EU Imposes Authorization Requirements for COVID-19 Vaccine Exports

In response to delayed EU shipments of certain COVID-19 vaccines to the European Union, the European Commission (Commission) passed on 29 January 2021 Regulation 2021/111 (Export Authorization Regulation) which is in force from 30 January 2021. The Commission intends for the Export Authorization Regulation to apply until at least 31 March 2021.

The Export Authorization Regulation stipulates that certain exports of the COVID-19 vaccine will require prior notification and authorization from competent authorities of the EU member states where the COVID-19 vaccines are manufactured. Member states are required to set up such authorization regimes and the Commission will issue binding opinions on whether such authorizations should be granted, taking into account their likely impact on the ability of vaccine manufacturers to meet their obligations under Advance Purchase Agreements (APAs) concluded with the European Union.

According to the Commission, the objectives of the Export Authorization Regulation are to (i) ensure that EU citizens have timely access to the COVID-19 vaccines; (ii) increase transparency with respect to vaccine exports outside the European Union; and (iii) protect the EU’s investment of €2.7 billion in the rapid development and production of several COVID-19 vaccines.

The European Commission will consult with EU member states regarding amending the Export Authorization Regulation and any future steps.

KEY FEATURES OF THE EXPORT AUTHORIZATION REGULATION

Scope

• The Export Authorization Regulation applies to COVID-19 vaccines covered by an APA with the European Union.
• The Export Authorization Regulation will apply to exports from the European Union to about 100 countries worldwide, including the United Kingdom, Japan, the United States, Korea, Canada, Singapore, Australia, New Zealand, Brazil, Mexico, South Africa, and Turkey.
• The Export Authorization Regulations will not apply to exports to 92 countries including EFTA Member States (Norway, Switzerland, Liechtenstein, and Iceland), countries in the Western Balkan and in North Africa, and certain Mediterranean countries (including Lebanon, Israel, as well as to developing countries covered by the COVAX facility (a vaccine purchasing and distribution initiative run by the World Health Organization, among others).
• An export authorization is required for exports outside the EU market (whether or not the COVID-19 vaccine originated in the European Union).

Authorization Process

• Companies are required to request authorization prior to the export of relevant COVID-19 vaccines from the member state in which the COVID-19 vaccine is manufactured. Without a valid export authorization, the export of relevant COVID-19 vaccines from the European Union is prohibited.
• EU member states are required to process applications for export authorizations as soon as possible, and no later than two working days after receiving the required information. The Export Authorization Regulation sets out a model authorization request form member states can adopt. This period is extendable by an additional two working days; however, only under exceptional circumstances and for duly justified reasons.
• In determining whether to grant authorization, member states, together with the Commission, shall assess whether the volume of proposed exports threatens the execution of the APA between the relevant vaccine manufacturer and the European Union.
• Upon receipt of the request, EU member states are required to immediately seek the agreement of the Commission. In case of disagreement with the draft decision of the member state, the Commission shall issue an opinion to the competent authority within one working day, evaluating the impact of exports for which authorization is requested on the execution of the relevant APAs within the European Union. The member state is required to decide on the export authorization request in accordance with the Commission’s opinion.
• In order for the relevant authorities of the member states to assess an export authorization request, relevant COVID-19 vaccine manufacturers are requested to provide data on their exports since 29 October 2020 together with their first export authorization request. If a COVID-19 vaccine manufacturer refuses to provide this past export data, then the authorization may be denied.
• Competent member state authorities will be able to verify information submitted, even after having granted authorization.
• The Commission has stated that it will regularly report on authorizations that are granted and refused.

COVID-19 VACCINE EXPORTS INTO NORTHERN IRELAND

Pursuant to the Northern Ireland Protocol agreed between the United Kingdom and the European Union, Northern Ireland remains within the European Union Customs territory and the European Single Market for goods, thereby avoiding the need for customs checks, tariffs, or paperwork at the border between the Republic of Ireland and Northern Ireland.

Article 16 of the Northern Ireland Protocol however allows the United Kingdom or the European Union to unilaterally take appropriate safeguard measures where the arrangements under the Northern Ireland Protocol lead to “serious economic, societal or environmental difficulties that are liable to persist.”

The Commission originally contemplated triggering Article 16 of the Northern Ireland Protocol, in order to restrict COVID-19 vaccine exports into the rest of the United Kingdom via Northern Ireland, in circumvention of the Export Authorization Regulation.

Following discussions on 29 January between the European Commission President von der Leyen, Irish Prime Minister Micheál Martin, and UK Prime Minister Boris Johnson, the Commission announced that it would ultimately not trigger Article 16 of the Northern Ireland Protocol. Ms. von den Leyen noted that COVID-19 vaccine facilities in the United Kingdom would also be supplying the European Union, that certain COVID-19 vaccine deliveries in the European Union will be pulled forward, that there will be an increased COVID-19 vaccine supply for February and March, and that production capacities in Europe will be expanded.

NEXT STEPS

Citing the urgency of the COVID-19 pandemic, the lack of transparency, and the temporary global shortage of COVID-19 vaccines, the Commission passed the Export Authorization Regulation using the emergency procedure under Regulation (EU) 2015/479, allowing it to act quickly before formally consulting member states. Measures passed under this emergency procedure however cannot initially have a duration of more than six weeks.

The European Commission has stated that, pursuant to Regulation (EU) 2015/479, it intends to extend the Export Authorization Regulation beyond this initial six week period until the end of March 2021 and that it will consult with EU member states on potential amendments and future steps during the initial six-week period.

KEY TAKEAWAYS

• The Export Authorization Regulation will likely put pressure on COVID-19 vaccine manufacturers that are party to APAs to prioritize EU deliveries and to expand production capacity further and faster.
• The Commission notes that the Export Authorization Regulation will be used in the short term to ensure delivery targets are met, following reports of delayed or reduced deliveries. The European Commission anticipates that full production capacity for COVID-19 vaccines in the European Union will be installed by 31 March 2021 and that by then the risk of shortages and diversion of supplies will be reduced.
• The Export Authorization Regulation can be understood in the context of the Commission’s broader mission to coordinate and implement the European vaccines strategy. Under this strategy, the European Commission entered into APAs with vaccine producers on behalf of member states. Once available, and authorized at the EU level, all member states are to have access to COVID-19 vaccines at the same time, with distribution done on a per capita basis. Delays to COVID-19 vaccine distribution threaten this coordinated approach with participating member states possibly resorting to unilateral purchasing of COVID-19 vaccines or other unilateral measures.
• The Export Authorization Regulation follows other measures taken at the EU and member state levels allowing for governmental intervention in response to the COVID-19 pandemic. For example, on 25 March 2020, the Commission issued guidelines to member states, seeking to protect EU companies and critical assets essential to EU security and public order (particularly in the health, medical research, and biotechnology sectors) from predatory buyers (see Morgan Lewis LawFlash.). Similarly, on 20 May 2020, Germany tightened its foreign direct investment regime, adding new businesses to the catalogue of critical infrastructure, in particular in the health sector (see Morgan Lewis LawFlash). As the efforts against the COVID-19 pandemic continue, further European governmental intervention may be expected in the health and biotechnology sectors.