payments which hindered e-commerce from playing a more substantial role in efficient resource management.
China and ASEAN are important trading partners. Cost-effective Chinese medical devices are welcomed in ASEAN countries for their technological performance. Yet most ASEAN countries use long-standing US or Japanese regulatory standards, so Chinese medical products often have to obtain certification from the US Food and Drug Administration before entering the ASEAN market. This increases delivery costs and delays for urgently needed medical devices.
China and ASEAN’s 10 member states need to harmonise the regulation of medical devices. They also need to strengthen their collaboration when facing regional public health crises and increase their capacity to transport medical devices across borders.
The digital economy has become a driving force for trade in medical devices and provided a new thrust for China–ASEAN cooperation. At a special foreign ministers’ meeting in February 2020, the two parties designated 2020 as the China–ASEAN Year of Digital Economy Cooperation and decided to expand cooperation in e-commerce, technological innovation, 5G networks and smart cities.
One of the digital economy’s biggest impacts on world trade has been the rapid development of e-commerce, allowing manufacturers to sell their products directly across borders to individual foreign consumers. E-commerce has become a major part of international trade amid efforts to control COVID-19, ensuring the supply of daily necessities and medical supplies.
China is at the forefront of e-commerce development and has the foundations for pragmatic cooperation with ASEAN. In 2017, the online sale of tangible goods in China contributed 37.9 per cent to the growth of total retail sales of consumer goods. Progress also has been made in laws regulating the e-commerce sector in China, including the 2018 e-Commerce Law. The coordinated development of e-commerce and express delivery logistics in China has achieved outstanding results in delivery-vehicle management and end-user service innovation.
Promoting the development of China–ASEAN cross-border e-commerce for medical devices requires establishing product standards, protecting intellectual property rights, resolving disputes over transactions and nurturing young talent and key enterprises in e-commerce.
Establishing a communication mechanism for medical device regulators between China and ASEAN countries will promote mutual understanding of regulatory mechanisms, product standards and testing methods to increase regional collaboration.
The two sides should exchange information on policymaking and practices in the area of medical devices so that ASEAN countries can better understand China’s regulatory standards and lower non-tariff trade barriers. Constructing widely accepted standards for e-commerce logistics and coordinating the development of cross-border logistics and transportation networks are a prerequisite for the further development of e-commerce.
Establishing a dispute resolution mechanism for cross-border e-commerce transactions will improve accessibility to foreign consumers. In China, the Consumer Rights Protection Law is temporarily the basis for handling disputes in the absence of a specific mechanism. The number of complaints or reports from foreign consumers received by China’s market supervision authorities is relatively small.
This could indicate that there are no accessible channels for complaints from overseas consumers. It is essential to establish a China–ASEAN consumer dispute resolution system that considers governance, real-world practices and aspects of diversified applications for market supervision.
The goal of establishing China–ASEAN regulatory harmonisation for e-commerce in medical devices is to adapt to post-pandemic changes, promote open economic development and deepen cooperation. It will also prepare for the establishment of a unified e-commerce market under the Regional Comprehensive Economic Partnership Agreement.
Anyu Lee is Professor at Sichuan University.
Fujian Li is Research Fellow at China Foreign Affairs University.
A version of this article was first published here in Global Asia.