Transatlantic Trade | US and Europe – Week of April 12, 2021
Tensions with Russia resulted in another G7 statement on the situation in and around Ukraine, while the United States (US) moved to address other Russian provocations related to cyber intrusions, election interference and bounties on US troops in Afghanistan. The United Kingdom (UK) also denounced Russia’s malign activities. While US lawmakers welcomed the actions against Russia, they urged the Biden Administration to announce new sanctions related to the Nord Stream 2 pipeline from Russia to German.
The US temporarily suspended administering the Johnson & Johnson COVID-19 vaccine this week after blood-clotting cases arose that required additional reviews. The European Union (EU) is similarly reviewing the data from these cases, while the European Council took a step forward this week with its version of a vaccine passport.
The World Trade Organization (WTO) focused this week on the pandemic and vaccine production and distribution challenges, along with fisheries subsidies. The EU moved forward with legal action against the UK’s decision to extend customs grace periods in Northern Ireland.
In this issue, we also cover:
- COVID-19 developments more broadly, with respect to the US, EU, UK;
- WTO updates;
- Notable UK, EU and US developments;
- UK-EU trade deal developments; and
- US sanctions with respect to Russia, Uganda, and the Western Hemisphere.
COVID-19 Updates | US, EU, UK
On Tuesday, 13 April, the Centers for Disease Control and Prevention (CDC) and the U.S. Food & Drug Administration (FDA) recommending temporarily pausing use of the Johnson & Johnson (J&J) COVID-19 vaccine. This move comes after six reported US cases of a rare and severe type of blood clot, resulting in one death, in women between the ages of 18 and 48, with symptoms occurring six to 13 days after vaccination. The CDC convened a meeting of the Advisory Committee on Immunization Practices (ACIP) on Wednesday to review these cases, which resulted in a decision to further study the matter. The FDA is also further investigating these cases. White House COVID-19 Response Coordinator Jeff Zients said at a press briefing later on Tuesday that the pause on the J&J vaccine would not have a significant impact on the U.S. vaccination program. The United States is currently averaging three million shots per day.
US Trade Representative Katherine Tai held virtual meetings with business leaders on Tuesday about increasing vaccine production, global health issues and a proposed waiver to certain provisions of the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) related to the COVID-19 pandemic. She also met virtually with labor unions and advocacy organizations regarding the same.
On 15 April, the United States and Gavi, the Vaccine Alliance, welcomed new partner commitments announced that morning at the “One World Protected” virtual event that included over $300 million in financial contributions and donations of millions of COVID-19 vaccine doses to be shared by COVAX. The event launched a two-month investment opportunity to accelerate the delivery of COVID-19 vaccines to 92 low- and middle-income economies through the Gavi COVAX Advance Market Commitment.
In light of US concerns about blood-clotting incidents linked to J&J’s COVID-19 vaccine, the European Medicines Agency (EMA) expects to review the cases in the US to determine whether the use of the vaccine can commence in the EU as the rollout was foreseen to start this week. Notably, J&J vaccine deliveries have been suspended in EU Member States, in anticipation of the EMA’s review. The EU is aiming to pursue securing an additional 1.8 million doses of the Pfizer/BioNTech COVID-19 vaccine through 2023.
Regarding the Oxford/AstraZeneca COVID-19 vaccine, the EMA is expected to provide additional guidance on blood-clotting concerns. Meanwhile, Denmark has become the first European country to officially stop usage of the vaccine in its territory. Media reports indicate the European Commission may not renew the AstraZeneca and J&J COVID-19 vaccine contracts upon their conclusion at the end of 2021.
In other news, the Council of the EU adopted its negotiating position on the proposal for a digital green certificate, broadly referred to as a “vaccine passport”. The digital green certificate aims to ensure safer freedom of movement in Europe, by introducing a categorization of travelers who either have been vaccinated against COVID, have already had the disease, or have tested negative. Negotiations will proceed with the European Parliament to find a common approach on this proposal, after the European Parliament concluded its negotiating mandate in March.
