European Commission scales down controls on exports of COVID-19 vaccines

As of January 1, 2022, an export authorization for the export of COVID-19 vaccines and active substances is no longer required. Given the current situation in the European Union, the European Commission apparently no longer considers it justified for the existing safeguard measures to continue. Export controls will remain, but in a mitigated form. Instead of the export authorization that will remain mandatory until the end of 2021, the EU will continue to monitor the export of vaccines against the coronavirus for the next two years on the basis of data to be additionally included in customs declarations for (re-)export. Jikke Biermasz and Arjan Wolkers discuss the new measures.

Export authorization replaced by export control

On 25 November 2021, the Commission promulgated Implementing Regulation (EU) No 2021/2071 subjecting certain vaccines and active substances used for the manufacture of such vaccines to export control. The implementing regulation will enter into force on 1 January 2022 and replace the existing measures that will expire at that time. At present, the presentation of an export authorization is still mandatory for the export of corona vaccines and the active substances used.

Export surveillance using additional TARIC codes by manufacturer and number of doses

As of January 1, 2022, the control of the export of corona vaccines and the active substances used will therefore be structured differently. As of that date, an export authorization is no longer required, but an additional TARIC code must instead be included in the customs declaration for the (re)export of the vaccines. To this end, the Commission has created additional TARIC codes for the various vaccine manufacturers, which are listed in the Annex to the Regulation. The additional TARIC code of the manufacturer must be included in a customs declaration for the (re-)export. In addition, the number of doses that will leave the customs territory of the EU must also be specified in the customs declaration. So it remains to be careful when submitting customs declarations for the (re-)export of vaccines. Although an export authorization will no longer be required in the future, failing to include the information that is mandatory from 2022 also results in an incorrect customs declaration and would therefore constitute a violation of customs legislation.

Background to the surveillance of exports

Implementing Regulation (EU) No 2021/2071 states that this measure should enable the Commission to monitor compliance with the forgoing purchase agreements (so-called Advanced Purchase Agreements abbreviated as APAs) that the EU has concluded with the various pharmaceutical companies. The potential breach of contractual obligations in the APAs by the pharmaceutical industry was, of course, a sensitive issue at the beginning of 2021, and contributed to the EU's decision to impose an export authorization during the build-up phase of vaccine deliveries.

The Commission considers that the new rules on the control of exports of vaccines and active substances are further needed to ensure security of supply in the EU and to determine to what extent the EU could make additional donations of vaccines over time. The latter is certainly not unimportant. After all, the coronavirus does not care at all about national borders and rules regarding the import and export of products. Protectionism may be an understandable response to the pandemic, but not necessarily the best means of combating it.

Combating the pandemic requires a global approach, which means that the vaccination rate in poorer countries must also be increased. In short: vaccines must also be supplied there and supervision must provide insight into the EU's ability to contribute further to this.

Protectionism is rampant

The coronavirus crisis, in all its facets and different phases, has also provided more than enough food for thought from a legal point of view. As for protectionism, the Commission has deployed EU customs law and product regulation at various times and in ways to combat the scarcity of essential products within the EU. In earlier phases of the pandemic, this involved artificial respiration equipment and personal protective equipment. Notable examples of this are:

• Temporarily subjecting certain personal protective equipment (abbreviated as PPE) to the submission of an export authorization;
• The temporary exemption from import duties and VAT on the import of PPE;
• Recommendation 2020/403 on the conformity assessment and market surveillance procedures within the context of the COVID-19 threat through which the EU temporarily facilitated imports of PPE manufactured according to technical solutions other than the harmonized standards.

Safeguard measures as regards to the vaccines

After the vaccines from the various pharmaceuticals that had been used in the fight against the coronavirus finally became available from the end of 2020, this was almost immediately accompanied by a series of successive safeguard measures.

At the end of January 2021, the Commission first made exports of COVID-19 vaccines and active substances, under Article 5 of Regulation (EU) 2015/479 on common rules for exports, subject for a short period to the submission of an export authorization. The obligation to provide an export authorization when exporting was subsequently extended until mid-2021, and then again until the end of the year.

To this was added the requirement for the authorities to assess, when granting an export authorization, whether the proposed export transaction could not jeopardize the security of supply in the EU. It was also decided to temporarily suspend the exemption of certain third countries of destination from the scope of the safeguard measure, all prompted by the worldwide shortage of vaccines, the delays in the production and delivery of the vaccines promised to the EU and the lack of transparency. EU producers were said to have exported large quantities of vaccines to third countries with a large own production capacity that would conversely limit their own exports to the EU, as well as to third countries without a relevant own production capacity but where vaccination coverage was already much higher at that time than in the EU or where the epidemiological situation was less severe than here. Such exports posed a threat to EU supplies and therefore had to be denied.

Safeguard measures as an exception to free export

Restricting the export of products is unique and exceptional. After all, apart from known restrictions that are often related to security interests, such as restrictions that apply, for example, to the export of dual-use goods under the Dual-use Regulation (Regulation (EU) 2021/821), the basic principle is that export of goods from the EU to third countries is free.

The legal basis of the export authorization requirement can be found in Regulation (EU) 2015/479 on common rules for exports. The basic principle of this regulation is that exports from the EU are in principle free and not subject to any quantitative restrictions. However, safeguard measures can be introduced in exceptional circumstances to prevent or overcome a crisis situation in the EU caused by scarcity of essential goods.

Export authorization for export no longer justified

As mentioned, the export authorization requirement will apply until the end of 2021, after which it will be replaced by a mechanism of a two-year surveillance of the (re-)export of vaccines from the EU. This supervision is implemented by making it compulsory for customs declarations to include the number of doses and to specify the vaccine manufacturer with a specific TARIC code.

The Commission apparently no longer considers it justified to use the 'drastic remedy' of Regulation (EU) No 2015/479. However, the recitals of Implementing Regulation (EU) No 2021/2071 mention that the surveillance system should allow the Commission, if justified, to re-take safeguard measures to prevent a new crisis situation in the EU caused by vaccine scarcity.

The basis for the new surveillance system can be found in Article 56(5) of the Union Customs Code (UCC), which provides, inter alia, that the export of goods subject to the tariff measures and measures referred to in paragraphs 1 and 2 of that article adopted under EU law with regard to specific areas in the context of the goods traffic may be subject to supervision.

What is striking is that Article 1 of Implementing Regulation (EU) 2021/2071 in the second paragraph states that 'export' in the sense of the new measure does not only mean export of Union goods, but also the re-export of non-Union goods in the sense of the UCC. Corona vaccines and active substances from third countries that enter the EU to undergo manufacturing operations (under customs supervision) here, including filling and packaging, are therefore also subject to export surveillance.

About Ploum's International Trade, Customs and Logistics team

The specialists of our International Trade, Customs and Logistics team are happy to assist you if you have any questions on this topic, or in respect of other issues related to trade, customs, logistics, import and export. Thanks to our many years of experience in the customs practice, we can serve you quickly and effectively. Please contact Jikke Biermasz or Arjan Wolkers.