EU Vaccine Rules May Disrupt Global Supply, Including to Allies

The European Union’s closest neighbors, including countries in the Balkans and those that have special trading relationships with the bloc like Norway and Switzerland, will need authorization to import Covid vaccines from the EU under a proposal to be unveiled on Wednesday.

The plan, which will be made public in Brussels around midday, seeks to strengthen the EU’s existing export rules by insisting that nations that receive doses from the EU also send doses back. It will also consider a country’s vaccination rate and pandemic situation when deciding on whether to green light shipments. The mechanism won’t be automatic, but will be used on a case-by-case basis, according to officials familiar with the proposal.

The new export rules comes as the health outlook has dramatically worsened in Europe, with many of the biggest countries including Germany and France announcing new lockdowns. When EU leaders meet later this week to discuss the proposal, they’ll say that the “situation remains serious” and that “restrictions, including non-essential travel, must therefore be upheld,” according to an EU document seen by Bloomberg.

Neighboring countries will be included in the new directive due to the increased risk of third parties using their special trade privileges to help circumvent the tighter export criteria, according to a draft of the regulation seen by Bloomberg. The rules will include European Free Trade Association countries as well as those in the European Economic Area, according to two people familiar with the plan.

EU Vaccine Rules May Disrupt Global Supply, Including to Allies

Countries at risk of running afoul of the new rules will be those that restrict their “own exports of vaccines or their raw materials, either by law or other means,” according to the document. This could have consequences for the U.K. which, having received 11 million of the 45 million doses shipped out of the EU, is by far the biggest recipient of the bloc’s vaccines.

Also, the rules will look at “the conditions prevailing in the destination country” and will consider “the epidemiological situation, its vaccination rate and the vaccine stocks,” according to the document.

The bloc has administered 13 doses per 100 people, less than a third of what the U.K. has managed, according to Bloomberg’s Coronavirus Vaccine Tracker. Israel has inoculated more than half of its population.

The plan is aimed at companies such as Astra that aren’t delivering on their commitments and also factors in any possible future difficulties with companies like Pfizer Inc. that are meeting their obligations, according to an official familiar with the proposal, who asked not to be identified because the plans are private. The rules won’t amount to an automatic ban and are meant to increase transparency and fairness, the official said.

Another diplomat said the EU wanted to tackle “vaccine tourism” whereby Europeans are being encouraged to spend their holidays in countries with a vaccine surplus only to get jabbed by doses imported from the bloc.

Vaccine ‘Greed’

U.K. Prime Minister Boris Johnson told reporters in London that all countries are “fighting the same pandemic” and his government will “continue to work with our European partners.” Later that evening, however, he risked inflaming tensions, telling a group of Conservative MPs in a private meeting via Zoom that the U.K.’s vaccine success was because of “greed.”

The government sought to limit the damage, with cabinet minister Priti Patel taking the rare step of using television interviews to try to explain the premier’s remarks. British officials do not usually comment in public on private discussions, such as the meeting Johnson had with his party.

Meanwhile, Canada’s government described the EU’s proposals as “concerning.” And in Australia, Health Minister Greg Hunt on Wednesday said his nation had received less than a fifth of the 3.8 million doses it contracted from AstraZeneca’s European operations. Earlier this month, Italy blocked vaccine shipments to Australia using the EU mechanism.

Low and middle income countries that are part of the Covax humanitarian facility will continue to be exempt from having to seek authorization and the EU will continue to recommend that exports should be permitted when they do not pose a threat to the security of supply of vaccines and their components. The measures will stay in place until at least the end of June, said a person familiar with the proposed act.

Summit Discussion

Since February the bloc has received more than 380 export requests to 33 different countries for a total of around 45 million doses. To date, only one request has been rejected following Italy’s refusal to green light the shipment of 250,000 Astra doses to Australia earlier this month.

The U.K. is by far the main export destinations having received about 11 million doses, according to an EU document. It is followed by Canada, which got 7.2 million and Japan at 5.4 million. Saudi Arabia got 1.5 million shots and the U.S. 900,000.

The proposals will need to be approved by EU leaders when they meet virtually on Thursday and Friday. Ministers from multiple countries, including France and Italy, backed the reciprocity principle at a preparatory meeting on Tuesday, according to a diplomatic note seen by Bloomberg. Others, however, urged caution, citing the potential impact on global supply chains.

The EU and U.K. are currently negotiating how to divide up stock from an Astra plant in the Netherlands due to come on stream in the next few weeks. A European diplomat said there was scope for an agreement on some form of pro-rata distribution based on population size.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.