Analysis: “European Union imposes export restrictions on personal protective equipment” by Isabelle van Damme
The unprecedented and alarming public health emergency resulting from the outbreak of COVID-19 has caused the European Union to impose restrictions on exports of personal protective equipment with effect from 15 March 2020, complementing other initiatives taken in response to this crisis. The export restrictions are in place for a period of six weeks, ending on 26 April 2020. They may be extended or otherwise be reviewed.
Commission Implementing Regulation 2020/402 designates personal protective equipment as an essential product necessary to further prevent the spread of the COVID-19 disease and to safeguarding the health of medical staff treating infected patients. Annex I defines personal protective equipment, by reference to CN codes, as covering protective spectacles and visors, face shields, mouth-nose-protection equipment, protective garments and gloves.
Anticipating a significant increase in demand for these products in the imminent future, and taking into account the risk of shortages, the state of manufacturing capabilities in Member States as well as the restrictions in the supply chain resulting from export restrictions taken by third States, all exports of personal protective equipment listed in Annex I require an export licence. A model export licence form is included in Annex II to the Regulation. Export licences will be granted only in limited circumstances, which are also listed in the Regulation. Without an export licence, exports are prohibited. By imposing these measures, the European Union is indirectly also incentivising EU Member States to refrain from imposing or to remove any intra-EU restrictions on the free movement of such goods. Therefore, these measures must also be seen in the context of the European Union’s challenge to ensure the operation of the internal market.
Under WTO law, export restrictions of this type are prohibited under Article XI:1 of the GATT 1994. However, the prohibition does not apply where those measures are temporarily applied to prevent of relieve critical shortages of foodstuffs or other products essential to the exporting WTO Member (Article XI:2(a) of the GATT 1994). That appears to be the basis for the European Union’s measures. In any event, even in the absence of a critical shortage of essential products, a WTO Member may take necessary action for the protection of public health (Article XX(b) of the GATT 1994).
As a matter of trade, global supply chains of all types of medical equipment, including personal protective equipment covered by the European Union’s export restrictions are rapidly being redesigned and the coherence of national import and export policies is being tested. Countries seek to open access to their markets to such products (notably, by lifting certain tariff restrictions), incentivise domestic manufacturing capabilities despite the possible loss of an export market, favour procurement of domestic goods (to relieve reliance on imports) and, as the European Union has now decided, severely limit exports regardless of whether or not the equipment is of domestic origin (please see here for an overview). Increasingly, these actions are also affecting pharmaceutical ingredients and medications.
Outside the European Union, industry associations in third States, including the United States, have already called on their governments, faced with their own choices as to how to reconcile the concern to maintain global supply chains whilst acting in the interest of the urgent need for public health protection, to combat these export restrictions. There is also a wider concern that, for any government, export restrictions are an incomplete and possibly insufficiently effective response to the public health crisis we face today because, inter alia, such measures might discourage domestic production faced with the consequences of lost exports (especially in case there is sufficient domestic manufacturing capacity exceeding expected increases in domestic demand) and alienate governments at a time when close cooperation is called for (see, for example, the G7 Statement of 16 March 2020 on COVID-19).
Isabelle Van Damme is a practising lawyer in Brussels, Belgium. Her practice focuses on EU law and international trade law. She also teaches, and publishes on, EU external relations law and WTO law.