Transatlantic Trade | US and Europe – Week of March 15, 2021
The United States (US) Government published in the Federal Register its decisions to temporarily suspend US retaliatory duties related to the long-standing large civil aircraft dispute with European countries. If the European Union (EU) and United Kingdom (UK) fail to secure a settlement with the United States, the US tariffs will snapback in July. The EU is exploring a Digital Green Certificate to use during the global pandemic to further safe travel in the bloc, as it continues to grapple with COVID-19 vaccine shortages and lowered rates of vaccination. The UK is similarly exploring a Certification for those vaccinated, while the White House has yet to back a “vaccine passport” for travel.
Transatlantic countries recognized St. Patrick’s Day on 17 March, with outreach to Irish officials. The UK Prime Minister outlined Britain’s priorities this week, touching on foreign and national security concerns. The US Government may soon impose additional sanctions related to the Nord Stream 2 pipeline from Russia to Germany, while it also continues to focus on concerns related to the People’s Republic of China (“China”). The EU moved another step closer to imposing some sanctions related to human rights concerns in China. The UK also imposed sanctions against individuals associated with the Syrian regime. Looking ahead, US Secretary of State Antony Blinken is set to visit Brussels next week to attend the NATO Foreign Ministerial, engage with European Union leaders and meet with Belgian officials.
In this issue, we also cover:
COVID-19 developments more broadly, with respect to the EU, US, UK;
An update related to the EU COVID-19 vaccine export control mechanism;
Notable UK, EU and US developments;
A UK-EU trade deal update; and
Sanctions developments with respect to Russia, China and Syria.
COVID-19 Updates | EU, US, UK
On 17 March 2021, the European Commission issued a legislative proposal to create a Digital Green Certificate aimed at facilitating safe, free movement inside the EU during the COVID-19 pandemic. The Certificate would become an EU-wide tool, provided via a secured and easily authenticated QR Code accessible either digitally or in paper form. EU citizens travelling would use the Certificate to prove they have been vaccinated against COVID-19, received a negative test result or recovered from COVID-19. The Digital Green Certificate is expected to be available for all Member States and will be open for Iceland, Liechtenstein, Norway and Switzerland. The Certificate is anticipated to be a temporary system that would be suspended when the World Health Organization no longer labels COVID-19 as an international health crisis. The legislative proposal will need to be adopted by the co-legislators before it can become official EU law. The European Commission also published a Communication in preparation of a coordinated approach to a gradual lifting of COVID-19 restrictions across Member States ahead of the European Summit of 25 March.
In terms of vaccinations, the European Commission announced an agreement to accelerate the delivery of 10 million Pfizer/BioNTech COVID-19 doses for the second quarter of 2021. Amid concerns that the AstraZeneca/Oxford COVID-19 vaccine may cause blood disorders, several countries temporarily suspended use of it, including several European countries (France, Germany, Italy and Spain). AstraZeneca issued a statement to address the concerns. The European Medicines Agency (EMA) reviewed the data around the clotting incidents and issued a statement on Thursday that stressed the vaccine does not present an increased risk of blood clots and the reported incidents could be associated with very rare cases of low levels of blood platelets.
The three authorized US vaccine providers – Pfizer/BioNTech, Moderna, and Johnson & Johnson (J&J) – are on track to deliver nearly 500 million doses to the United States, enough to vaccine all Americans by the end of May. The United States is currently injecting an average of about 2.2 million doses each day. The pace of vaccination is expected to increase later this month as more of its secured supply of vaccines is delivered. On Thursday, 18 March, US President Joe Biden marked the 100 million doses administered milestone, which is set to occur on Friday.
While President Biden signed an Executive Order earlier this year that instructs Federal Agencies to explore how Covid-19 vaccine records can be digitized and potentially used on international immunization cards, the White House has not indicated whether it supports such an effort. Travel groups and major US airlines reportedly wrote a letter last week to COVID-19 Recovery Team Coordinator Jeff Zients urging the White House to serve as a leader in the development of temporary vaccine health credentials. The United States and other countries have previously used vaccination certificates to certify travelers were immunized for smallpox, typhoid, cholera and other diseases.
On Thursday, 18 March, White House Press Secretary Jen Psaki confirmed during a press briefing that the United States plans to send about four million doses of AstraZeneca/Oxford’s COVID-19 vaccine from its stockpile to Mexico (2.5 million) and Canada (1.5 million) in loan deals (for future vaccine doses) with the two countries. The deals are expected to be announced formally in the coming days. The United States has also pledged US$4 billion to the COVAX vaccine facility to help poorer countries to access COVID-19 vaccines.
