June 26, 2022

Volume XII, Number 177

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June 24, 2022

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June 23, 2022

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Transatlantic Trade | US and Europe – Week of March 21, 2022

While the President of the United States (US), Joe Biden, appears to be willing to increase rhetoric against the President of the Russian Federation (Russia), other Western allies are less willing to join in increasing tension with Russia on this front.  By Sunday, the US Secretary of State appeared to downplay President Biden’s Friday remarks from Poland, after the President’s previous stop in Belgium (Thursday) for other high-level meetings.  In Brussels, the US and European Union (EU) announced a series of joint cooperative initiatives this week intended to ameliorate increased energy pricing tied to the bloc’s dependency on Russian energy.  Transatlantic partners also continue to layer on additional sanctions and restrictions, seeking to further pressure the Russian Government.

The United Kingdom (UK) and US convened their first joint Dialogue early in the week in Maryland, concluding with an announcement that will lift US tariffs on aluminum and steel.  The EU and US also appear to have reached an agreement in principle for addressing transatlantic data flows.  Separately, the UK is progressing with bilateral trade negotiations with Canada and India.  In addition, the EU finalized the political negotiations of its Digital Markets Act.

In this issue, we cover:

  • Ukraine and Russia, and transatlantic responses;

  • Other notable US, UK, and EU developments;

  • A brief UK-EU trade deal update; and

  • A brief COVID-19 update.

Ukraine-Russia | Western Allies Continue to Pressure Russia

The North Atlantic Treaty Organization (NATO) Heads of State and Government met in Brussels on 24 March to discuss the ongoing Russia-Ukraine conflict.  The NATO Leaders Statement called on Russian President Vladimir Putin to “withdraw military forces from Ukraine,” and it further called “on Belarus to end its complicity”.  NATO Allies underlined their continued support to Ukraine on a political and humanitarian level, while affirming the intention to continue supporting Ukraine in areas such as “cybersecurity and protection against threats of a chemical, biological, radiological, and nuclear nature.”   NATO Allies also called on other countries, including the People’s Republic of China (“China”) “to uphold the international order including the principles of sovereignty and territorial integrity, as enshrined in the UN Charter” and to “refrain from any action that helps Russia circumvent sanctions.”  NATO Foreign Ministers are expected to discuss further support to Ukraine in April.

Following the NATO Leaders Summit, the Group of Seven (G7) Leaders met in Brussels to discuss Ukraine.  A G7 Statement reiterated the G7 Leaders’ commitment to restore peace and stability, condemned the ongoing Russian conflict and further affirmed the intention of close cooperation between the G7 on more restrictive measures targeting Russia.  Close cooperation on energy and sustainable supplies is also noted, while the risks for global food security are highlighted.  Notably, G7 Leaders confirmed the readiness to strengthen the pressure on current sanctions against Russia, while they agreed to “avoid export bans and other trade-restrictive measures, maintain open and transparent markets, and call on others to do likewise, consistent with World Trade Organization (WTO) rules, including WTO notification requirements.”

In Poland on Friday, US President Biden criticized President Putin’s actions in Ukraine, suggesting at the end of his speech,

"For God’s sake, this man cannot remain in power."

On Sunday, US Secretary of State Antony Blinken sought to clarify the President’s remarks, stating, while in Israel, the United States does not have a policy of advocating for regime change.

Prior to President Biden’s European trip, Secretary Blinken issued a statement on 23 March, outlining the US position that alleges Russia had committed “indiscriminate attacks” targeting Ukrainian citizens and consequently committed war crimes.  He stated:

"The U.S. government will continue to track reports of war crimes and will share information we gather with allies, partners, and international institutions and organizations, as appropriate.  We are committed to pursuing accountability using every tool available, including criminal prosecutions."

On 24 March, the US Government announced another tranche of sanctions, designating 328 members of the Russian State Duma, in addition to the 12 members designated on 11 March.  The US Government cited,

"These members supported the Kremlin’s violations of Ukraine’s sovereignty and territorial integrity, including through treaties recognizing the self-proclaimed independence of Russian-proxy controlled areas of eastern Ukraine, the so-called Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR)."

The US Government further designated the entire Russian State Duma, along with Herman Gref, the head of Sberbank and reportedly a close ally of Putin.

