Transatlantic Trade | US and Europe – Week of June 14, 2021
The Group of Seven (G7) Leaders’ Summit concluded in the United Kingdom (UK) on Sunday, with several transatlantic leaders heading next to Brussels for the NATO Summit, including the President of the United States (US). In Belgium, the US and European Union (EU) leaders met to strengthen the partnership. EU officials also hosted a Summit with Canada. The US, EU and UK announced frameworks this week to resolve the longstanding large civil aircraft dispute and related retaliatory duties. The UK and Australia reached an agreement in principle on a trade agreement. And Russia was also a focus this week, with the Presidents of the US and Russia meeting in Switzerland.
In this issue, we also cover:
COVID-19 highlights among the transatlantic partners;
Notable UK, US, and EU developments; and
UK-EU trade deal
COVID-19 Highlights | EU, US, UK
Travelling is gradually resuming in the EU, with the legislative process for the EU Digital COVID Certificate concluding this week and many European countries implementing these certificates for their citizens. On Wednesday, the Council of the EU endorsed a renewed plan for easing travel restrictions, whereby travel to the United States will resume. Despite travel gradually picking up, the European Commission appears to have proposed that Member States extend the vaccine export authorization scheme for an additional three months, until September. EU diplomats expect to vote on this proposal on Friday, most likely favourably.
US Centers for Disease Control and Prevention Director Rochelle Walensky said on Friday that the delta variant first found in India, which spread widely in the UK, is expected to become the dominant strain in America. On Friday, US President Joe Biden urged unvaccinated Americans to get inoculated, warning the delta variant could cause more deaths. The US marked over 600,000 deaths this week due to COVID-19.
On Monday, 14 June, Novavax, an American company, reported late-stage data from its US-based clinical trial showing its vaccine is more than 90 percent effective against COVID-19 across a number of virus variants. The company said it is on track to file for emergency use authorization (EUA) in the United States and elsewhere in the third quarter of 2021. Novavax’s protein-based COVID-19 vaccine candidate was more than 93 percent effective against the predominant variants of COVID-19 that have been of concern among scientists and public health officials; it is 100 percent effective against variants “not considered Variants of Concern/Interest.” Novavax is on track to produce 100 million doses per month by the end of the third quarter of 2021, and 150 million doses per month in the fourth quarter of 2021.
The UK announced it was easing some coronavirus restrictions this week, such as removing the 30 person gathering limit for weddings, receptions and commemorative events, subject to social distancing guidelines. They also removed the requirement for care home residents to isolate for 14 days after external visits.
Notable UK Developments
The G7 Leaders released a communiqué on Sunday committing to a shared agenda aimed at: (1) ending the COVID-19 pandemic and strengthening collective defenses against future global health threats; (2) reinvigorating respective economies and securing future prosperity; (3) supporting a green revolution to address climate change concerns; (4) strengthening partnerships; and (5) promoting democratic values. At a press conference at the conclusion of the G7 Summit, British Prime Minister Boris Johnson spotlighted the G7 countries helped the Global Partnership for Education – an organisation working to ensure every child in the world is given the chance of a proper education – reach half of its five-year fundraising goal, including a £430m donation from the UK. The White House posted multiple fact sheets related to the G7 Summit, such as ending support for overseas coal generation, and the build back better world (B3W) partnership.
On 13 June, the UK and Germany announced a package of support, including £120 million in new funding from the UK and €125 million in new funding from Germany, which will enable quicker responses for vulnerable people when extreme weather and climate-linked disasters hit. The US confirmed it will join the UK, Germany and other G7 countries as a member of the InsuResilience Global Partnership and Risk Informed Early Action Partnership (REAP).
On Monday, 14 June, the UK secured a trade deal with Australia that would eliminate tariffs on all UK goods, marking the first major trade deal negotiated by the Government since Britain left the EU. Prime Minister Johnson and Australian Prime Minister Scott Morrison agreed on the main elements of the deal at the Monday bilateral meeting. The final Agreement in Principle is set to be published in the coming days.
The UK and New Zealand held talks this week towards the conclusion of a high-quality and comprehensive Free Trade Agreement. A joint statement reflected, “Both countries are confident that the remaining issues will be resolved, with talks on track to deliver a fantastic agreement.” They aim to reach an agreement in principle in August. Separately, the UK secured market access to Japan for imports of UK poultry meat this week. The agreement is estimated to be worth up to £13 million per year.
