Transatlantic Trade | US and Europe – Week of April 26, 2021
Trade officials in the United States (US) focused this week on increasing global access to COVID-19 vaccines, while the European Union (EU) moved forward with legal action against AstraZeneca. With COVID-19 mutants contributing to the significantly increased infections in India, the US imposed travel restrictions on individuals traveling from that country, effective Tuesday, 4 May, at 12:01 EDT.
The United Kingdom (UK) hosted the Group of Seven (G7) Digital and Technology Ministerial this week. US Secretary of State Antony Blinken will participate in the G7 Foreign and Development Ministers Meeting early next week in London, before travelling next to Ukraine (5-6 May) to “reaffirm unwavering U.S. support for Ukraine’s sovereignty and territorial integrity in the face of Russia’s ongoing aggression.” The US Government will also focus on overseas digital services tax proposals next week. Meanwhile, the UK unveiled its new Global Anti-Corruption Sanctions Regime this week, while the European Parliament ratified the EU-UK Trade and Cooperation Agreement.
In this issue, we also cover:
COVID-19 highlights among the transatlantic partners;
Notable UK, US, and EU developments;
UK-EU trade deal updates; and
Sanctions developments with respect to Myanmar and anti-corruption.
COVID-19 Highlights | US, EU, UK
This week, US vaccinators resumed use of the Johnson & Johnson (J&J) vaccine with a warning label for women under the age of 50. Mass vaccination sites across the country are shifting their focus to J&J’s one-dose shot for those individuals 18 years and older.
US Trade Representative Katherine Tai spent this week meeting with stakeholders to discuss the US response to COVID-19, personal protective equipment (PPE) and increasing global access to COVID-19 vaccines. In a virtual meeting with the National Council of Textile Organizations, participants discussed mobilization of the textile industry to produce Made-in-the-USA PPE and the US supply chain for this sector. Her meetings with vaccine manufacturers – Moderna, Novavax, Pfizer and AstraZeneca – focused on increasing global production of their vaccines and addressing gaps in the supply chains, along with talks on the proposed waiver to certain provisions of the World Trade Organization’s (WTO’s) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) for the COVID-19 pandemic. Ambassador Tai also met virtually with Bill Gates, co-founder and co-chair of the Bill & Melinda Gates Foundation, on these same topics.
The European Commissioner for Health Stella Kyriakides issued a statement following a request from Member States to the European Medicines Agency (EMA) to further review the use of the AstraZeneca COVID-19 vaccines. The EMA’s assessment is expected to assist Member States in the rollout of the vaccine.
On 26 April, the European Commission announced a joint decision with Member States to launch a lawsuit against AstraZeneca over a breach of contract for the late delivery of their COVID-19 vaccines. The company issued a statement following the announcement highlighting that “any litigation is without merit and we welcome this opportunity to resolve this dispute as soon as possible”.
A UK study this week noted that after one-dose of Pfizer, individuals that are infected with COVID-19 were between 38 and 49 percent less likely to pass the virus on to their household contacts than those who were unvaccinated. On 30 April, the UK announced that it would host a replenishment summit in 2022 with the Coalition for Epidemic Preparedness Innovations (CEPI) – a leading scientific coalition – to raise funds for vaccine research and development.
Notable UK Developments
In a statement to Parliament on Monday, 26 April, British Foreign Secretary Dominic Raab said the UK’s new Global Anti-Corruption Sanctions Regime is intended “to target the individuals who are responsible, and should be held responsible, for graft and the cronies who support or benefit from their corrupt acts”, not whole countries. He acknowledged the UK is a global financial centre, adding it “also makes [the UK] a honeypot, a lightning rod for corrupt actors who seek to launder their dirty money through British banks or through businesses.”
That same day, the US Government welcomed the UK’s new Global Anti-Corruption Sanctions Regime, observing it builds on the success of the UK’s Global Human Rights Sanctions Regime. The Treasury Department noted the UK’s new Global Anti-Corruption Sanctions Regime provides opportunities for the two trading partners to take complementary sanctions actions, where appropriate, which would magnifying the impact of respective sanctions.
The fourth round of free trade agreement negotiations with New Zealand took place virtually between 12-27 April. A summary reflected chief negotiators provisionally agreed the outline of the whole agreement, including a chapter on Anti-Corruption, and a standalone chapter on Women in Trade. The two sides provisionally closed two more chapters – Trade Remedies and Competition – and made progress on Disputes, Rules of Origin, Goods, Labour and Telecommunications, Digital, Consumer Protection and Environment.
