UK and EU vaccine dispute deepens as Brussels considers new export controls

LONDON — Tensions are high between the U.K. and the European Union as the 27-member bloc considers restricting exports of Covid-19 vaccines across the English Channel.

It comes as the European Union grows increasingly frustrated at AstraZeneca for not respecting its delivery targets to the bloc. The pharmaceutical firm reduced the number of vaccines it will deliver to the EU twice in the first quarter and once in the second quarter. As a result, European officials are worried that any future issues could undermine their vaccination targets.

In the meantime, AstraZeneca has met its delivery targets for the United Kingdom — where the vaccination rate is higher than in the EU — despite some of these vaccines coming from plants in the European Union. The U.K. placed its order for the AstraZeneca shots earlier than the EU.

“The EU needs to secure deliveries of vaccines to Europeans in line with companies’ contractual obligations. We will review the different tools at our disposal for that end, including the use of the export authorization regime in its current or in adapted form,” a spokesperson for the European Commission told CNBC on Monday.

In late January, the EU approved restrictions on exports of Covid-19 vaccines, but they can only be implemented if a company is not respecting its contractual obligations with the region, and if the vaccines are heading to a country considered non-vulnerable.

This is what enabled Italy to stop a shipment of AstraZeneca vaccines to Australia a couple of weeks ago. This has been the only instance so far of European authorities preventing Covid shots from leaving the region. However, the legislation is due to expire at the end of March.

“There is an ongoing reflection process in the EU, and we will be consulting Member States. All options are on the table,” the European Commission spokesperson added via email.  The issue is expected to be discussed by the 27 heads of state on Thursday during a European summit.

Speaking to a group of newspapers over the weekend, European Commission President Ursula von der Leyen said: “We have the possibility to forbid planned exports. That is the message to AstraZeneca, ‘you fulfil your contract with Europe before you start delivering to other countries’.”

Von der Leyen had already asked for tougher export restrictions last week, during a press conference.

“We will reflect on whether exports to countries who have higher vaccination rates than us are still proportionate,” she said on Wednesday.

The European Union had exported 41 million doses of Covid shots as of last week, to 33 countries, and the biggest recipient is the U.K.

The U.K. government did not confirm when contacted by CNBC on Monday whether Prime Minister Boris Johnson was due to speak with European leaders about vaccine exports.

However, the U.K.’s defence secretary, Ben Wallace, told Sky News on Sunday that blocking vaccines would be “counterproductive” and hurt the EU’s reputation.

Pfizer, whose Covid-19 vaccine has been used the most across the EU so far, reportedly said the region should not block the export of Covid shots because the firm needs raw materials from the U.K. Imposing restrictions on the vaccines could lead the U.K. to retaliate by preventing ingredients from getting to EU plants.

A spokesperson for Pfizer told CNBC on Monday that its position is aligned with the European Federation of Pharmaceutical Industries and Associations, which said in January that export bans risk retaliatory measures “given the global nature of vaccine supply lines.”

The U.K. aims to finish vaccinating its adult population with the first dose of Covid shots by July.

Despite a “tough” start to the rollout in the European Union, as described by von der Leyen last week, the bloc also intends to reach herd immunity by mid-July.

“By July 14, we have the opportunity to reach immunity,” Thierry Breton, European commissioner for internal market, told French TV channel TF1 on Sunday.

The EU’s objective will depend on the fulfillment of delivery contracts by four pharmaceutical firms and on the member states’ ability to vaccinate their populations.