Transatlantic Trade | US and Europe – Week of April 5, 2021
European countries re-examined data this week from the Oxford/AstraZeneca COVID-19 vaccine, amid increased concerns surrounding blood-clotting incidents. The United States (US) and United Kingdom (UK) are trending toward further reopening, as inoculation levels rise. Meanwhile, the European Union (EU) continues to face criticism with respect to its COVID-19 vaccine export control mechanism.
Reports this week indicate the US President may announce a Special Envoy to address the Nord Stream 2 pipeline from Russia to Germany. The UK and US separately focused on Ukraine, where tensions with Russia are at a heightened state. The US also focused this week on supercomputing concerns with respect to the People’s Republic of China (China).
In this issue, we also cover:
COVID-19 developments more broadly, with respect to the EU, UK, US;
An update related to the EU COVID-19 vaccine export control mechanism;
Notable UK, EU and US developments;
UK-EU trade deal developments; and
US sanctions with respect to Burma, China, and the Western Hemisphere.
COVID-19 Updates | EU, UK, US
The AstraZeneca COVID-19 vaccine, recently renamed Vaxzevria, made headlines this week in Europe, due to rising concerns over the links with its use and the development of blood clots. The European Medicines Agency (EMA) again reviewed the data on the reported cases and published another opinion on 7 April 2021, confirming there is a potential link with “very rare cases of unusual blood clots with low blood platelets”. While the EMA’s safety committee recognized that some of the blood clots cases are linked to the vaccine, it stressed, “[T]he overall benefits of the vaccine in preventing COVID-19 outweigh the risks of side effects”. The EMA confirmed that unusual blood clots should be listed as a very rare side effect, but considering the benefits of the vaccine overall, it remains approved in the EU for people above 18 years old.
The AstraZeneca/Vaxzevria blood clotting incidents led a number of countries including Finland, France, Sweden, Denmark, Germany, the Netherlands, Belgium, Italy and Spain to introduce restrictions on the vaccine for older people. Meanwhile, some European countries such as Germany and regions, such as Madrid in Spain, initiated exploratory talks to purchase the Russian Sputnik V COVID-19 vaccine, while noting they will not authorize its use before EMA’s endorsement.
The UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) regulator also reviewed data related to cases of blood clotting and the AstraZeneca COVID-19 vaccine. MHRA Chief Executive June Raine followed a similar approach as the EMA, confirming the benefits of the specific vaccine outweigh the risks but stressed, “[T]he balance of benefits and risks is very favorable for older people but it is more finely balanced for younger people”. Therefore, the UK announced on 7 April its decision to restrict use of AstraZeneca to adults under 30 years old.
The UK is set to ease restrictions next week. Effective Monday, 12 April, additional premises will be able to reopen, with the rules on social contact applying. Libraries, community centres, and the majority of outdoor settings and attractions will reopen. This includes outdoor hospitality, zoos, theme parks, drive-in cinemas and drive-in performances events.
On Friday, 2 April, the Centers for Disease Control and Prevention (CDC) updated its travel guidelines for those Americans fully vaccinated against COVID-19, saying they can safely travel in the United States and overseas without self-quarantine or a coronavirus test, as long as they wear a mask in public spaces. When traveling internationally, fully vaccinated people should still have a negative COVID-19 test before boarding a flight back to the United States and another negative test three to five days after returning from international travel. Meanwhile, the guidelines for unvaccinated individuals remains the same.
On Tuesday, 6 April, President Biden called on all states to make every American adult eligible for a vaccine by 19 April, moving his target date up two weeks. As of Thursday, the CDC reported 25 percent of the adult US population was fully vaccinated against the virus; 40 percent of all adults have at least one shot; and 75 percent of seniors have at least one dose.
US Secretary of State Antony Blinken addressed the media on the US response to COVID-19 on Monday, 5 April. To end the pandemic in the United States, he said a worldwide effort is needed to stop the virus from replicating and mutating. He argued for American leadership to help “bring to a close one of the deadliest pandemics in human history.” Apart from rejoining the World Health Organization (WHO), providing US$2 billion in funding to the COVAX program and allocating US$11 billion for the US global response, Secretary Blinken also addressed America’s COVID vaccine manufacturing capacity. He stated,
[W]e’ll work with global partners on manufacturing and supplies to ensure there will be enough vaccine for everyone, everywhere. As we get more confident in our vaccine supply here at home, we are exploring options to share more with other countries going forward.”