Vaccine manufacturers are working on next generation vaccines that address better the COVID variants. J&J is also considering a two-dose, or booster shot, regime. Moderna may also be exploring a third-dose booster. AstraZeneca/Oxford is working to improve its vaccine to address the South African variant. The US Food and Drug Administration (FDA) is reportedly finalizing plans for fast-track approval trials for new vaccine formulas, after trials occur. Other countries are exploring mixing and matching second doses of vaccines to see if activate the immune system to provide better protection.
On 18 March, UK Prime Minister Boris Johnson addressed the country’s vaccination efforts, concerns related to the COVID-19 vaccines and supply levels. He noted the independent Medicines and Healthcare products Regulatory Agency has reviewed the evidence related to concerns with the AstraZeneca/Oxford vaccine and “confirmed that the benefits of the vaccine in preventing COVID far outweigh any risks.” He also pointed to the EMA’s findings that the vaccine is safe and effective. The Prime Minister acknowledged that the vaccination pace may have slowed, saying a delay in a shipment from the Serum Institute and a batch being retested will result in slightly fewer vaccines in April than in March. He added the existing supply, however, will enable the UK to hit the targets set, such as by 15 April, those over 50 will be able to receive their first dose, as well as those under 50 who are clinically vulnerable.
In an opinion piece published by The Times on 16 March, Prime Minister Johnson addressed of the Oxford/AstraZeneca vaccine and British interests to see the world vaccinated against COVID-19. He argued, “Global Britain” needs “the whole world to have the confidence to open up for trade and travel and holidays and business, all the things that drive jobs and improve our lives at home.” He explained an objective of “Global Britain” is “not to swagger or strike attitudes on the world stage. It is to use the full spectrum of our abilities, now amplified by record spending on both defence and science, to engage with and help the rest of the world. That is how we serve the British interest, and I mean the economic interest of people up and down the country.” On 17 March, the UK marked the milestone of 25 million receiving their first COVID-19 vaccine dose.
On 15 March, the UK Government solicited public comments on the role of COVID-status certification in the UK’s recovery from the pandemic. The Government is examining whether certification could help to reopen the economy, reduce restrictions on social contact and improve safety.
Update | EU COVID-19 Vaccine Export Control Mechanism
European Commission President Ursula von der Leyen said during a press conference on Wednesday that the EU is prepared to tighten the COVID-19 vaccine exports to countries who manufacture but refuse to export vaccines, which has been described as a “veiled threat” to the UK. In a plea for openness and reciprocity, President von der Leyen stressed “we are ready to use whatever tool we need to deliver on that” so the EU “gets its fair share” in a time period where COVID-19 infection cases have been increasing rapidly. With regard to the United States, President von der Leyen clarified that “there is a seamless flow back and forth of pre-products, raw materials and drug substance,” which demonstrates “reciprocity is given”.
Notable US Developments
On Thursday, 18 March, Secretary of State Blinken warned, “[A]ny entity involved in the Nord Stream 2 pipeline risks U.S. sanctions and should immediately abandon work on the pipeline.” The Biden Administration cited prior Administrations’ warnings that the pipeline is a “Russian geopolitical project intended to divide Europe and weaken European energy security,” and noted Congress has provided additional sanctions. The Secretary’s statement also warned, “The Department is tracking efforts to complete the Nord Stream 2 pipeline and is evaluating information regarding entities that appear to be involved.”
The Biden Administration is reportedly examining imposing new sanctions related to the pipeline. These could range from insurance companies working with the vessels laying the pipeline in the Baltic Sea to those companies providing support vessels and material to the project. The above statement comes after pressure from bipartisan Members of the US Congress to impose sanctions on the pipeline from Russia to Germany. While House Foreign Affairs Committee (HFAC) Ranking Member Michael McCaul (R-Texas) appreciated the Secretary’s “strong words,” he noted in a statement that afternoon, “[I]t is the Biden Administration’s action – or lack of action – that is concerning.” He reiterated his request that “the State Department provide Congress a clearer understanding of the ‘evidentiary threshold’ it is using when weighing additional sanctions in order to ensure it is not hiding behind ‘the need for more information’ to avoid new sanctions designations.”
On Tuesday, 16 March, the Biden Administration released the declassified Intelligence Community assessment of foreign threats to the 2020 US federal elections that had been provided to former President Donald Trump, senior Executive Branch officials, and Congressional leadership and intelligence oversight committees on 7 January 2021. The report assessed the Russian Government meddled in the 2020 election with an influence campaign “denigrating” then-presidential candidate Biden and “supporting” then-President Trump. The report also noted that while China did not interfere, it “considered but did not deploy influence efforts intended to change the outcome of the US Presidential election.” It remains to be seen if the Biden Administration will impose sanctions against Russia for election interference.