The UK Government confirmed on 13 April that all university students could return to in-person teaching after 17 May, in line with Step 3 of the Government’s roadmap. Phase 2 of the vaccination programme began this week, with people aged 45 to 49 able book their appointments. On 9 April, British Transport Secretary Grant Shapps provided a framework produced by the Global Travel Taskforce that charts the safe return of international travel after 17 May. Among other things, the framework would remove the current permission to travel form, allowing passengers to travel without proving they have a valid reason to leave the country.
WTO Updates | Pandemic & Fisheries Subsidies
WTO Director-General Ngozi Okonjo-Iweala convened vaccine and medical supply manufacturers, trade ministers, civil society groups and international organizations to discuss how the WTO can facilitate broader vaccine access, despite an impasse over an India-South Africa proposal to waive some TRIPS provisions. While TRIPS obligations were discussed, the participants also focused on the effect of export restrictions on COVID-19 vaccine production. Director-General Okonjo-Iweala called on members to lift export controls, facilitate logistics and customs, and advance talks in the TRIPS Council.
Ambassador Tai, European Trade Commissioner Valdis Dombrovskis, Indian Commerce Minister Piyush Goyal and South African Trade Minister Ebrahim Patel provided remarks at the meeting. Thus far, the Biden Administration has opposed the TRIPS waiver. In remarks to the opening session, Ambassador Tai acknowledged production, supply, and equitable distribution difficulties, along with disparities between developed and developing countries. She expressed hope that this time of crisis and suffering that discussions lead to breakthroughs and progress that will also result in a renewed look at reforming the WTO.
Director-General Okonjo-Iweala also called for members to conclude an agreement curbing harmful fisheries subsidies as quickly as possible. On Monday, she opened a week-long negotiating session by stating no progress this week would be a “substantial blow.”
Notable US Developments
On Tuesday, 13 April, Speaker of the House Nancy Pelosi (D-California) invited US President Joe Biden to deliver his first address a joint session of Congress on 28 April. House Ways & Means Committee Ranking Member Kevin Brady (R-Texas) announced on Wednesday, 14 April, that he would not seek re-election next year.
President Biden joined a virtual CEO Summit on Semiconductor and Supply Chain Resilience on Monday, 12 April. A White House readout reflected,
Participants emphasized the importance of improving transparency in the semiconductor supply chain to help mitigate current shortages and improving demand forecasting across the supply chain to help mitigate future challenges. They also discussed the importance of encouraging additional semiconductor manufacturing capacity in the United States to make sure we never again face shortages.”
Also on Tuesday, President Biden spoke with Russian President Vladimir Putin and emphasized “the United States’ unwavering commitment to Ukraine’s sovereignty and territorial integrity.” He also voiced concerns “over the sudden Russian military build-up in occupied Crimea and on Ukraine’s borders, and called on Russia to de-escalate tensions.” Toward establishing “a stable and predictable relationship consistent with U.S. interests.” President Biden suggested a meeting in a third country in the coming months.
The G7 Foreign Ministers¹ issued a statement on Tuesday regarding the Russia-Ukraine situation. They called on Russia to cease its provocations and to de-escalate immediately tensions in line with its international obligations.
US Secretary of State Antony Blinken travelled to Brussels, Belgium, this week, joining US Secretary of Defense Austin Lloyd in consulting with NATO Allies and partners on shared transatlantic priorities. This included discussing the pending US drawdown of troops in Afghanistan and Russia’s military build-up in and around Ukraine. Meanwhile, President Biden is set to host Japanese Prime Minister Yoshihide Suga at the White House for his first in-person foreign leader visit on Friday, 16 April.
On 15 April, Ambassador Tai outlined her vision for leveraging trade policy to protect the environment and tackle climate change in her first speech as US Trade Representative at an event hosted by the Center for American Progress. She spotlighted President Biden will welcome 40 world leaders to a Summit on Climate next week, adding the US would announce an ambitious 2030 emissions target as its new Nationally Determined Contribution under the Paris Agreement. Ambassador Tai spoke of a multilateral trading system that has no rules to address the corporate incentive to participate in the race to the bottom and the need to place environmental concerns among trade discussions and negotiations. She argued disciplines that discourage harmful behaviors are helpful but encouraged policymakers to create rules that promote positive behaviors, too.