Update | EU COVID-19 Vaccine Export Control Mechanism
After the EU blocked shipment 250,000 Oxford/AstraZeneca COVID-19 vaccine doses destined for Australia in early March, the Australian Government has continued to note that, since January, 3.1 million vaccines contracted with AstraZeneca, have not been delivered. The EU’s export control mechanism appears to be the target of Australia’s complaints, not the vaccine manufacturer. In response to the criticism, European Commission Chief Spokesperson Eric Mamer stated, “[T]he contract that Australia has signed is with AstraZeneca, not with the EU”. Many international organizations, such as the World Trade Organization (WTO) and WHO, have also criticized the EU vaccine export control mechanism.
Notable US Developments
On Friday, 2 April, the US Department of Labor reported more than 916,000 Americans returned to work in March, surpassing expectations and marking the biggest jump in employment since the summer, as Americans get vaccinated and more states and cities allow businesses to reopen. The overall unemployment rate fell to six percent, indicating the US economy is on track for record growth this year. This strong recovery could blunt the total value of the American Jobs Plan unveiled by President Joe Biden last week that is being touted as a “recovery” mechanism from the effects of the pandemic on the US economy.
Also last Friday, President Biden spoke with Ukraine President Volodymyr Zelenskyy. A White House readout reflected President Biden “affirmed the United States’ unwavering support for Ukraine’s sovereignty and territorial integrity in the face of Russia’s ongoing aggression in the Donbas and Crimea.” The summary also noted US support for President Zelenskyy’s plan to tackle corruption. On Tuesday, 6 April, the Pentagon called on Russia to not conduct provocations nor increase tensions with respect to Ukraine. Amid the heightened situation, reports this week indicate the US may be considering sending naval ships into the Black Sea as a show of force.
The White House may soon announce a Special Envoy that would lead negotiations to halt the construction of Russia-to-Germany gas pipeline Nord Stream 2, a project that is on track to be completed later this year. Reports indicate Amos Hochstein, who served as the special envoy and coordinator for international energy affairs under former President Barack Obama, may be a top contender for the position. Nord Stream 2 AG, the company responsible for the planning, construction and subsequent operation of the pipeline, and its CEO Matthias Warnig, are reportedly on the list of sanctionable entities; it remains to be seen if the Biden Administration includes them in the report due to Congress next month. Bipartisan US lawmakers continue to pressure the White House to stop the project, contending Nord Stream 2 would place Russian infrastructure inside NATO territory and make some European countries more dependent on Russian energy.
On Thursday, 8 April, US Trade Representative Katherine Tai met virtually with Belgian Deputy Prime Minister and Minister of Foreign Affairs Sophie Wilmès. The two leaders agreed to collaborate on WTO reform, along with “reducing excess steel and aluminum capacity, addressing forced labor, resolving the large civil aircraft dispute between the US and EU, and increasing the global vaccine supply.”
Notable UK Developments
UK Prime Minister Boris Johnson spoke with Ukraine President Zelenskyy on 5 April. A summary of the call reflected the leaders discussed “recent Russian military activity on Ukraine’s border and in illegally-annexed Crimea.”
This week, UK Foreign Secretary Dominic Raab visited Indonesia and Brunei-Darussalam to forge closer trade and security ties with the two countries. Later this year, the UK’s Carrier Strike Group led by the HMS Queen Elizabeth will make its first visit to the Indo-Pacific region.
On 7 April 2021, the UK Government awarded Aerospace Corporation UK Ltd a 500,000 GBP contract to advise the UK Ministry of Defense Space Directorate on the country’s space defense plans. This follows the UK’s plans to “protect and defend” Britain’s “interests in a more congested and contested space domain”, as outlined in the UK Government’s Integrated Review of Security, Defence, Development and Foreign Policy.
