Introduction
Overview
Material scope
Compliance with EU law – free movement and solidarity
Exports outside EEA and Switzerland


Introduction

On 23 March 2020 the Ministerial Decree on special measures in the context of the SARS-CoV-2 pandemic on the basis of Book XVIII of the Code of Economic Law (the MD) was adopted by the minister of economic affairs, which restricts the retail and wholesale distribution of certain types of personal protective equipment (PPE) and medical devices used for treating COVID-19 patients. Further amendments were implemented by ministerial decrees on 27 March 2020 and 7 April 2020.

According to the MD's preamble, it concerns types of PPE and devices that are important in the fight against COVID-19 and whose availability is threatened by market disruption and measures taken by other countries.

This article provides a short description of the relevant trade restrictions followed by a legal analysis in light of fundamental principles of EU law.

Overview

The MD has been introduced under Article XVIII.1 of the Code of Economic Law, which empowers the minister of economic affairs to take certain measures that are strictly necessary for resolving or avoiding economic difficulties caused by exceptional circumstances or events that (could) endanger the Belgian economy's effective functioning.

Firstly, Article 2 of the MD provides that only licensed pharmacies may sell certain medical devices (eg, surgical masks, screening materials, disinfectant wipes for medical use and respirators) if prescribed by a healthcare professional.

The sale of these products by registered distributors should be restricted to other registered distributors of the products concerned, licensed pharmacies, hospitals and licensed healthcare professionals.

Article 3 restricts the retail and wholesale distribution of the following types of PPE that can be used in the fight against COVID-19:

  • FFP2 and FFP3 masks;
  • protective goggles and masks;
  • long-sleeve gloves (nitrile) of at least 300mm; and
  • 12% hydrogen peroxide and nebulisers (nocospray).

Initially, this list also included two biocidal products (hydroalcoholic gels and hand alcohol), but these products were deleted with the amendment of 7 April 2020, given the lack of acute shortage.

At the retail level, these types of PPE may be sold in licensed pharmacies only if they have been prescribed by a healthcare professional. Wholesalers may offer them to only the following categories of customers:

  • other wholesalers in the sector, licensed pharmacies, hospitals and licensed healthcare professionals;
  • undertakings that must offer these products to their employees under the Belgian Welfare Codex; and
  • undertakings that, by virtue of legal or regulatory provisions, need these types of PPE as part of the manufacture, processing, conservation or storage of their goods, or in the exercise of their activities.

The latter category was not initially foreseen and was added by the amendment of 7 April 2020.

The MD also provides that the federal minister of public health can impose restrictions on the number of transactions, sales and sales volume of wholesale and retail sales in Belgium and that government officials may require or order:

  • stocks of certain medical devices and PPE to be redistributed; and
  • the confiscation of certain medical devices and PPE at cost price.

The Royal Decree confirming the MD has already been presented to the Council of Ministers but has not yet been adopted, as it is apparently awaiting the Council of State's opinion.

Material scope

The MD applies to a broad range of medical devices and PPE listed in Articles 2 and 3 thereof; some of which are not clearly defined, such as 'screening materials' listed in Article 2 or 'protective glasses and masks' listed in Article 3, which may not all be suitable for the medical treatment of patients, but are used in other sectors.

This occasional lack of clarity contrasts with the EU Commission Implementing Regulation 2020/402, making the exportation of certain products subject to the production of an export authorisation (previously amended by EU Commission Implementing Regulation 2020/426) in which the type of PPE concerned is listed in Annex 1 based on the respective combined nomenclature (CN) code and a clear description.

Compliance with EU law – free movement and solidarity

Even more importantly, the territorial scope of sales restrictions is not entirely clear and could give rise to confusion.

If the MD is understood to refer to only wholesalers, authorised distributors and undertakings established in Belgium, then it would constitute a complete export ban on a broad range of essential products for companies in different sectors. This would undoubtedly violate the fundamental principle of the free movement of goods that applies both within the European Union and for trade with European Free Trade Association (EFTA) countries, as well as the principle of solidarity.

In a number of recent communications, the European Commission has strongly opposed such national export bans, which have spread to an increasing range of products, starting with PPE and extending more recently to medicines. For example, in its Coordinated Economic response to the COVID-19 Outbreak of 13 March 2020, the European Commission emphasised that "it is crucial that national measures pursue the primary objective of health protection in a spirit of European solidarity and cooperation". It has gone on to state that:

restrictions on exports ignore integrated supply chains. They create bottlenecks to production of essential supplies by locking inputs in specific Member States. They disrupt logistics and distribution chains, which rely on central warehouses. They encourage stockpiling responses in the supply chain. Ultimately, they reintroduce internal borders at a time where solidarity between Member States is the most needed. (Emphasis added.)