The UK Taskforce on Innovation, Growth and Regulatory Reform reported its recommendations this week to Prime Minister Johnson on how the UK can reshape regulation and seize new opportunities from Brexit. The Taskforce was directed to identify and develop proposals across a range of areas that will drive innovation, growth and competitiveness through regulatory reform.
Notable US Developments
With respect to the US pushing for more action on forced labor concerns, the G7 Leaders’ communiqué identified three sectors of forced labor concerns: the garment sector; the agriculture sector (e.g., cotton); and the solar sector, including polysilicon. G7 partners will look at various forms of restrictions on goods proven to be produced with forced labor.
On the margins of the G7 Summit, President Biden met with South African President Cyril Ramaphosa; Japanese Prime Minister Suga Yoshihide; Italian Prime Minister Mario Draghi; and French President Emanuel Macron. President Biden also participated in a trilateral meeting with British Prime Minister Boris Johnson and Australian Prime Minister Scott Morrison.
At the conclusion of the G7, President Biden travelled next to Brussels to attend the NATO Summit (Monday) and the US-EU Summit (Tuesday). Ahead of their talks, the US and EU announced a cooperative framework to address the 17-year large civil aircraft dispute, including a five-year tariff suspension. The US and UK similarly announced a framework and duties suspension (starting from 4 July 2021) related to the large civil aircraft dispute.
In Brussels, President Biden met on the margins of the NATO Summit with Polish President Andrzej Duda; along with a trilateral meeting with Estonian Prime Minister Kaja Kallas, Latvian President Egils Levits, and Lithuanian President Gitanas Nauseda. The NATO Summit was an opportunity for President Biden to revitalize the transatlantic alliance (fact sheet).
President Biden concluded his first overseas trip on Wednesday, meeting with Russian President Vladimir Putin in Geneva, Switzerland. President Biden challenged President Putin on a range of human-rights-related issues, including the detention of Aleksey Navalny, the detention of Americans in Russia, and the Russian Government’s efforts to suppress Radio Free Europe/ Radio Liberty. He also made clear the US has capabilities should President Putin choose not to take action against cybercriminals attacking American critical infrastructure from Russian soil.
Meanwhile, Friday afternoon (18 June) reports indicated the Biden Administration temporarily halted a military aid package to Ukraine worth up the $100 million. Politico reported National Security Council officials put the package on hold after Russia announced a troop draw down near Ukraine, ahead of President Putin meeting with President Biden. Later on Friday, White House Press Secretary Jen Psaki issued a statement refuting claims of the US withholding military assistance to Ukraine. She stated,
Just last week—in the run-up to the U.S.-Russia Summit—we provided a $150 million package of security assistance, including lethal assistance. We have now provided the entire amount appropriated by Congress through the Ukraine security assistance initiative.”
On 16 June, House Foreign Affairs Committee Ranking Member Michael McCaul (R-Texas) and Senate Foreign Relations Committee Ranking Member James Risch (R-Idaho) sent a letter to President Biden, urging him to immediately impose the legally-mandated second round sanctions, as required by the US Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (“CBW Act”), to hold the Russian Government “accountable for its continued use of chemical weapons and flagrant disregard for international norms and fundamental rights.” The Republican leaders also warned the President,
We see no evidence that Vladimir Putin is inclined to work with your Administration to ‘build a stable and predictable relationship’ as you have hoped.”
US Secretary of State Antony Blinken will travel to Berlin, Germany; Paris, France; Rome, Italy; the Vatican; Bari, and Matera, Italy, from 22-29 June. Acting Assistant Secretary of State for European and Eurasian Affairs Philip Reeker, will accompany the Secretary; he will also travel to Milan, Italy (20-22 June); Tirana, Albania (30 June); and Ohrid, North Macedonia (1-3 July).
