Transatlantic Trade | US and Europe – Week of April 19, 2021
The United States (US) hosted the Leaders Summit on Climate this week, with transatlantic partners affirming commitments on reducing emissions and growing green, sustainable jobs. The United Kingdom (UK) and the US also focused on issues with respect to Russia, while the European Union (EU) published a legislative package related to sustainable finance and sustainable corporate reporting.
Meanwhile, the Johnson & Johnson (J&J) vaccine pause may be coming to an end, as European and American officials concluded the benefits of the vaccine outweigh the risks. While the White House has yet to weigh in on resuming J&J inoculations in the United States, the European Union looks to move forward with adding the vaccine to its supply.
Looking ahead, the UK will host an in-person G7 Ministerial in early May. The US President is set to visit the UK and Belgium in June to attend the G7 and NATO Summits.
In this issue, we also cover:
COVID-19 highlights among the transatlantic partners;
Recap of the Leaders Summit on Climate;
Notable US, UK, and EU developments;
UK-EU trade deal updates; and
COVID-19 Highlights | US, EU, UK
On Wednesday, 21 April, President Biden provided an update on the US vaccination effort, noting 200 million doses have been administered in his first 100 days in office. As of Monday, Americans over the age of 16 are now eligible for the vaccine. The President also called on “every employer, large and small, in every state,” to give employees paid time off to get vaccinated and to recover, if under the weather after the shot.
J&J reported on Friday that it had negotiated a warning for its vaccine, ahead of a final determination from the US Centers for Disease Control and Prevention (CDC) and the US Food & Drug Administration (FDA). Later that day, the CDC’s vaccine advisory panel met and recommended the benefits outweigh the negatives with respect to the J&J vaccine. Meanwhile, the White House has said it will take into account the CDC and FDA’s recommendations, as it decides next steps. The European Medicines Agency also announced its opinion this week on the J&J vaccine, saying that despite the rare blood clotting cases, the benefits of the vaccine outweigh the risks, paving the way for additional doses in the EU’s vaccine supply.
The European Commission is considering launching legal action against pharmaceutical company AstraZeneca regarding an alleged breach contract with the EU on the supply of the COVID-19 vaccines. Diplomats in Brussels are entertaining this option, with reports suggesting the majority of Member States are in favor of initiating legal proceedings in light of AstraZeneca’s inability to deliver contracted doses in the second quarter of 2021.
On 20 April, the UK Government announced an Antivirals Taskforce that will identify treatments for UK patients who have been exposed to COVID-19 to stop the infection spreading later this year and speed up recovery time, largely at home. With some case of the India-variant emerging in the UK, the Government added the country to its red list this week, thereby restricting travel to and from India, effective on Friday.
Recap of the Leaders Summit on Climate
US President Joe Biden opened his virtual Leaders Summit on Climate, a two-day event with 40 leaders. He announced the United States’ new commitment under the Paris Accords – achieving a 50-52 percent reduction from 2005 levels in economy-wide net greenhouse gas pollution by 2030. A White House fact sheet released early Thursday outlines the Administration’s approach for achieving this target. In opening remarks, President Biden stressed addressing climate change is linked to job creation and economic opportunities. He also encouraged other countries to “make bold investments” in a clean energy future, touting his American Jobs Plan for the United States. The White House also released a fact sheet summarizing the Summit and US commitments.
In remarks to the Summit, UK Prime Minister Boris Johnson shared the UK is working with the smallest nations to the biggest emitters to secure commitments that will keep earth’s temperature change to within 1.5 degrees Celsius, ahead of hosting COP26 later this year (November). He encouraged the other leaders that when building back better from the pandemic’s effects on respective economies, nations should focus on “building back greener.” On 20 April, the UK announced it would incorporate in law its ambitious climate change target of reducing its emissions by 78 percent by 2035, compared to 1990 levels.
European Commission President Ursula von der Leyen reiterated this week at the Summit that the EU intends to introduce a net 55 percent emissions reduction target by 2030, following the EU-level agreement on the proposed Climate Law. Carbon pricing in EU policies is viewed as a crucial step toward achieving this goal, through, inter alia, extending the EU’s Emissions Trading System. Germany Chancellor Angela Merkel supports this proposal, saying, “[W]e think CO2 pricing is the way forward”. European Council President Charles Michel added “a global approach to carbon pricing is paramount to promoting green investment… we need to chase carbon from our business models”.
Notable US Developments
US Secretary of State Antony Blinken gave a speech on 19 April calling for American leadership to address the climate crisis facing the world. He noted climate change can be a driver of conflict, as resources, such as water, dry up, and of migration. Secretary Blinken spotlighted a predicted $4.6 trillion global infrastructure gap, which creates green and sustainable opportunities for American workers and businesses. Other opportunities for US companies include the global renewable energy market, which is projected to reach $2.15 trillion by 2025. China, Secretary Blinken stated, is ahead of the United States in this sector, holding nearly a third of the world’s renewable energy patents. Apart from solar panels, wind turbines and batteries, the Secretary further spotlighted a lack of dominance in 40 clean energy categories, such as clean hydrogen, carbon capture and next-generation renewables like enhanced geothermal energy.
