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24 March 2021

How the EU’s naivety led to its vaccine debacle

The threatened EU export ban on vaccines is an overdue response to protectionism elsewhere, but it may come to late to speed up the bloc’s own roll-out.  

By Dave Keating

One of the most famous theories in social sciences is the prisoner’s dilemma – a phenomenon where two completely rational individuals end up not cooperating even when it’s clearly in their interest to do so. It comes from a 1950 experiment where two prisoners could receive a one year sentence if they both stay silent, or one can be set free if one betrays the other who stays silent. In the end they both betray each other, resulting in three-year sentences for both.

The EU, UK and US have found themselves in such a dilemma on vaccines. And despite the talk of EU “vaccine nationalism”, it is in fact the EU who is the only prisoner here who didn’t rat the others out. Instead, with an American export ban preventing global supply, EU vaccine factories have had to help supply the whole world outside the US – exporting between a third and half of the doses made in the EU. For that the EU is now paying a harsh price, and they’ve let the global media narrative turn against them.

While to people in Britain and America it might seem like the EU Commission President Ursula von der Leyen’s threat last week to ban vaccine exports to vaccine-producing countries who don’t reciprocate came out of nowhere, in fact it is the culmination of a year’s worth of developments in which the EU played by the normal rules of free trade. While much of the anglophone media’s focus has centred on dubious claims about a fumbled EU procurement process, the real problem has gone largely undiscussed: the EU, perhaps naively, took vaccine decisions on an assumption of a free market and good faith from its international partners. The US and the UK instead manoeuvred to protect themselves.

Early moves

The current dispute kicked off with decisions taken in January and February 2020 – even before Europe had woken up to the danger of the pandemic. Media reports have widely made the claim, based on an interview given by AstraZeneca’s CEO Pascal Soriot to the Italian newspaper La Repubblica, that the UK is benefitting from priority access to the AstraZeneca vaccine because it signed its purchase agreement for doses three months before the EU. But it has since emerged that the UK’s purchasing agreement with AstraZeneca was in fact signed in August, one day after the company signed its contract with the EU. Soriot was asked about this at a hearing in the European Parliament last month, and he clarified that his statement actually pertained to a licensing agreement signed with Oxford University in May 2020, when AstraZeneca apparently inherited an earlier “UK First” provision from Oxford’s funding contract with the government. Where this provision is written is still a mystery, Oxford will not make its contracts public.

EU countries were also funding the work being done by their home-grown researchers, including Germany’s funding for BioNTech. But this funding came with no “Europeans First” conditionality for distribution as the UK’s did.

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Meanwhile, in March 2020, former US president Donald Trump tried unsuccessfully to buy the German vaccine developer Curevac and bring it to the US. Despite this warning, apparently nobody in Berlin or Brussels thought it might not be a good idea for the other German vaccine developer, BioNTech, to be partnered with Pfizer, an American company. That nationality-agnostic approach to pharma partners was not the approach used across the channel in Britain. According to a Sky News report about the Health Secretary Matt Hancock’s strategy, Oxford was originally going to partner with American company Merck – but the UK government overruled it and opted instead for them to partner with the UK-based AstraZeneca because they were concerned about US export controls blocking doses if Merck was making them.

The British concern over American vaccine nationalism turned out to be well-founded. The US set up a framework in which it prevents companies from sending vaccine doses made on US soil anywhere outside the country. The result can be seen in the supply chain. US plants are being used to supply the US, while EU plants are being used to supply the world. Donald Trump signed an executive order in December 2020 giving Americans first priority to any vaccines made on US territory, and that order has not been rescinded by President Biden. The legal basis that can keep American-made doses in America is the Defence Production Act, something similar to the Article 122 the EU could use now to stop exports.

[See also: International coronavirus vaccine tracker: how many people have been vaccinated?]

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Vaccine wars

These statist approaches by the US and UK have meant they are both not exporting any vaccines. All of this exploded into the open in January 2021, when AstraZeneca informed the EU shortly before getting EU approval on 29 January that it would not be able to meet the delivery schedule it had envisioned. EU officials were furious, suspecting that doses made in the EU that were to be held pending approval had actually been exported to the UK. AstraZeneca blamed a problem at its EU production facility. The Commission said doses should then be sent from the two AstraZeneca plants in the UK to make up the shortfall. AstraZeneca said it couldn’t because the supply line was divided between EU and UK elements. The EU then published its contract with the company, showing that the plants in both the EU and UK were all supposed to be used to deliver EU supply with no demarcation.