On 29 April, the National Security and Investment Act, a bill to strengthen the UK Government’s ability to investigate and intervene in mergers, acquisitions and other deals that could threaten UK national security, was granted Royal Assent. Business Secretary Kwasi Kwarteng said of the Act,
We’re sending a crystal clear message to overseas investors: the UK is open for business, but if you seek to threaten the safety of the British people we will move to protect our interests.” The regime is expected to commence towards the end of this year.
On 26 April, the UK and Indonesia announced a new Joint Economic and Trade Committee (JETCO), which will help promote and develop trade, investment and economic cooperation ties and address market access barriers affecting UK businesses trading with Indonesia. The announcement came after the Joint Trade Review (JTR), which was carried out by the UK and Indonesian Governments over the last 18 months, identified nine key sectors for enhanced cooperation: education and training, financial and professional services, healthcare and life science, food and drink, agriculture, renewables and green energy.
The UK Foreign Affairs Ministry announced Natacha Alexander has been appointed as the next UK Permanent Representative to the Organisation for Economic Co-operation and Development (OECD) in Paris. She will take up her appointment in June.
Notable US Developments
In a Joint Address to Congress Wednesday evening, US President Joe Biden called for increased investments in America, including through the COVID-relief American Rescue Plan that was approved by Congress earlier this year, and the American Jobs Plan, an infrastructure package the President outlined at the end of March. He unveiled a third trillion dollar package – the American Families Plan – that evening, which would expand education and child care in the United States. A White House fact sheet on the newest package is available here.
The President’s speech briefly touched on trade. He said all of the investments in the American Jobs Plan are “guided by one principle: Buy American,” adding this “does not violate any trade agreement.” President Biden shared that in conversations with President Xi Jinping of the People’s Republic of China (“China”), he has said competition, not conflict, is welcomed. He added,
[W]e will defend America’s interests across the board. America will stand up to unfair trade practices that undercut American workers and American industries, like subsidies from state — to state-owned operations and enterprises and the theft of American technology and intellectual property.”
At a virtual event hosted by the Washington Foreign Law Society this week, Tomas Baert, head of trade and agricultural policy at the EU Delegation in Washington, DC, said of President Biden’s “Buy American” policies, “The land of the free suddenly becomes less free when you talk about government procurement.” Baert noted the EU will be “very closely” monitoring the Biden Administration’s Buy America policies. This week, President Biden appointed Celeste Drake as the first-ever “Made in America” Director, a position within the White House Office of Management and Budget (OMB) that will oversee the review of waivers for Government Agencies with respect to various Made-in-America laws.
Regarding areas of potential cooperation, Baert suggested the EU and US could work together on technology and setting standards in this space and on issues concerning the Xinjiang region in China. He added COVID-19 is another area where the two sides could cooperate, while adding the proposed TRIPS waiver is not an effective solution for addressing the COVID-19 vaccine shortage in developing countries.
In opening remarks before the Senate Appropriations Subcommittee on Commerce on Wednesday, 28 April, Ambassador Tai stated the Biden Administration would “promote and defend [US] values of, democracy, human rights, and economic opportunity in service of producing a more inclusive prosperity.” She added the Office of the US Trade Representative (USTR) “will be directly involved in assembling what the President has termed ‘a united front of U.S. allies.’” Ambassador Tai also confirmed USTR would “enthusiastically embrace” the opportunities “to lead in creating new clean energy technologies and new jobs while averting an unfolding economic crisis and protecting our planet.”
On Tuesday, 27 April, Ambassador Tai spoke virtually with UK Secretary of State for International Trade Elizabeth Truss to discuss the G7 Trade Track and improving the lives of workers. Ambassador Tai spotlighted the need to support the production and equitable distribution of COVID-19 vaccines. The two leaders also discussed collaborating on topics of mutual interest, including industrial subsidies, climate change, and the large civil aircraft dispute.
On Friday, USTR released its annual Special 301 Report on the adequacy and effectiveness of US trading partners’ protection and enforcement of intellectual property (IP) rights. In an accompanying statement, USTR noted concerns with “the European Union’s aggressive promotion of its exclusionary geographical indications policies.”