In addition, the US Government sanctioned other Russia elites (US Department of State fact sheet).  This included 17 members of the board of PJSC Sovcombank, a designated entity.  Additionally, OOO Volga Group was re-designated for having operated in the financial services sector of the Russian Federation economy.   Consequently, Gennady Nikolayevich Timchenko, the owner of OOO Volga Group, was re-designated along with OOO Transoil, which Timchenko owns.  Timchenko’s wife, Elena Petrovna Timchenko, and daughter, Natalya Browning, were also designated, along with Ksenia Gennadevna Frank, a board member of OOO Transoil and her spouse Gleb Sergeevich Frank.  Finally, the US Government added sanctions on multiple defense-related entities and one associated individual, targeting Russia’s supply chain to the conflict in Ukraine.

On 26 March, the US Government announced its intent to provide an additional $100 million in civilian security assistance to enhance the capacity of the Ukrainian Ministry of Internal Affairs to provide essential border security, sustain civil law enforcement functions, and safeguard critical governmental infrastructure.  The United States is the largest single country donor of humanitarian assistance to Ukraine, having provided more than $2 billion since March 2021.

Joint Statement by European Commission (EC) President Ursula von der Leyen and US President Biden on 24 March underlined the EU-US alignment on sanctions, alongside like-minded partners across the world.  Apart from stepping up efforts to coordinate responses against sanctions evasions, the two sides noted joint efforts with respect to humanitarian relief and admissions, cooperation on energy, the potential food crisis, and cybersecurity challenges.  To implement this cooperation, the EC and US released a Joint Statement on European Energy Security on 25 March, confirming the “strategic energy cooperation for security of energy supply and reducing dependence on fossil fuels.”   A Joint Task Force on Energy Security is to be established to further outline this cooperation, tackling a number of issues, namely:

  • The US increasing its domestic liquefied natural gas (LNG) extraction for the EU market, starting at 15 bcm in 2022 and increasing in subsequent years;

  • The US committing to maintaining and enabling a regulatory environment for additional export of LNG capacities;

  • Joint efforts to reduce the greenhouse gas intensity of all new LNG infrastructure;

  • The EC will work with Member States to determine approvals for LNG import infrastructure, and with both Member States and market operators pool energy demands in an EU energy platform between April and October 2022, while ensuring a stable demand for additional US LNG until at least 2030 of approximately 50 bcm/annum; and

  • Ensuring stakeholder engagement and a cooperation strategy for the use of technology, energy efficiency solutions and endorsing more renewable energy projects moving forward.

To mitigate high energy prices and responding to policy options laid out in the REPowerEU Communication, the EC adopted a legislative proposal this week aimed at introducing “a minimum 80% gas storage level obligation for next winter to ensure security of energy supply, rising to 90% for the following years.”  A Communication outlined the possible options for market interventions at the European Union- and Member State-levels.  The EC expressed its readiness to create a Task Force on common gas purchases at the EU-level, as well as a joint negotiating team to hold talks on future energy partnerships with key suppliers, beyond LNG and gas.

EU27 Heads of State and Government also met in Brussels on 24-25 March to discuss, among others the ongoing Russian conflict in Ukraine, where they held a joint discussion with President Biden.  A joint readout noted that leaders “reviewed their ongoing efforts to impose economic costs on Russia and Belarus, as well as their readiness to adopt additional measures and to stop any attempts to circumvent sanctions.”  The EU and US also stressed their cooperation on reducing dependence on Russian fossil fuels and responding to the food security concerns.

The European Council conclusions from 24 March reaffirmed the Versailles Declaration endorsed earlier in March, and attested to the EU’s readiness to proceed quickly with further coordinated sanctions on Russia and Belarus.  European Leaders also discussed, as outlined in the conclusions, the phase-out of the dependency of Russian gas, oil and coal imports; the security and defence plans (See further below regarding the Strategic Compass); economic issues; the coordination efforts for the COVID-19 pandemic; and preparation for the EU-China Summit, scheduled for 1 April.

On 23 March, the EC adopted a “Temporary Crisis Framework” that would enable Member States to have flexibility in the state aid rules to support their respective economies in view of the ongoing Russian conflict.  The flexibility would include liquidity support in the form of State guarantees and subsidised loans, as well as aid to compensate for the higher energy prices attributable to the conflict.