Ambassador Tai met virtually with Dutch Minister for Foreign Trade and Development Cooperation Sigrid Kaag on 15 April. A readout reflected she “emphasized her desire to work closely with the Netherlands on an inclusive and worker-centric trade policy.”
On 8 April, the Office of the Director of National Intelligence released a report titled, Global Trends 2040: A More Contested World, which identifies four structural forces that will shape the future – demographics, the environment, economics, and technology. The report also reflected a more “activist” trade policy and fragmentation over the next 20 years.
Notable UK Developments
On 9 April, UK Prime Minister Boris Johnson issued a statement shortly after learning His Royal Highness Prince Philip, The Duke of Edinburgh, had passed away. The country is mourning the death of the Queen’s husband.
On 15 April, the UK Foreign, Commonwealth and Development Office summoned the Russian Ambassador “over the United Kingdom’s deep concern at a pattern of malign activity, including cyber intrusions, interference in democratic processes, and the build-up of military forces near the Ukrainian border and in illegally-annexed Crimea.” A readout is available here. The UK also provided details on the SVR’s involvement in the SolarWind attack. The SVR is Russia’s civilian foreign intelligence service and is the successor organization to the KGB’s First Chief Directorate.
On 14 April, the Governments of the UK, France and Germany (the E3) expressed “grave concern” over Iran’s announcement that it will start uranium enrichment up to 60% using advanced centrifuges. They further stated Iran has no credible civilian need for enrichment at this level. In response to a question at a joint press briefing in Brussels at NATO’s headquarter, US Secretary of State Antony Blinken said the US took “very seriously [Iran’s] provocative announcement of an intent to begin enriching uranium at 60 percent, and the P5+1 should be unified and united in rejecting that.” While he added the US is committed to the Joint Comprehensive Plan of Action (JCPOA) and the diplomatic process, it remains to be seen whether Iran is committed to pursuing this process.
Notable EU Development
During the European Parliament’s Trade Committee debate this week, European Commission Chief Trade Enforcement Officer Denis Redonnet provided some ideas about the EU’s approach to its pending anti-coercion instrument. Redonnet stressed, “[T]he Commission has not at this stage decided specifically whether this instrument should include a response to extraterritorial sanctions there are considerations to counter extraterritorial sanctions in the context of this future instrument”. The nature of extraterritorial sanctions need to be examined to ensure the extent they “may involve coercion” in the EU and its Member States. While the measure is not final yet, according to Redonnet, intervention in “any action must be proportionate in harm, it must be effective”. The European Commission has a public consultation on the pending mechanism; interested parties may submit comments until 15 June 2021.
Ministers from France, Germany, the United Kingdom, the Netherlands, Spain, Denmark and Sweden announced on Wednesday their commitment to stop public export subsidies for future fossil fuel projects. French Economy Minister Bruno Le Maire stressed, “We want to stop financing abroad what we also don’t finance at home”. The commitment means that from this year onwards, the countries of the coalition will stop subsidizing fossil energy projects and from 2025 forward to stop granting export credit guarantees for oil projects, with an ultimate phase out of gas projects from 2035.
UK-EU Trade Deal | Updates
On 15 March, the European Union announced the beginning of legal action against the British Government for its unilateral decision to extend grace periods on customs checks at Northern Ireland’s ports until October. With the expiry of the one-month timeframe for the UK Government to provide its response, it appears UK authorities have requested additional time to respond to the letter of formal notice, ahead of this week’s informal EU-UK Joint Committee meeting.