Ahead of Belarusian opposition leader Sviatlana Tsikhanouskaya appearing at her first public hearing on Wednesday before Congress, bipartisan HFAC Members released a statement calling on the Lukashenka regime to end its human rights violations and release immediately all political prisoners in Belarus. They spotlighted in particular, “[T]he case of Radio Free Europe/Radio Liberty consultant Ihar Losik, whose health is deteriorating after engaging in two hunger strikes to protest his own political imprisonment since June 2020.”
The United States joined several countries in condemning Russia’s informal meeting at the United Nations on 17 March, saying it was intended “to promote a false narrative about its occupation of Crimea.” They reiterated support for Ukraine’s territorial sovereignty and integrity and denounced “Russia’s human rights abuses and military build-up on the peninsula.” The next day, the United States joined the other G7 countries and the High Representative of the European Union in a statement that condemned “Russia’s continued actions to undermine Ukraine’s sovereignty, territorial integrity and independence.”
On Thursday, 18 March, HFAC Ranking Member McCaul and Senator Marco Rubio (R-Florida), a senior member of the Senate Foreign Relations Committee (SFRC), urged US Department of Commerce Secretary Gina Raimondo “to apply the Foreign-produced Direct Product Rule (FDPR) to the SMIC [Semiconductor Manufacturing International Company] Entity Listing.” The lawmakers stated, “SMIC is a clear threat to U.S. national security,” and added the US should “prohibit the transfer of goods that might support SMIC’s production of semiconductors.” In their letter to Secretary Raimondo, they spotlighted, “the Dutch company ASML Holdings NV announced that it would continue its sales of deep ultraviolet lithography (DUV) tools to China’s Semiconductor Manufacturing International Corporation (SMIC) through 2021.” They called on the Biden Administration to work with the Dutch Government to persuade them to block the ASML sales to SMIC.
HFAC Ranking Member McCaul and SFRC Ranking Member Jim Risch (R-Idaho) sent a letter to Secretary of State Blinken on Wednesday, 17 March, requesting a transparent and responsible distribution of the US$10 billion in American foreign assistance funding provided in the recent COVID-19 relief bill – the American Rescue Plan Act. The lawmakers expressed concern with Democratic lawmakers not addressing issues raised by Republicans as the bill moved forward, citing the co-mingling of funds and authorities, and lack of specific reference to essential terms and conditions routinely carried in authorizations and appropriations measures that advance effective foreign aid principles, such as consultation and notification requirements, among other things. The senior Republican foreign policy leaders called on the State Department to provide Congress with a comprehensive strategy, and accompanying spending plan, that aligns the US$10 billion provided for the international COVID-19 response with US national interests. They noted the strategy should establish clearly defined goals, priorities, objectives, and benchmarks for combatting and mitigating the impacts of the COVID-19 pandemic.
Notable UK Developments
Prime Minister Johnson addressed the conclusions of the Integrated Review of security, defence, development and foreign policy on 16 March. In a separate statement, 10 Downing Street noted the UK cannot rely solely on an increasingly outdated international system to protect its interests and promote its values. The UK will instead seek an increased international activism, working alongside allies and using all available tools to shape a more open international order in which democracies flourish. (This message will resonate with the Biden Administration and bipartisan US lawmakers seeking to reform the World Trade Organization.)
Prime Minister Johnson announced the creation of two new cross-government hubs: (1) a Situation Centre, based in the Cabinet Office, that builds on the lessons of the COVID pandemic in order to anticipate and respond to future crises; and (2) a Counter-Terrorism Operations Centre to improve the UK’s ability to thwart terrorists, while also dealing with the actions of hostile states. The UK will also shift, or tilt, to the Indo-Pacific, which is described as “increasingly the geopolitical centre of the world”. Notably, the UK is applying for partner status at the Association of South East Asian nations. At the end of April, Prime Minister Johnson is set to travel to India on his first major international visit since the UK departed the EU.
The UK will also continue to prioritise addressing climate change and preserving biodiversity this decade. Notably, the UK was the first major economy to legislate to achieve Net Zero. Its future aid spending is also expected to align with the Paris Agreement. Prime Minister Johnson also seeks to make the UK a Science and Technology superpower, by increasing economy-wide Research & Development (R&D) to 2.4 percent of GDP by 2027 and investing £14.6 billion in R&D across government in the next year.
On 15 March, the UK Government published Bus Back Better, the long-term national bus strategy for England outside London. The strategy also sets out an ambitious roadmap to a zero-emission bus fleet.
Also on 15 March, the UK Department for International Trade provided readout of the latest UK-Australia free trade agreement talks. Both sides shared on text and proposals on Digital, Labour and Technical Barriers to Trade chapters. Progress was also made on chapters related to Customs, Rules of Origin, and Professional Services. The majority of text has been agreed in chapters on Good Regulatory Practice, as well as Small to Medium-Sized Enterprises.