Furthermore, the ongoing Russia-Ukraine conflict is raising concerns about global food security and agricultural supplies, particularly wheat.  The EC presented a range of short-term and medium-term actions this week to enhance global food security and to support farmers and consumers in the EU, amid rising food prices and input costs, such as energy and fertilisers.  These measures included a €330 million EU Emergency Support Programme that would secure access to basic goods and services in Ukraine, along with coordination of food prices and food security policies via multilateral bodies (such as the United Nation’s Food and Agriculture Organization, World Trade Organization, G7, and Group of 20 countries).  The EC also included measures to support EU farmers and consumers, such as reducing VAT rates, and mapping of risks and vulnerabilities of the EU food supply chain.

The EU further announced it would be stepping up its support to eight global Coalitions for Action this week, aiming to transform disrupted food supply chains.  Executive Vice President and Trade Commissioner Valdis Dombrovskis affirmed, “wheat futures prices have risen by 70%” and since Ukraine is a major wheat exporter, this year’s harvest will be heavily impacted by the current conflict.  Dombrovskis continued,

"On global food security, the EU will step up humanitarian assistance for low-income food-importing countries as well as for others that are affected by the conflict."

On 24 March, UK Foreign Affairs Secretary Liz Truss announced 65 new designations, targeting strategic industries, such as Russian Railways and defence company Kronshtadt, banks, including Alfa Bank, along with additional business elites in the oil and banking industry.  She penned an opinion piece published by Frankfurter Allgemeine Zeitung on 25 March that explains Britain’s collaboration with partners to coordinate pressure on Putin and oligarchs in response to the conflict in Ukraine.

The UK Government announced a new package of support for Ukraine at the NATO and G7 Leaders’ meetings.  Prime Minister Boris Johnson stated the UK would provide 6,000 new defensive missiles and £25m for Ukraine’s armed forces.  The UK Government is also set to provide an additional £4.1 million for the BBC World Service, as part of a cross-government effort to tackle disinformation in Russia and Ukraine.  UK Justice Secretary Dominic Raab also chaired a meeting of justice and foreign ministers in The Hague on 24 March to coordinate support for the International Criminal Court’s war crimes investigations.  The Deputy Prime Minister also announced an additional £1 million in funding for the court.

On 27 March, the UK Government stated it is standing up a £3 million package of support for Ukrainian researchers at risk.  Minister for Science, Research & Innovation George Freeman also announced:

"All payments for projects delivered through UK public research funds with a Russian dimension have been paused.  I have commissioned an assessment, on top of the existing and strong due diligence processes of UK public research funders, to isolate and freeze activities which benefit the Russian regime."

The day before, the UK announced it would provide Ukraine with £2 million in essential food supplies Ukrainians facing food shortages in the country.  Working with Polish and Slovakians, the UK’s rapid donation follows a direct request from Ukraine’s Government


US Developments

On 24 March, the US Department of State’s Rewards for Justice (RFJ) program announced it is offering a reward for information on specific Russian Federal Security Service (FSB) officers for their alleged involvement in computer intrusions, wire fraud, aggravated identity theft, and damage to the property of an energy facility offenses over the time period of 2012-2017.  The announcement marked the first time that RFJ has named foreign government security personnel under its critical infrastructure reward offer.  That same day, the RFJ offered a reward for information on Russia-based hacker Evgeny Viktorovich Gladkikh, who allegedly conducted malicious offensive cyber operations as an employee of the Russian Ministry of Defense’s Central Scientific Research Institute of Chemistry and Mechanics, in its Applied Development Center, with other co-conspirators.

On 22 March, the US Department of State issued a statement condemning “Russian authorities’ politically-motivated conviction and sentencing of opposition leader Aleksey Navalny on additional spurious charges to nine more years in a high security prison.”  The US Government urged Russian officials “to immediately and unconditionally release Aleksey Navalny and to end its campaign against his organizations and associates.”

On 23 March, US Secretary of the Treasury Janet Yellen met with Queen Máxima of the Netherlands, who serves as the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA).  A readout reflected Secretary Yellen praised Queen Máxima’s “work to support digital financial inclusion globally, and they discussed the importance of consumer protection and education given the expanding complexity and use of digital financial services and digital assets.”

