EU Director General Says Work on Airbus-Boeing Continues, PPE Export Restrictions to Ease

The European Union director general said the union will be scaling back export restrictions on personal protective gear, and she said that the EU is still trying to convince individual countries to lift restrictions on ventilators. Sabine Weyand was speaking from Brussels on a webcast hosted by the Washington International Trade Association on April 9. Weyand said the temporary EU restrictions will expire April 25, and that officials are reviewing the list, as they have realized not all PPE is scarce.

Guidance issued by the European Commission April 7 urges member states to lift export restrictions to ensure equal access to medical goods during the COVID-19 pandemic. This will help increase the availability of “essential medicines” in European Union hospitals and combat “unnecessary” stockpiling and panic buying, the commission said April 8. The guidance includes “proposed actions” for a “more coordinated approach” toward supply availability across the EU. The commission said shortages of medical goods are partly due to “the introduction of protectionist measures within and outside the EU,” including export bans and “transportation barriers” between countries.

“But we have to recognize in the heat of a crisis, you cannot leave the allocation ... strictly to the market,” she said, because speculators will lead to higher prices. She said that even with items on EU restriction, there have been exports, to governments and to humanitarian non-profits.

Wendy Cutler, vice president of the Asia Society Policy Institute, said on the webcast that the Federal Emergency Management Agency's export restrictions also aren't an outright ban, but goods will stay at the border until FEMA and CBP decide to let them go. She asked: “Will they be applied in a very strict, restrictive manner?”

Weyand noted that the EU eliminated tariffs on COVID-19-related medical goods as an emergency measure, but that most tariffs were already so low, that they also revoked the value-added tax for a bigger impact. She said that Trade Commissioner Phil Hogan will discuss making the elimination of these tariffs more permanent with member countries next week, and she said that could lead to plurilateral talks for parallel actions by other countries.

Several panelists talked about the political momentum for near-shoring and re-shoring production of medicines or medical equipment. Weyand said that since ventilators have more than 700 parts, self-sufficiency for any country, or even any continent, is impossible.

“I really think that it would be good to steer this into the direction of diversification,” she said. Because pandemics move around the world in waves, near-shoring wouldn't necessarily protect a country from a shortage if it needed more production at the time the pandemic hit its own region. But, she said, this pandemic showed that companies were wrong to rely solely on China for critical goods, as well.

“I think there will also be enormous pressure on business to improve their risk management,” she said, and the more they do that, the less governments will have to interfere in supply chains.

World Trade Organization Deputy Director Alan Wolff said the WTO needs to be more responsive in emergencies, and gave examples of guidance on how long temporary export restrictions should last, and on helping to make sure products meet international safety standards.

Weyand looked forward to the economic recovery after countries lift lock downs. She said there is “massive state money being pumped into society for very good reasons,” but added: “the real question will be, at what stage does that morph into distortive subsidies?” She said Europe, the U.S. and Japan will want to work together and discuss how to wean companies off the support.

She said that if the U.S. and the EU resolve their trade irritants, such as the Boeing/Airbus subsidies, that will also help the economy rebound. She said it makes no sense that U.S. Trade Representative Robert Lighthizer chose to hit European cheese and wines when it's aerospace subsidies at issue. “This crisis urges us to have a fresh look at policy measures that were taken before,” she said, and said there are ongoing discussions between Hogan and Lighthizer.