Notable EU Developments
Since publishing details on the Comprehensive Agreement on Investment (CAI), many have criticized the deal’s provisions related to media entities. According to the deal, China would maintain restrictions over foreign investments in news and entertainment companies in China. On the EU side, Chinese media investments domestically would be left at the discretion of each Member State. Many Members of the European Parliament (MEP) have expressed skepticism about the deal, such as Rapporteur for the Regulation on countermeasures in international trade disputes, Marie-Pierre Vedrenne; MEP Reinhardt Bütikofer insisted on the importance that China is also a rival. Other MEPs, such as the European Parliament’s Rapporteur on the EU-China CAI Iuliu Winkler, were more optimistic about the trade opportunities arising from the deal, stating, “After the publication of the market access schedules, we see several key commitments which are very much welcome, in the services as well as non-services sectors”.
Opposition to the EU-Mercosur trade deal continues. On 16 March, many civil society groups added their voices to those opposing the deal. They suggested the deal is intrinsically bad for the European Market and green compromises. Bettina Müller from Power Shift movement noted, “The interpretative declarations, the annexes, protocols: We all know them already from prior agreements”.
UK-EU Trade Deal | Updates
On 15 March, the European Union announced the beginning of legal actions against the British Government for its unilateral decision to extend grace periods on customs checks at Northern Ireland’s ports until October. The European Commission sent a letter of formal notice to the United Kingdom for breaching the substantive provisions of the Protocol on Northern Ireland, as well as the good faith obligation under the Withdrawal Agreement. The UK has a month to provide its response to the letter of formal notice. European Commission Vice-President Maroš Šefčovič reiterated this decision constitutes an “international law violation”. The EU also called on the UK to continue bilateral discussions at the EU-UK Joint Committee level in good faith, with the aim of reaching a mutually agreed solution on the custom control questions in Northern Ireland ports by the end of March 2021. The British Government spokesperson responded to the action, saying: “We’ve been clear that the measures we have taken are temporary, operational steps intended to minimise disruption in Northern Ireland and protect the everyday lives of the people living there. They are lawful and part of a progressive and good faith implementation of the Northern Ireland Protocol”.
Sanction Updates | Russia, China
On 17 March, the Department of Commerce’s Bureau of Industry and Security (BIS) expanded export restrictions on Russia, pursuant to a 2 March 2021 determination by the Secretary of State that the Government of Russia used chemical or biological weapons in violation of international law or lethal chemical or biological weapons against its own nationals, Alexei Navalny. Effective 18 March, BIS will review license applications under a presumption of denial for exports and re-exports of items controlled for national security reasons (“NS items”) that are destined for Russia. BIS will also suspend License Exceptions Servicing and Replacement Parts and Equipment (RPL), Technology and Software Unrestricted (TSU), and Additional Permissive Reexports (APR) for NS items destined for Russia.
Ahead of a Thursday US-China meeting in Alaska, the US Government added an additional 24 Chinese and Hong Kong officials, whose actions are perceived to have reduced the autonomy situation in the Hong Kong Special Administrative Region of the People’s Republic of China. Secretary Blinken noted the National People’s Congress 11 March decision “unilaterally undermine[s] Hong Kong’s electoral system . . . [and] further undermines the high degree of autonomy promised to people in Hong Kong and denies Hong Kongers a voice in their own governance, a move that the United Kingdom has declared to be a breach of the Sino-British Joint Declaration.”
On Wednesday 17 March, the EU27 Ambassadors supported the decision of sanctioning four individuals of the Chinese Government as a punitive measure for the alleged human rights violation of the Uyghur population in the Xinjiang region. The “EU Magnitsky” regime consists of asset freezes and travel ban measures in defense of human right violations. The sanctions are expected to be formally approved by a meeting of EU Foreign Affairs Ministers on 22 March. The next day, China threatened to impose countermeasures against the EU in response to the decision. Chinese Ambassador to the EU Zang Mingh warned, “[S]anctions based on lies could be interpreted as a deliberate attack on China’s security and development”.
On 15 March, the UK imposed travel bans and asset freezes on six members of the Syrian regime, including the Foreign Minister. These are the first UK sanctions against the Syrian leadership under the UK’s autonomous sanctions regime since the conclusion of the EU Transition Period.
 Other countries included: Australia, Belgium, Bulgaria, Canada, Czech Republic, Estonia, France, Georgia, Germany, Ireland, Latvia, Lithuania, Netherlands, Norway, Poland, Slovakia, Ukraine, and the United Kingdom.
 The other G7 countries include: Canada, France, Germany, Italy, Japan and the United Kingdom.