On 21 March, the US Securities and Exchange Commission (SEC) unveiled a proposal to enhance and standardize climate-related disclosures for investors.  If adopted, the SEC proposal, among other things, would require a registrant to disclose information about:

  • the registrant’s governance of climate-related risks and relevant risk management processes;

  • how any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short-, medium-, or long-term;

  • how any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook; and

  • the impact of climate-related events (severe weather events and other natural conditions) and transition activities on the line items of a registrant’s consolidated financial statements, as well as on the financial estimates and assumptions used in the financial statements.

Treasury Secretary Yellen welcomed the SEC’s proposal, saying:

"Investors and businesses have for years asked for reliable information that can be used to assess climate-related risks and opportunities."

The draft proposal, subject to public feedback and possible legal challenges, is likely to be finalized later this year.

 


UK Developments

In conjunction with the US, the UK exposed historic malign cyber activity of Russia’s Federal Security Service (FSB).  Separately, Foreign Secretary Liz Truss said that under the UK’s cyber sanctions regime a Russian defence ministry subsidiary, the Central Scientific Research Institute of Chemistry and Mechanics (TsNIIKhM), was designated for an incident involving safety override controls in a Saudi petro-chemicals plant in 2017.

Early in the week, US Trade Representative Katherine Tai hosted UK Secretary of State for International Trade Anne-Marie Trevelyan in Baltimore, Maryland, for the first US-UK Dialogues on the Future of Atlantic Trade.  The two-day format resulted in consensus in working to protect labor rights and the environment; promote supply chain resilience; support low-carbon transitions; address third party market-distorting practices; make it easier for SMEs to export; and ensure the benefits of trade are evenly distributed across the two countries.  A second joint UK-US Dialogue on the Future of Atlantic Trade is being planned for late April in the United Kingdom.

On 22 March, US Secretary of Commerce Gina Raimondo and Ambassador Tai announced a new 232 tariff agreement with the United Kingdom to allow historically-based sustainable volumes of British steel and aluminum products to enter the US market without the application of Section 232 tariffs.  A statement from the US Government reflected:

"In addition to novel smelt and cast requirements on aluminum, this deal also requires that any U.K. steel company owned by a Chinese entity must undertake an audit of their financial records to assess influence from the People’s Republic of China government.  The results of these audits must also be shared with the United States."

Specifics on British steel products can be viewed here.

On 25 March, British Prime Minister Boris Johnson spoke with Chinese President Xi Jinping.  Apart from a discussion on the situation in Ukraine, the UK readout reflected the Prime Minister “expressed again his sympathy with the victims of the flight that crashed in China.”

On 24 March, International Trade Secretary Trevelyan and Canadian Minister for International Trade Mary Ng formally launched negotiations on a new free trade agreement (FTA) in Ottawa.  The UK is Canada’s third largest trading partner.

Also on 24 March, the United Kingdom and the Fijian Government signed a new Memorandum of Understanding (MOU) on maritime security, which means Fijian sailors will be able to board Royal Navy vessels and vice versa.  The MOU allows the two countries to work together to combat illegal maritime activity in the Pacific.

This week, the UK and India completed their second round of negotiations for a bilateral FTA.  Technical experts from both sides came together for discussions in 64 separate sessions covering 26 policy areas.


EU Developments

EU Leaders re-elected European Council President Charles Michel for a second term this week, lasting until November 2024.  A Joint Foreign Affairs and Defense Council endorsed the Strategic Compass this week, an ambitious plan for the EU’s security and defence policy by 2030. The Strategic Compass provides a shared assessment of the strategic environment in which the EU is currently operating and the threats and challenges the EU faces.  The Strategic Compass also outlines the importance of cooperation with NATO; it was endorsed by the European Council on 25 March.

The European Parliament’s International Trade Committee met this week.  Appearing before the Committee, Executive Vice-Presidents Dombrovskis and Margrethe Vestager discussed the upcoming May 2022 EU-US Ministerial meeting of the EU-US Trade and Technology Council (TTC).  They stressed cooperation in the context of the EU-US TTC has been crucial, especially given the rapid and coordinated response on the sanctions and export controls imposed against Russia and Belarus.  However, despite the positive outcome of this cooperation, EVP Vestager stressed that EU-US trade talks should remain frozen, amid suggestions the EU-US TTC cooperation could revive the EU-US Transatlantic Trade and Investment Partnership (TTIP) negotiations that stalled during the Obama Administration.