While in Brussels on Monday, the US and EU pledged to cooperate on digital standards at the WTO and to coordinate approaches on semiconductor manufacturing. They agreed to establish a high-level US-EU Trade and Technology Council (TTC) to cooperate on semiconductors, technology standards-setting and cybersecurity. According to the US-EU Summit statement,
The TTC will initially include working groups with agendas focused on technology standards cooperation (including on AI, Internet of Things, among other emerging technologies), climate and green tech, ICT security and competitiveness, data governance and technology platforms, the misuse of technology threatening security and human rights, export controls, investment screening, promoting SMEs access to, and use of, digital technologies, and global trade challenges. It will also include a working group on reviewing and strengthening our most critical supply chains.”
US Trade Representative Katherine Tai, Commerce Secretary Gina Raimondo and Secretary of State Antony Blinken will co-chair the TTC with the European Union. The United States and EU also pledged to address steel and aluminum global overcapacity by the end of the year, seeking to resolve tensions arising from the US application of tariffs on imports from the EU under US Section 232.
Notable EU Developments
European Commission President Ursula von der Leyen and European Council President Charles Michel welcomed US President Biden and Canadian Prime Minister Justin Trudeau in Brussels for the EU-US and EU-Canada Summits this week. The EU-US Joint Statement identified as key priorities for future collaboration: tackling the COVID-19 pandemic and climate change, strengthening trade, investment and technological cooperation. The transatlantic partners would also encourage global support through the COVAX Facility, create a Joint EU–US COVID Manufacturing and Supply Chain Taskforce to deepen cooperation on production capacity, establish a joint EU-US Experts’ Working Group to exchange information and expertise for travelling between the EU and the US, and create an EU-US High-Level Climate Action Group. From a trade perspective, they noted in the joint statement: “Commitment to grow the EU-US trade and investment relationship as well as to uphold and reform the rules-based multilateral trading system”. The establishment of an EU-US Joint Technology Competition Policy Dialogue will seek to ensure alignment in the competition policy and enforcement.
Furthermore, the partners engaged to “consult and cooperate on the full range of issues in the framework of our respective similar multi-faceted approaches to [the People’s Republic of China (“China”)], which include elements of cooperation, competition, and systemic rivalry” and “stand united in our principled approach towards Russia and we are ready to respond decisively to its repeating pattern of negative behaviour and harmful activities”. A US-EU high-level dialogue on Russia will be established to coordinate policies and actions. The statement also underscores support to facilitate “the return of the United States to the Joint Comprehensive Plan of Action (JCPOA) as well as the full and effective implementation of the deal by Iran and the United States”.
According to the Joint Statement following the EU-Canada Summit, the two parties “aim to give a new impetus to our cooperation to make us stronger and help us bring prosperity and security to our peoples”, almost five years after the signature of the EU-Canada Comprehensive Economic and Trade Agreement (CETA). Future collaboration would include joint efforts to combat the COVID-19 pandemic, and harnessing the potential of climate change, sustainability and trade, along with promoting shared democratic values. The joint statement also underlined the intention to “work closely together to address common concerns and challenges we face in relations with China and Russia, as well as exchange on engaging with them where that is possible and in our respective interests”. Furthermore, on 15 June, an EU-Canada Strategic Partnership on Raw Materials, was created to enable a competitive supply chain between the trading partners on “security and sustainability of trade and investment; integration of raw material value chains; science, technology and innovation collaboration; and environmental, social, governance (ESG) criteria and standards”.
UK-EU Trade Deal Updates
UK-EU tensions continue, as an agreement to reinstate trade facilitation between Great Britain and Northern Ireland remains elusive. In case an agreement cannot be reached, and the EU imposes tariffs on UK goods, Secretary General of the World Trade Organization (WTO) Secretary-General Ngozi Okonjo-Iweala, stressed, “I would really, really hope that an EU-UK trade war will not take place. With all the opportunities they have for dialogue, I would be a little surprised if we ended up with an EU-UK trade war. It would be too costly for both sides.” UK Cabinet Member David Frost reiterated this week that the UK is not planning to align with EU rules and standards on food production to reduce the customs controls in Northern Irish ports.
In addition to the turmoil linked to the custom controls, Northern Ireland is now also facing political uncertainty as Northern Ireland’s First Minister Arlene Foster resigned on Monday, following the recent decision of the Democratic Unionist Party to replace her as party leader with Edwin Poots. To avoid a political crisis and elections, the Democratic Unionist Party and the Sinn Féin Party would have until the beginning of next week to nominate their candidates for first and deputy first ministers.