COVID-19 EU Bulletin – Issue #8

Institutional Response

European Summit

• Recovery Fund: European leaders video-convened on Thursday, 24^th of April, to discuss European recovery on the basis of a Commission document that outlines a “Union Recovery Programme.” The MFF proposal has a volume of €2 trillion, and includes a €323 billion recovery fund raised on the market through EU bonds with long or perpetual maturity intended to support Member States with grants or loans. As part of the new budget, the fund would have to be approved by the European Council in June 2020 and adopted by the EP in autumn in order to commence recovery as soon as possible. Environmental NGOs have called for the recovery strategy to include a prominent sustainability dimension (source: POLITICO).
• Coronabonds 2.0? EU heads of state and governments remained contradictive in their comments leading up to the summit. While Spain advocates for money to be made available through grants, Austria insists that funding must be repaid on the basis of loans. The discussion recalls the quarrels over coronabonds earlier this month, and indeed Portugal suggested that it was open to compromise over mutual debt in light of concessions on the Recovery Fund-stage. Germany, which opposed coronabonds, in usual restraint, said it was too early to decide on details or scope of the fund, but that Europe was to live with the virus for a long time and that Germans should be prepared to make significantly higher contributions to the EU budget (source: POLITICO).
• Extending the budget? The Greens in the EP have suggested a three-stage financial recovery plan. First, the Sanitary Emergency Stage concentrates budgetary efforts on fighting the virus and minimising the damage sustained, including in third countries. Second, the Stimulus Package extends the current budget by two years and aligns it with the Paris Agreement, rebuilding the economy and industry, as well as creating more resilient healthcare systems. Third, the Recovery & Green New Deal foresees a budget of “several GDP points per year” over 10 years to fast track recovery together with climate goals.

European Commission

• Green Deal and COVID-19: Commissioner Timmermans had a debate with the EP’s ENVI committee on the implementation of the Green Deal and the EU Climate Law in light of COVID-19. The Commission believes that a green recovery is possible and that new investments will be able to create a stable economy based on the Green Deal. According to Timmermans “it is not true that the Green Deal is a luxury the EU cannot afford in this moment, as climate change is not over and will remain even after the pandemic”. He insisted on the need to invest in key sectors such as buildings and automotive to adopt future-proof measures (e.g. by changing insulation in buildings, energy mix as well as replacing old cars with new and green vehicles). Investing in these sectors will also help to make people understand the added value of the transition. Similarly, it will be also important to avoid dependence on fossil fuels and other materials (Cambre followed the live stream of the exchange).

International Organisations

• World Trade Organisation: The WTO has reported a growing number of restrictions in response to the COVID-19 The documentdetails that 80 countries and customs territories have so far introduced restrictions mostly covering medical supplies such as face masks, ventilators, and pharmaceuticals, including 46 WTO members. However, only 13 WTO members have submitted information regarding their measures taken, impacting other countries’ efforts to procure equipment in the fight against COVID-19. The WTO report also highlights the costs of restrictions members occur in the long run.

Member States

• Austria has demanded more flexibility of EU state aid rules according to a letter sent to Commissioner Vestager. Pointing to the exceptional circumstances and referring to the financial crisis of 2008, the two Austrian Ministers who authored the letter said they preferred if state aid rules were suspended in full for the duration of the crisis. On page two, they make slightly more realistic points asking for less administrative burden, exemptions from ex-ante notification requirements for “anti-crisis subsidies” following natural disaster-rules, and increased aid volume. The Commission’s answer was clear: even before the letter had been sent, a spokesperson reiterated that state aid rules were a cornerstone of the Single Market when asked about the Austrian request. In reaction to the letter, the Commission’s representative in Austria called the request “somewhat strange”.

Bailouts

• A growing number of Member States have confirmed that firms would not be able to profit from emergency financial support if their headquarters were located in offshore tax havens such as Panama, Cayman Islands, or the BVI. So far, Italy, Belgium, Poland, and Denmark have announced corresponding conditions, and French Finance Minister Le Maire said it was “obvious” that offshore accounts could not be beneficiaries of public aid (source: POLITICO).

Tackling the Virus & Medical Procurement

• Over the peak: The European Centre for Disease Prevention and Control has reported that the first wave of new COVID-19 infections had passed the peak in 20 EEA countries. According to the ECDC, “non-pharmaceutical interventions” such as physical distancing have reduced the 14-day incidence by 18% across the EEA and the UK. However, the agency warned, lifting lockdown measures too quickly could cause a sudden resurgence of community transition. The ECDC provides the EU and member states with a set of public health objectives and considerations to support the implementation of the Commission’s roadmap to easing restrictions. The recommendations include reducing mortality and transmission, robust surveillance based on testing, more and harmonised testing, contact tracing, maintaining healthcare capacity, and in-action and after-action reviews to assess the response to COVID-19 so far, as well as a strong risk communication strategy.
• Drug shortages: The European Federation of Pharmaceutical Industries and Associations said that barriers to trade are causing drug shortages within the European Union. While enough medecine was produced within the Union to meet European’s demands, non-tariff barriers were preventing medecines from being delivered where they are needed. The EFPIA calls for a united approach using patient-level demand to steer supply. Meanwhile, France has reportedly extended its list of drugs facing export restrictions, despite calls from the Commission to the contrary.

Vaccine Development

• Get out the checkbooks: The Coalition for Epidemic Preparedness Innovations (CEPI) has estimated that the development of a COVID-19 vaccine would cost USD2 billion, plus manufacturing.
• Vaccine finance: The European Investment Bank has agreed to offer German drug developer CureVac €75 million equity investment for the development of a novel COVID-19 vaccine. The decision comes after President Von der Leyen announced mid-March that CureVac would receive funding. The firm has also been central to tensions with the United States when President Trump reportedly showed great interest in securing exclusive access to the vaccine for Americans, should it prove successful (source: POLITICO).
• More Maltese money: The Commission announced that is has approved a €5.3 million grant to Maltese companies and public entities researching COVID-19 and antivirals. The decision was made through the Commission’s Temporary Framework for State Aid.
• Unsuccessful study: A data-leak on the WHO website showed that a drug tested by Gilead in China (remdesivir) did not show benefits for the treatment of COVID-19. The document had been posted accidentally and has since been removed. Recently, the drug had been praised by President Trump. As a reaction Gilead said that the drug trial did show potential for patients to benefit from remdesivir, especially when treated early, and that the study was non-conclusive because too few people enrolled for it (source: POLITICO).
• The search continues: The German authorities have approved two drug trials involving humans for a COVID-19 vaccine, to be starting in the next few months. In the UK, a vaccine trial started on Thursday, 23^rd April (POLITICO).

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