EU to extend vaccine export curbs to cover Britain, backloading: source

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BRUSSELS (Reuters) – The European Commission on Wednesday will extend EU powers to potentially block COVID-19 vaccine exports to Britain and other areas with much higher vaccination rates, and to cover instances of companies backloading contracted supplies, EU officials said.

The regulation is aimed at making vaccine trade reciprocal and proportional so that other vaccine-making countries sell to Europe and the EU does not export much more than it imports, one EU official said.

With no numerical targets, the change is unlikely to trigger mass export bans of EU-made vaccines, the official with insight into the announcement said on Wednesday.

“I just really, really don’t see that happening because we have our international obligations and we want to keep supply chains going and the global system moving and flowing,” the official said.

The regulation will be the basis for the EU’s 27 governments to decide whether to block vaccine exports or not.

“In practice, all this is, is a piece of paper that says please take this stuff into consideration when you’re looking at approving export authorisations,” the official said.

The move, which EU officials said could hit AstraZeneca (NASDAQ:AZN) and Johnson & Johnson (NYSE:JNJ), are designed to avoid even limited delivery shortfalls to a region whose inoculation programme has been beset by delays and supply issues.

Shipments abroad could also be withheld if vaccine-producing countries, such as Britain and the United States, disallow exports to the EU, officials said, confirming comments by commission head Ursula von der Leyen last week.

As London-Brussels tensions rose on Monday over a possible export ban, Britain demanded that EU authorities allow the delivery of vaccines it has ordered.

On Tuesday, Prime Minister Boris Johnson said Britain did not believe in imposing vaccine blockades. “I’m encouraged by some of the things I’ve heard from the continent in the same sense,” he told a news briefing.

Johnson & Johnson has announced delays in its second-quarter supplies to the EU, which a second EU official said could lead to consequences under the Commission amendment covering companies backloading contracted quarterly deliveries.

All vaccine makers could be affected, added the second official, with direct knowledge of the Commission decision. Some on the EU’s list of countries exempt from any vaccine export monitoring, like Israel, are likely to be removed, because of their very high inoculation rates, the first official said.

“It doesn’t mean they won’t get vaccines. It just means they’re not automatically exempted anymore,” the first EU official said.

‘WE DON’T WANT THE SAME DELAYS IN Q2’

The EU this month used an export control mechanism, set up at the end of January, to block an AstraZeneca vaccine shipment to Australia.

That mechanism can be activated only if companies do not meet contracted quarterly delivery targets. The block followed AstraZeneca’s announcement of steep cuts in first-quarter deliveries to the EU.

With the amendments to be adopted on Wednesday, the EU will be able to block exports to cover companies that respect their quarterly contracts but backload supplies to the end of the period, said the official, who asked to remain anonymous.

Johnson & Johnson, which has committed to delivering 55 million doses to the EU between April and June, plans to start deliveries in the second half of April.

The company told EU officials production issues might make it difficult to meet its second quarter target, but it was striving to do so.

Moderna (NASDAQ:MRNA) and Pfizer/BioNTech also had delays in vaccine deliveries to the EU, though they are set to meet their overall first-quarter targets. “We don’t want the same delays to happen in the second quarter,” said the second official.