People queue to receive the Chinese-made Sinopharm Covid-19 vaccine, outside the Belgrade Fair turned into a vaccination centre, on January 25, 2021.
- The EU's decision to implement export controls on coronavirus vaccines is "highly problematic," according to experts.
- The EU has made the decision to potentially restrict vaccine exports amid criticism over its sluggish vaccine rollout.
- The bloc is also plagued by supply issues from vaccine makers, but it has been warned against "vaccine nationalism."
The EU's decision to implement export controls on coronavirus vaccines is "highly problematic," according to experts, who warned that it could lead to a collapse in the global supply if other countries followed suit.
"There's a real risk that the EU taking this decision is going to spark a cascade in other countries putting in place (vaccine) export bans," Suerie Moon, co-director of the Global Health Centre Graduate Institute in Geneva, told CNBC on Monday.
"There's a real risk that we're going to see a breakdown in the movement of vaccines across borders, the same kind of breakdown we saw a year ago when countries, including the EU, blocked food and even masks and other essential medical supplies from being exported. This is disastrous at an international level."
At worst, she said, "the biggest risk is that this is going to set an example that many other countries will follow, and this will lead to a collapse in global vaccine supply."
Export controls
Money Report
Moon's warning comes after the EU said last week that it was implementing what it called a "transparency and authorization mechanism for exports of Covid-19 vaccines." It said the measure was designed to, "ensure timely access to Covid-19 vaccines for all EU citizens and to tackle the current lack of transparency of vaccine exports outside the EU."
Despite insisting that the measure was not an "export ban," it nonetheless allows member states to restrict exports of coronavirus vaccines that are made in the bloc if they deem that the vaccine maker has not honored existing contracts with the EU.
It contains exemptions for a variety of countries outside the EU but within Europe, such as Albania and Serbia, a range of countries in northern Africa and any of the 92 low- and middle-income countries covered by the COVAX initiative.
Moon said that: "The EU has certainly put in place a few pressure valves to allow for exports to certain countries in the world, but there's still a lot of countries who heavily rely on EU production and they're going to be hurt quite badly."
The bloc made the announcement amid heightened concerns and ugly public disputes with vaccine makers over a lack of supplies to the bloc.
Vaccine maker Pfizer said it was temporarily lowering the production of its shot, developed with German biotech BioNTech, as it upgrades production facilities in Belgium, while AstraZeneca also dealt a blow to the EU by announcing it would deliver far fewer vaccine doses than initially expected in the first quarter, citing problems at its Dutch and Belgian plants.
The delays piled more pressure on the European Commission, which was already being criticized for its lack of speed in ordering and approving vaccines, and its rollout of immunizations.
The move to introduce controls on exports triggered a furor with the U.K. in particular, after a week of simmering tensions over supplies of the AstraZeneca vaccine, which is also manufactured at two sites in Britain.
The EU had indicated that supplies should be diverted to Europe from the British plants, sparking a dispute with the drugmaker and the U.K. government. It escalated to the point where the EU said it would override part of the Brexit deal in order to prevent EU-made vaccines potentially entering the U.K. via Northern Ireland.
It reversed that decision shortly afterwards following a public outcry, including from the World Health Organization, which warned against the perils of "vaccine nationalism." The EU assured the U.K. that it would receive vaccine supplies made in the bloc.
Pandora's box
Simon J. Evenett, a professor of international trade and economic development at the University of St. Gallen, commented Monday that the EU's move was tantamount to opening "Pandora's box" and that it could have unforeseen conseqences.
He said the restrictions could prompt concern among foreign governments for a number of reasons, including the fact that the "standard for authorizing exports of Covid-19 vaccine is unclear," and that these decisions "may be arbitrary." He also flagged that it may not lapse on March 31 2021, as promised.
Evenett warned that the move could, "spread along the Covid-19 vaccine supply chain, to include vital ingredients need to produce the vaccines and to distribute them," and may even lead to export curbs on other essential goods such as food, energy and other medicines.
Such scenarios "would compound the harm done to both the EU's public health systems and to its multinationals," he said.
"Disruption in vaccine supply chains will slow down rates of inoculation in the EU and elsewhere resulting in unnecessary deaths and an even slower economic recovery. If the European Commission realises that it is about to open Pandora's Box, then it may find an elegant way to withdraw its export control regime on Covid-19 regime," he said.
"Doing so would enable to the EU to reclaim its reputation as a defender of multilateralism and the rules-based global trading system. This morning that reputation is in tatters."
