(Bloomberg) -- The European Union announced it will give itself stronger powers to stop Covid vaccine exports to the rest of the world, setting the stage for an escalation of tensions with allies and manufacturers as it faces a third wave of infections.
The EU, in strengthening its existing export rules, will demand that countries that received doses from the EU also allow shots to be sent back. It will also consider a nation’s vaccination rate and pandemic situation when deciding whether to green light shipments. The mechanism won’t be automatic, but will be used on a case-by-case basis.
The proposal comes as the bloc struggles to turn around its sluggish inoculation campaign and as governments from Berlin to Paris battle a rise in infections more than a year since they started. The situation has also been fueled by a spat with the U.K., it’s former member, over vaccine supplies to Britain.
“We have to ensure timely and sufficient vaccine deliveries to EU citizens,” European Commission President Ursula von der Leyen said in a statement. “The EU is the only major Organization for Economic Cooperation and Development producer that continues to export vaccines at large scale to dozens of countries, but open roads should run in both directions.”
The new export rules coincide with the coronavirus situation in Europe getting bleaker as governments face pressure over why their citizens aren’t being vaccinated as quickly as those elsewhere and the EU finds itself in disputes with manufacturers and other countries.
When leaders hold a summit on Thursday, at which they’ll discuss the bloc’s latest powers, they will say the “situation remains serious” and that “restrictions, including non-essential travel, must therefore be upheld,” according to an EU document seen by Bloomberg.
While the legislation isn’t aimed at any specific countries, it’s clear the U.K. could be one of the biggest targets, adding even more drama to an increasingly fraught relationship three months to the day since the two sides signed a trade deal. As well as disagreements over the export of Covid vaccines, the U.K. has refused to grant full rights to the bloc’s ambassador in London while the EU is still smarting from the U.K.’s threat -- later withdrawn -- to break international law last year and rewrite the Brexit agreement.
The European Commission’s draft legislation published on Wednesday said governments should take into account issues including whether countries are exporting vaccines back to the EU, as well as their epidemiological and vaccine situation. The measures will stay in place until at least the end of June.
According to the document, vaccine manufacturers have exported “large quantities” to “certain countries without production capacity, but which have a higher vaccination rate” than the EU, or where the current rate of Covid infections isn’t as high. Exports to these countries may “threaten the security of supply” the legislation says.
It adds that manufacturers have exported to countries that “have a large production capacity of their own” yet “those countries restrict their own exports” to the EU.
The plan is aimed at companies such as Astrazeneca Plc (LON:AZN) that aren’t delivering on their commitments and also factors in any possible future difficulties with companies like Pfizer Inc. (NYSE:PFE) that are meeting their obligations, according to an official familiar with the proposal, who asked not to be identified because the plans are private.
Slow Rollout
In an effort to get around claims by some governments -- notably the U.K. -- that they don’t have formal export restrictions, the legislation makes clear that these can come about “either by law or through contractual or other arrangements concluded with vaccine manufacturers.”
While a ban on exports to those countries won’t be automatic, “member states should refuse export authorizations accordingly,” the draft said.
The new rules 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. It has also vaccinated at a faster rate and has falling infections.
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.
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 the document. The rules will include European Free Trade Association countries as well as those in the European Economic Area.
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, 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.
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.
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.
©2021 Bloomberg L.P.