The European Commission's response recalled that the Treaty on the Functioning of the European Union (TFEU):

allows Member States under certain strict conditions to deviate from Single Market rules. Any national restrictive measure taken under Article 36 TFEU to protect health and life of humans must be justified, i.e. suitable, necessary and proportionate to such objectives by ensuring an adequate supply to the relevant persons while preventing any occurrence or aggravation of shortages of goods, considered as essential, such as personal protective equipment, medical devices or medicinal products. Any planned national measure restricting access to medical and protective equipment must be notified to the Commission, which is to inform the other Member States thereof. (Emphasis added.)

Annex 2 to this communication provides guidance for EU member states on how to put in place adequate control mechanisms to ensure security of supply across the European Union. The European Commission has clarified that:

a simple export ban alone cannot meet the legal requirement of proportionality. Such a measure does not, in itself, ensure that the products will reach the persons who need them most. They would therefore prove unsuitable to reach the objective of protecting the health of people living in Europe.

According to the European Commission, "measures without a clearly identified scope restricted to actual needs, a solid rationale and/or a limited duration may increase the risk of scarcity and therefore are very likely to be disproportionate".

The same principles apply for the EFTA countries (ie, Iceland, Liechtenstein, Norway and Switzerland) in light of the rules on free movement of goods provided for by the EEA Agreement and the Free Trade Agreement with Switzerland.

In short, exceptions to the free movement of goods during the COVID-19 crisis, where many countries are facing shortages of essential medical equipment, will be difficult to justify and should be introduced in close cooperation with the European Commission.

Accordingly, the sale restrictions under the MD should be interpreted restrictively and in a way that is compatible with EU law. The cabinet of the minister of economic affairs has indicated that this is also its position. Exports to other legally registered wholesalers and authorised distributors in EU and EFTA countries, as well as to other undertakings situated in these countries that need PPE to manufacture, process or store their goods, or to carry out their activities, should thus still be possible.

Exports outside EEA and Switzerland

As regards exports outside the European Economic Area and Switzerland, the MD is not any clearer. Less strict principles apply than to trade within the internal market, but even so, an absolute ban on exports from Belgium to third countries will not be easily justified.

At the EU level, on 15 March 2020 the European Commission introduced export authorisation requirements for certain PPE, which are listed in Annex 1 of the EU Commission Implementing Regulation 2020/402 and defined by CN code. These include protective spectacles and visors, face shields, mouth and nose protection equipment, protective garments and gloves.

Applications for export authorisations must be addressed to the competent authorities of the EU member state where the exporter is established. The competent authority for granting an authorisation in Belgium is the Federal Public Service Economy (FPS Economy). Further information (and the notification form) can be found on the FPS Economy website (in Dutch and French).

A European Commission guidance note provides practical guidelines for the application of the new authorisation system. The European Commission has clearly indicated that the system is not an export ban. Therefore, the Belgian authorities enjoy a margin of discretion and exports of certain quantities of specific PPE products may be authorised under specific circumstances depending on the needs of the EU member states.

Restrictions on the export of other types of PPE outside the European Economic Area are possible but should also respect the principles of proportionality and international solidarity. Therefore, export restrictions outside the European Economic Area should be introduced only when strictly necessary in light of immediate shortages for that product.

Article 1 of EU Regulation 2015/479 on common rules for exports states that exports to non-EU countries "shall not be subject to any quantitative restriction, with the exception of those restrictions which are applied in conformity with this Regulation". Therefore, in principle, the Belgian authorities would need to send a request to the European Commission and the latter would decide within five working days whether to impose an export ban at the EU level in order to prevent a shortage of essential products.

Article 10 of EU Regulation 2015/479 permits EU member states to adopt quantitative restrictions on exports if they are justified on the grounds of protecting life and human health. Against the background of Article 1, this presumably requires that urgency makes it impossible for an EU member state to consult with the European Commission.

For further information on this topic please contact Christophe Ronse or Hanne Baeyens at ALTIUS by telephone (+32 2 426 1414) or email ([email protected] or [email protected]). The ALTIUS website can be accessed at www.altius.com.