The UK Government is establishing the world’s first network of underwater camera rigs across the British Overseas Territories that will collect biological information across the Caribbean, South Atlantic, Indian, Pacific and Southern Oceans. The intent is to help protect the marine environment.
Notable EU Development
On 6 April 2021, European Council President Charles Michel and European Commission President Ursula von der Leyen met with Turkish President Reyep Tayyip Erdoğan in Ankara to discuss the future of the EU-Turkey relations. Michel underscored the EU’s intention “to put a concrete and positive agenda on the table, based on three pillars: economic cooperation, migration, and people-to-people contacts and mobility”. The progress of bilateral exploratory talks between Greece and Turkey was welcomed, with a statement at the end of the meeting reflecting that de-escalation in the Eastern Mediterranean “must be sustained and enhanced”. Other topics discussed included the promotion of women’s rights and Turkey’s recent withdrawal from the Istanbul Convention. The latter move by Turkey has “raised serious concern in Europe”, and it will continue to be an issue in the EU-Turkey relationship. Many in Brussels also criticized the seating arrangements during the meeting, which several labelled as “snubbing” European Commission President von der Leyen.
UK-EU Trade Deal | Updates
This past week was marked by a number of violent incidents and riots in Northern Ireland coming against a backdrop of growing discontent over the post-Brexit trade protocol. Both London and Brussels condemned the riots. UK Prime Minister Johnson stated, “I am deeply concerned by the scenes of violence in Northern Ireland, especially attacks on PSNI [Police Service of Northern Ireland] who are protecting the public and businesses, attacks on a bus driver and the assault of a journalist. The way to resolve differences is through dialogue, not violence or criminality”. European Commission Chief Spokesperson Eric Mamer followed, saying, “We condemn in the strongest possible terms the acts of violence that have occurred in Northern Ireland over the past days. Nobody has anything to gain from this. We call on all those involved to refrain immediately from these violent acts”. Northern Ireland First Minister Arlene Foster from the Democratic Unionist Party and Deputy First Minister Michelle O’Neill from the Sinn Fein Party also condemned the “unjustifiable unrest” in the city of Belfast.
In other news, a petition was launched in the UK Parliament calling for reciprocal agreement with the EU for UK flight crew transfers and licenses. The EU-UK Trade Deal currently includes the possibility of the EU and UK cooperating on such issues without ensuring reciprocity. However, this would limit airline pilots holding a UK-issued license to fly an EU-registered aircraft without first obtaining a license validation from an EU Aviation Safety Agency (EASA) member country or applying for a separate EU-issued license.
U.S. Sanction Updates | Burma, China, and the Western Hemisphere
On 8 April, the US Department of Treasury’s Office of Foreign Assets Control (OFAC) designated Myanma Gems Enterprise (MGE), a Burmese state-owned entity that is responsible for all gemstone activities in Burma.
Also on 8 April, the US Department of Commerce’s Bureau of Industry and Security (BIS) added seven Chinese supercomputing entities to the Entity List for conducting activities contrary to US national security or foreign policy interests. Secretary of Commerce Gina Raimondo said of the action,
“Supercomputing capabilities are vital for the development of many – perhaps almost all – modern weapons and national security systems, such as nuclear weapons and hypersonic weapons. The Department of Commerce will use the full extent of its authorities to prevent China from leveraging U.S. technologies to support these destabilizing military modernization efforts.”
On 6 April, OFAC designated Carlos Andres Rivera Varela and Francisco Javier Gudino Haro, both deemed “violent” members of the Cartel de Jalisco Nueva Generacion (CJNG). OFAC also sanctioned travel agent Alejandro Chacon Miranda, noting he has facilitated travel that is often related to illicit activities for senior CJNG members and their allies. In addition, OFAC designated two businesses located in Mexico.
Also on 6 April, the US Department of State designated Representative in the Paraguayan Legislature’s Lower House, Ulises Rolando Quintana Maldonado, citing his alleged involvement in significant corruption. The US Government also sanctioned his wife, Mirtha Beatriz Esperanza Fariña Velausteguiz; both are ineligible for entry into the United States.
Frank Samolis, Matthew Kirk and Wolfgang Maschek contributed insights to this report.