USTR will begin a series of hearings next week focused on digital services tax (DST) proposals overseas. The Section 301 Committee will convene a virtual public hearing for comments pertaining to multiple jurisdictions on 3 May. The Section 301 Committee will also convene virtual public hearings on investigations for the DST concerns with respect to the following countries: the U.K. on 4 May; Italy on 5 May; Spain on 6 May; Turkey on 7 May; India on 10 May; and Austria on 11 May.
US Secretary of Commerce Gina Raimondo led the American virtual delegation at the G7 Digital and Technology Ministerial on 28-29 April. The Secretary affirmed US commitment to advancing technology leadership domestically and internationally, while stressing the following US priorities: securing the free flow of data with trust, strengthening an open and industry-led global standards system, and fostering 5G vendor diversity.
On Thursday, April 29, Deputy Secretary of the Treasury Wally Adeyemo met virtually with over two dozen non-governmental organizations (NGOs) focused on human rights and anti-corruption as part of the Treasury-led review of US economic and financial sanctions. He explained the Department is “balancing the benefits against the costs of sanctions use with an eye towards ensuring they remain a strong, viable option for policymakers for decades to come.”
Notable EU Developments
Earlier this week, during the EU Trade Policy Day, WTO Director-General Ngozi Okonjo-Iweala cautioned on the tendency to “use the WTO or trade as a kind of a weapon to solve these problems which are not originally trade-related”, referring to foreign affairs matters. Trade Commissioner Valdis Dombrovskis and Director-General Okonjo-Iweala discussed China’s participation in reforming the WTO, with the latter suggesting a fact-based approach would facilitate future negotiations with China.
Director of the Multilateral Affairs Directorate of DG Trade Ignacio Garcia Bercero outlined the EU’s redlines with respect to WTO reform, among other issues. The EU will advocate for the negative consensus rule to be maintained in the WTO dispute settlement system, as well as the independence of the Appellate Body. The latter may create friction with the US, which has questioned the legitimacy of the Appellate Body, vis-à-vis its sovereignty. Concluding the 2021 EU Trade Policy Day, Director General of DG Trade Sabine Weyand underlined that climate is “the key sustainability challenge” and called for partners to jointly “work together for sustainable development” in a transparent, inclusive and cooperative manner.
Meanwhile, Politico reported on a warning issued by the European Commission to EU capitals, regarding concerns of China’s “authoritarian shift”, as the European Commission is preparing to publish an anti-subsidies tool in the coming week.
UK-EU Trade Deal Updates
European Commission President Ursula von der Leyen gave a speech at the plenary this week, prior to the vote on the EU-UK Trade Deal ratification, reiterating the EU’s “steadfast determination” to “make the Protocol work for the benefit of everyone in Northern Ireland”. The European Parliament ratified the EU-UK Trade and Cooperation Agreement on 28 April with an overwhelming majority of 660 in favor, 5 votes against, and 32 abstentions. The Council of the EU adopted on Thursday a decision confirming the conclusion of the ratification process of the Trade and Cooperation Agreement and the Security and Information Agreement. The UK has consequently been notified of the conclusion of the EU’s procedures, with the agreements and accompanying texts’ published in the Official Journal of the EU on Friday (accessed here, here and here). All agreements enter into force on 1 May 2021.
Amid technical deliberations within the EU-UK Joint Committee over the Northern Ireland Protocol, Arlene Foster announced that she will be stepping down as First Minister of Northern Ireland and as leader of the Democratic Unionist Party in June and at the end of May, respectively, bringing more uncertainty in an already fragile political environment.
Sanction Updates | Myanmar & Anti-Corruption
The Council of the EU announced on Thursday its decision to extend the sanctions imposed to – among others – high-ranking officials from the Myanmar Armed Forces (see our last update here), by one year until 30 April 2022.
This week, the UK imposed sanctions under its new Anti-Corruption Regime on individuals involved in serious corruption from six countries. The UK sanctioned 14 individuals involved in the $230 million tax fraud in Russia uncovered by Sergei Magnitsky; Ajay, Atul and Rajesh Gupta, and their associate Salim Essa, for their roles in serious corruption in South Africa; three individuals involved in serious corruption in Honduras, Nicaragua and Guatemala; and Sudanese businessman Ashraf Seed Ahmed Hussein Ali for significant misappropriation of state assets. The sanctions include asset freezes and travel bans.