COVID-19: Transparency mechanism in the export of COVID-19 vaccines outside EU
On March 11, 2021, following persistent delays in some deliveries of vaccine to the EU, the European Commission adopted the new Implementing Regulation (EU) 2021/442 (“New Implementing Regulation”), renewing, with amendments, through the end of June, the transparency and authorization mechanism for COVID-19 vaccine exports currently falling under CN code 3002 20 10, irrespective of their packaging and active substances, including master and working cell banks used for the manufacture of such vaccines, currently falling under CN codes ex 2933 99 80, ex 2934 99 90, ex 3002 90 90, and ex 3504 00 90.
This export authorization mechanism applies only to exports from companies with which the EU has concluded Advance Purchase Agreements (“APAs”). These APAs commit the vaccine producers to deliver to EU member states a pre-agreed number of vaccines.
This mechanism was initially put in place on January 30, 2021, with the adoption of Regulation (EU) 2021/111 of January 29, 2021 (“First Implementing Regulation”), and with a timeframe lasting until March 12, 2021 which was supposed to represent a sufficient term to allow the full production capacity for COVID-19 vaccines in the European Union to be reached, thus avoiding the risk of shortages and diversion of supplies.
Based on the First Implementing Regulation, on February 26, 2021, the Italian government sent to the European Commission its proposal for denying authorization to export 250,000 units of COVID-19 vaccines manufactured by AstraZeneca heading from Italy to Australia, thus applying for the first time said regulation. On March 2, 2021, that proposal was approved by the European Commission and, as a result, the Italian Ministry of Foreign Affairs formally issued the first export-denial order.
According to the New Implementing Regulation, requests for export authorization shall be processed within two working days. The draft decision of the member state authority is forwarded to the European Commission and reviewed by the same and then published. When a company that manufactures COVID-19 vaccines in an EU country applies for export authorization, the member state’s authorities must consider whether the export poses a threat to the execution of EU APAs with vaccines manufacturers. In addition, under the amended rules, member state authorities must consider whether the export would pose a threat to the supply of COVID-19 vaccines within the EU, meaning it must consider reciprocity and proportionality. Reciprocity means that the competent authority must assess whether the country of destination restricts its own exports to the EU of COVID-19 vaccines or of the raw materials from which they are made. Proportionality includes a review of the current COVID-19 situation in the export country in comparison to the EU, in particular a review of the epidemiological situation, vaccination rate, and vaccine supply.
Exports to certain low- and middle-income countries on the COVAX AMC list and for humanitarian purposes, among others, are not subject to the export authorization mechanism.
The context for this is that the European Union has supported the rapid development and production of several vaccines against COVID-19 with a total of EUR2.7 billion and finds it important to protect the integrity of this substantial investment from the EU budget. Thus, the European Commission is concerned by the lack of transparency around the ways some companies are operating and wants to have complete information in order to ensure they fulfill their contractual commitments.
To address this very serious and immediate public health issue, the commission has adopted a temporary export transparency and export authorization mechanism on the basis of Regulation (EU) 2015/479 on common rules for exports (full text accessible here). Thus, taking into account the persistent delays and failures on the part of several companies in honoring their agreements with the EU despite having received a down payment to enable sufficient production, the commission introduced the above measures to remedy this critical situation.