“We know that significant amounts of the AstraZeneca vaccine went from the continent to the UK, for example, from the plant in Dessau, Germany, and still the company is not ready to give vaccine that is produced in the UK to supply the European Union,” says German MEP Peter Liese, in charge of health for Angela Merkel’s European People’s Party.

Consistently, the company has suggested that a UK First agreement with the British government prevents it from exporting any doses from those two UK plants, and indeed there is no evidence that any vaccine doses have been exported from the UK. According to the Commission, AstraZeneca will deliver only 30 million out of the promised 90 million in the first quarter and 70 million of the promised 180 million doses in the second quarter.

A similar proxy war may be developing now between the EU and US when it comes to Johnson & Johnson. So far, the US export ban has meant Canada, Mexico and Japan have to get their doses from EU plants instead. The Commission says the EU has exported 3.9 million doses to Canada, 3.1 million to Mexico and 2.7 million to Japan. The situation is particularly absurd for Canada, which must get its Pfizer doses from Belgium instead of next door in Michigan.

Even the US has received vaccine exports from the EU: one million in February according to the Commission, and 3.9 million doses of Johnson & Johnson a few weeks ago according to the New York Times. But Johnson & Johnson doses made in the US can’t go to the EU. Now that the vaccine has been approved in the EU, EU officials are getting déjà vu as Johnson & Johnson signals it will struggle to meet the EU delivery it envisioned.

According to the Commission, 41 million doses made in the EU have been approved for export since the EU put in place an export transparency mechanism on 31 January. But that doesn’t include doses exported before then, or doses exported since, to the roughly 120 countries exempt from export declarations – including all developing countries, all EU neighbours except the UK and Russia, and Israel. Those extra export figures are unknown. The Commission says that 70 million of the doses produced in the EU have been delivered to EU member states, and it can be assumed that roughly the same amount has been exported given the amount of unregistered exports that have gone out, especially to Israel.

Those EU export numbers were not revealed until two weeks ago, and the news has enraged EU citizens. People are asking, how have EU countries ended up in a situation where they are struggling with vaccine supply but exporting millions of doses to countries who are much more vaccinated, are not exporting anything, and whose media are antagonizing and ridiculing the EU for its slower performance? The anger felt from EU policymakers on that last point in particular cannot be overstated. Liberal Belgian MEP Guy Verhofstadt has said that the “vaccine nationalism” accusations being hurled about more accurately describe the behaviour “on the other side of the Channel and the Atlantic”.

Throughout the past year the Commission and EU national governments took decisions based on an assumption of a free market and good faith from its international partners. They didn’t think forcing an EU partner on BioNTech was essential, or that EU plants should be for Europeans First. By contrast, the US and UK have pursued a statist approach that has dictated to private companies where they can and cannot send their vaccines. The short-term benefit is clear, as the US and UK are far ahead of the EU in vaccinating.

In this light, the EU’s approach seems naïve. And it is especially galling coming from the new EU administration of Ursula von der Leyen, who has promised a more geopolitical Commission that stands up for EU citizens on the world stage with the new doctrine of “strategic autonomy”. On the biggest test of that new doctrine so far, the Commission has objectively failed.

A blanket ban

The new export ban idea, which would go beyond the already-existing transparency mechanism by targeting destination countries rather than exporting companies, will be discussed at a video summit of EU national leaders on 25 March. Any attempts by AstraZeneca to ship doses made in the EU to the UK, to make up for the recent shortfall of deliveries from India, are almost certain to be blocked using the existing transparency mechanism. But the leaders may go much further – blocking Pfizer exports to Britain on the basis of the UK not reciprocating with AstraZeneca. Such a ban would have a huge impact on the UK’s vaccination campaign and would put planned second doses after 12 weeks in doubt.

But while an EU export ban could make the UK’s vaccination campaign collapse, it would do little benefit to the EU’s campaign, freeing up probably less than two million doses per week based on the deliveries made over the past seven weeks. The real thing that could make a difference is if the US were to end its export ban and allow companies to send US-made vaccines to countries such as Canada, Mexico and Japan. Then the EU plants would no longer have to supply these countries, and those doses could stay in Europe.

Will the EU pressure force Biden’s hand? The topic is likely to come up at a meeting between EU officials and the US Secretary of State Antony Blinken in a Brussels visit this week. Last week the US made a token gesture of saying it would send four million doses to Mexico and Canada. But this is a “gift” from the US purchased supply, not an end to the restriction on companies exporting US-made doses.

Rather than inviting vaccine nationalism, EU leaders say they’re trying to stop it. If the UK and US agree to start exporting vaccines, all talk of EU export bans will stop. But it remains to be seen whether Washington and London are ready to change their approach.

[See also: Why pro-Europeans should be incensed about the EU’s vaccines debacle]