France Backs Italy’s Decision to Block AstraZeneca Exports

France backed Italy’s decision to halt a shipment of AstraZeneca Plc’s coronavirus shots to Australia as tensions escalate over global supplies of the vaccines, signaling that other European Union states could take similar measures.

“Of course I understand Italy,” French Health Minister Olivier Veran said during an interview with RMC radio. “We could do the same thing.”

The support from a major EU country comes after Australia called on the European Commission to take a look at Italy’s actions. The bloc has struggled to distribute shots to its population, and sparred with the Anglo-Swedish drug company over production delays.

“Australia has raised the issue with the European Commission through multiple channels,” Greg Hunt, Australia’s health minister, told reporters. “We have asked the European Commission to review this decision.”

Italy informed the commission that it would withhold the vaccine shipment, using a new rule that obliges member states to inform the EU executive when it decides to stop doses being exported outside of the bloc. The commission didn’t oppose Italy’s decision, an EU official said.

Tense Conversations

The EU’s top trade official, Valdis Dombrovskis, spoke with his Australian counterpart on Friday. They discussed the “export authorization mechanism where the EVP explained the functioning of the system as well as the systematic under-delivery by Astrazeneca on its EU contract,” said EU trade spokeswoman Miriam Garcia Ferrer.

Dombrovskis offered assurances, Ferrer said, that “for those companies that are honoring their contract arrangements with the EU there is no issue with the export authorizations including with Australia.”

As of Friday, Germany has not had cause to intervene on any exports, Health Minister Jens Spahn said at a briefing.

Some of the vial-filling for AstraZeneca’s vaccine is being done by Germany’s IDT Biologika GmbH, and Spahn cautioned of the risks of disrupting complicated production chains which span continents. “We need to watch closely with each measure that we don’t have a short-term win but then run into problems in the mid-term with these vaccine supply chains and everything that’s necessary in terms of upstream products,” he said.

Tougher Approach

The Italian foreign ministry said the decision involving 250,700 doses was a consequence of continued vaccine scarcity in Europe and Italy, and took into account AstraZeneca supply delays.

Such delays are “unacceptable,” Italy’s foreign minister, Luigi Di Maio, told reporters after talks with his French counterpart Jean-Yves Le Drian in Rome on Friday.

AstraZeneca Italy head Lorenzo Wittum, in the company’s first public comment on the issue, said his firm is committed to supplying Italy with 20 million doses of vaccines in the second quarter, as previously agreed on. It’s also working to smooth the company’s production chain globally.

“We understand the decision taken by the Italian government, also considering the European situation,” Wittum told ClassCnbc.

During an EU summit last week, Italian Prime Minister Mario Draghi called for a tougher approach against companies that don’t respect their delivery commitments.

The impact is likely to be largely symbolic given that the number of the vaccines blocked is relatively small compared to the company’s expected deliveries in the EU and elsewhere. But the move highlights Draghi’s intention to be tougher on pharmaceutical companies that don’t respect their commitments to the EU, and could encourage retaliatory protectionist measures by other governments.

In January, the commission introduced legislation that allows curbs on exports of coronavirus vaccines if drugmakers fail to meet delivery targets within the bloc. The rules came into force after AstraZeneca had informed the EU that it was unable to meet its commitments under an advance purchase agreement.

Damaging Protectionism

Italy is the first country so far to block the export of vaccines outside the EU, while over 170 requests have so far been authorized, according to a separate EU diplomat.

The decision could reignite concerns echoed by many including the World Health Organization that the EU is engaging in damaging protectionism, at a time when countries around the world race to immunize their populations amid growing concerns over fast-spreading coronavirus variants.

Asked by a reporter in Sydney on Friday whether he blamed Italian authorities for the block, Prime Minister Scott Morrison said: “They’re certainly responsible for exercising the veto right they had through the EU process about those supplies coming to Australia.”

“It’s important contracts are honored,” Morrison said.

The export controls may also prove to be a growing headache for drugmakers with so many manufacturing sites in the EU. Most companies at the forefront of the vaccine effort have production capacity in the bloc that is used to serve countries beyond it, or must be sent outside for completion before returning.

©2021 Bloomberg L.P.

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