European Commission Vice-President (VP) Maroš Šefčovič and UK Cabinet Office Minister David Frost met this week to take stock of ongoing technical work on the Protocol on Ireland/Northern Ireland and to discuss contentious political issues. Earlier this week both sides agreed to begin technical and political discussions on the implementation of the Northern Ireland Protocol to address the complexities surrounding its implementation. The two sides agreed to intensify technical talks with the key intent of preserving the Good Friday Agreement, which was tested recently by the violent protests in Northern Ireland. According to a statement by VP Šefčovič, “the meeting took place in a constructive, solution-driven atmosphere”, and he reiterated the need to continue with “mutually agreed paths towards full compliance with the Protocol, which includes clear end-points, deadlines, milestones and the means to measure progress”.
On 15 April, the European Parliament’s Foreign Affairs and Trade Committees approved the EU-UK Trade Deal. A plenary vote before the end of April is required to complete the full ratification. The next European Parliament plenary session is scheduled for the week of 26 April, but leading MEPs refused to set a formal date for the vote, as long as there are not enough reassurances from the UK regarding the application of the Withdrawal agreement, particularly with respect to the Northern Ireland Protocol.
U.S. Sanction Updates | Russia, Uganda, and the Western Hemisphere
On Thursday, 15 April, the US Government announced actions to hold the Russian Government accountable for the SolarWinds cyber intrusion, reports of bounties on US soldiers in Afghanistan, and attempts to interfere in the 2020 US elections. President Biden signed a new Executive Order (EO) related to Russia that will broaden the scope of US sanctions authorities. Under this authority, the US Department of the Treasury issued a directive prohibiting US financial institutions from conducting transactions in the primary market for new ruble or non-ruble denominated bonds issued after 14 June 2021. The EO also provides authority for the US Government to expand sovereign debt sanctions on Russia, as appropriate. The US Department of State expelled 10 officials from Russia’s Embassy. In addition, the Treasury Department announced sanctions against entities and individuals involved in election interference and against companies supporting Russian intelligence services responsible for the SolarWinds intrusion and other recent cyber incidents.
House Foreign Affairs Committee Ranking Member Michael McCaul (R-Texas) welcomed the Biden Administration’s moves against Russia as a necessary step. However, he added,
If the Biden Administration is serious about imposing real costs on the Putin regime’s efforts to undermine U.S. democratic institutions and weaken our allies and partners, then it must ensure the Russian malign influence Nord Stream 2 pipeline project is never completed. Therefore, I urge the Biden Administration to make additional sanctions designations today on the numerous entities widely known to be actively involved in the pipeline project as is required by congressionally-mandated sanctions.”
Senate Foreign Relations Committee (SFRC) Ranking Member James Risch (R-Idaho) echoed Congressman McCaul. He stressed,
The lack of Nord Stream 2 sanctions today makes it even more obvious the administration, for unknown reasons, is foot-dragging on this issue. Bipartisan congressional action demands the administration move quickly.”
SFRC Chairman Robert Menendez (D-New Jersey) welcomed the actions as a “first step,” while further urging the Biden Administration “to consider additional measures, to include blocking sanctions on Russian banks.” He added,
I also look forward to working with the Administration in its efforts to stop the Nordstream 2 pipeline.”
On 16 April, the State Department announced visa restrictions on those believed to be responsible for, or complicit in, undermining the democratic process in Uganda, including during the country’s 14 January general elections and the campaign period that preceded it. State added,
The Government of Uganda’s actions represent a continued downward trajectory for the country’s democracy and respect for human rights as recognized and protected by Uganda’s constitution.”
On 13 April, Treasury’s Office of Foreign Assets Control designated Audias Flores-Silva as a significant foreign narcotics trafficker pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). Flores-Silva is one of Cartel de Jalisco Nueva Generacion’s (CJNG) regional commanders in control of large portions of CJNG territory along the Pacific coast of Mexico. OFAC is also coordinating with the U.S. Department of State, which announced an up to $5 million reward for information leading to Flores Silva’s arrest or conviction. That same day, an indictment charging Flores-Silva on drug trafficking and weapons offenses was unsealed, with Flores-Silva facing charges for conspiracy to distribute cocaine and heroin intending, knowing, and having reasonable cause to believe that such substances would be unlawfully imported into the United States and using a firearm in furtherance of a drug trafficking conspiracy.
¹This includes the foreign ministers of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America, along with the High Representative of the European Union.