On Wednesday, US Secretary of Homeland Security Alejandro Mayorkas spoke with European Commissioner for Justice Didier Reynders, discussing the US-EU Passenger Name Record Agreement, domestic violent extremism, cybersecurity, and COVID-19 travel restrictions. This week, the US Department of State provided the media with an update on diplomatic efforts in Vienna related to the Joint Comprehensive Plan of Act (JCPOA), with the media pressing for any details related to discussions of possibly lifting some US sanctions on Iran.
Last week, Biden Administration officials announced actions responding to a number of US-Russia bilateral concerns, including the SolarWinds cyberattack and efforts to influence US elections. In response, the Russian Government expelled ten US diplomats and banned eight current and former US officials from entering the country. Russian Foreign Minister Sergei Lavrov said at a press conference that Moscow would also restrict the activities of US non-governmental organizations operating in-country and is considering “painful” measures against US businesses. For additional analysis on the Biden Administration’s expanded Russia sanctions, see our blog post here.
On 21 April, Senate Foreign Relations Committee Chairman Robert Menendez (D-New Jersey) and Ranking Member Risch applauded Committee passage of the Ukraine Security Partnership Act, legislation that would increase US lethal and non-lethal military support to Ukraine. The panel amended the bill to include a provision that would require President Biden to report to Congress on whether 20 specific entities related to the Nord Stream 2 pipeline project are subject to sanctions under the Protecting European Energy Security Act.
Notable UK Developments
In early May, London will host the first in-person meeting of G7 Foreign and Development Ministers¹ in over two years, with strict COVID-secure measures in place.
On 23 April, the UK and Australia announced they had achieved consensus on a majority of elements in the comprehensive trade agreement they are negotiating, with the aim of reaching an agreement in principle by June. This week, the UK Department for International Trade (DIT) spotlighted Australian healthtech firm, KISA Pty Ltd, has chosen the UK for its global headquarters, where it will launch its line of accessible mobile phone products.
On 21 April, DIT published a Memorandum of Understanding that set sets out the arrangements for applying the Economic Partnership Agreement between the UK and Cameroon. On 19 April, the UK and Serbia signed a Partnership, Trade and Cooperation Agreement to ensure £682m trade can continue and grow between the two countries. Promoting the UK as a global hub for FinTech and digital service, DIT announced a package of export support that will help boost the UK’s presence in overseas markets.
UK Ambassador Neil Bush spoke of shared UK and Canadian concerns about the erosion of independent media and opposition voices in Russia at the Organization for Security and Co-operation in Europe (OSCE) Permanent Council. He also expressed concern for Alexey Navalny’s deteriorating health, calling for his immediate and unconditional release.
Notable EU Developments
The European Commission published an important legislative package this week related to sustainable finance and sustainable corporate reporting. The legislative proposals include an array of new screening criteria for determining which economic activities contribute to environmental objectives. It also introduces a requirement for multinational companies to incorporate sustainable corporate reporting in their annual financial accounts.
In anticipation of the German Federal Elections of September 2021, Chancellor Merkel’s Christian Democratic Union party has named Armin Laschet, currently Minister-President of North Rhine-Westphalia state as their candidate. Germany’s Green Party, gaining ground in polls over the past few years, put forward a candidate for the first time – party leader Annalena Baerbock. Germany’s Social Democratic Party surprised many with their candidate selection this week – Federal Minister for Finance Olaf Scholz. The outcome of the upcoming elections is expected to have an impact on the transatlantic relations considering that all candidates are promoting the need for more cooperation with the US on climate change and trade policy.
UK-EU Trade Deal Updates
Negotiations over the Northern Ireland Protocol continue, as both sides seek solutions to ensure continued trade between Britain and Northern Ireland, while some fear continued tension could damage political stability in the region. As part of his update to the General Affairs Council this week, European Commission Vice-President Maroš Šefčovič reiterated the need for joint action with mutually agreed deadlines and milestones towards compliance. Meanwhile, outreach to businesses and other stakeholders in Northern Ireland is expected to occur in due course.
Marking a milestone in the UK-EU Trade Deal, the European Parliament is set to proceed with its ratification of the EU-UK Trade and Cooperation Agreement on Tuesday 27 April, just a couple of days ahead of the extended provisional application date expiring.
WTO Updates | US Withdraws Government Procurement Proposal; Fisheries Subsidies Update
Last Friday, the Biden Administration withdrew the prior Administration’s push to exclude essential medicines and other critical medical inputs from its government procurement coverage at the World Trade Organization (WTO). In a statement, the United States reserved its right to notify any future modifications, adding,
The United States continues to review its own government procurement policy and looks forward to working with parties to the revised Agreement to find solutions to secure the medical supply chain between allies and partners.”
This week, WTO Director-General Ngozi Okonjo-Iweala said she intends to convene a meeting of trade ministers virtually in July toward resolving political issues in the WTO negotiations to curb harmful fisheries subsidies and possibly “one or two other topics.” Members met on Wednesday, 21 April, for a heads-of-delegations review of progress made during last week’s negotiating session. The three main sticking points for the talks include: (1) whether and how to exempt subsidies for artisanal fishing; (2) what should be the requirements for due process in illegal, unreported and unregulated fishing determinations; and (3) how to approach the prohibition of subsidies that contribute to overfishing and overcapacity.
¹G7 countries include Canada, France, Germany, Italy, Japan, the US and UK, along with the EU. The UK has also invited India, Australia, the Republic of Korea, South Africa, and the Chair and Secretary-General of the Association of Southeast Asian Nations (ASEAN).