On 25 March, EC President von der Leyen and US President Biden announced  an “in principle” agreement on transatlantic data flows during a press conference.  This was later confirmed via a Joint Statement that announced the Trans-Atlantic Data Privacy Framework.  The Joint Statement reflected:

"Under the Trans-Atlantic Data Privacy Framework, the United States is to put in place new safeguards to ensure that signals surveillance activities are necessary and proportionate in the pursuit of defined national security objectives, establish a two-level independent redress mechanism with binding authority to direct remedial measures, and enhance rigorous and layered oversight of signals intelligence activities to ensure compliance with limitations on surveillance activities."

Highlights of the Trans-Atlantic Data Privacy Framework are accessible here.  A Joint Press Statement by European Commissioner for Justice Didier Reynders and US Secretary of State Gina Raimondo followed, underscoring the intensification of the EU-US negotiations in this regard to finalize the technical components of the “in principle” political agreement. This agreement seeks to replace the US-EU Data Privacy Shield, with the European Court of Justice struck down in 2020.   

After intense negotiations, the French Presidency of the European Council and the European Parliament reached a provisional political agreement on the inter-institutional negotiations alongside the EC over the far-reaching proposal for a Digital Markets Act (DMA).  The DMA would define rules to limit the power of large online platforms, such as gatekeepers under certain criteria, and grant the EC with powers to carry out market investigations.  Under the DMA, platforms would qualify as gatekeepers if they have an annual turnover of at least €7.5 billion within the EU in the last three years, or have a market value of at least €75 million with at least 45 million monthly end users or at least 10,000 business users established in the EU.  Gatekeepers will have a number of obligations and restrictions, accompanied by a fine of up to 10 percent of their total worldwide turnover and the option of a fine of up to 20 percent in case of a repeated offense.  SMEs would be excluded from being defined as gatekeepers, with certain exceptions.  The EC welcomed the outcome of the deal.

Meanwhile, following last week’s General Approach at the Council level on the Carbon Border Adjustment Mechanism, more than 1300 amendments have been tabled to the draft Report of the Environment, Health and Food Safety Committee (accessible hereherehere and here), complicating negotiations in the European Parliament.

In other news, the EU’s High Representative issued a Declaration on behalf of the EU condemning the “ruling by Moscow’s Lefortovo District Court, to extend the imprisonment of the Russian opposition politician Mr Alexei Navalny by an additional 9 years.”


UK-EU Trade Deal Update

On the margins of the G7 Leaders meeting, UK Prime Minister Johnson met with EC President von der Leyen to discuss the current status of implementation of the Northern Ireland Protocol.


COVID-19 Update

The European Medicines Agency (EMA) recommended on 24 March the authorization of AstraZeneca’s monoclonal antibody treatment Evusheld for coronavirus in adults and teenagers.  The EC must next formally endorse the EMA’s recommendation.  The decision for a marketing authorization of the drug follows the UK regulator’s approval on 17 March.

The EC and the World Health Organization (WHO) announced this week a “strengthening their partnership to improve equitable access to safe, effective, and quality-assured vaccines, medicines and health technologies in Sub-Saharan Africa”, which aims to increase local vaccine production.  The EU will be offering a financial contribution of €24.5 million to support regulatory strengthening (€11.5 million), technology transfer (€12 million), and demand consolidation and strategic purchasing (€1 million).

Pfizer announced on 22 March that it would supply UNICEF up to 4 Million Treatment courses of its Paxlovid coronavirus therapy to improve access to the new treatment for 95 low- and middle-income countries.

This week, the US Food & Drug Administration announced it will hold a virtual meeting of its Vaccines and Related Biological Products Advisory Committee (VRBPAC) on 6 April to discuss considerations for future COVID-19 vaccine booster doses and the process for selecting specific strains of the SARS-CoV-2 virus for COVID-19 vaccines to address current and emerging variants.  The FDA is also reportedly close to approving a fourth dose of the mRNA coronavirus vaccine for adults ages 50 and older.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume XII, Number 87
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About this Author

Stacy Swanson, Public Policy Specialist, Squire Patton Boggs Law Firm
Public Policy Specialist

Stacy Swanson helps sovereign governments successfully navigate Washington and understand United States Government policy. She regularly provides clients with strategies which effectively leverage existing relationships to advocate policy objectives before the legislative and executive branches of the U.S. government. 

202-457-5627
Christina Economides Public Policy Attorney Squire Patton Boggs Brussels, Belgium
Public Policy Advisor

Christina Economides is an advisor in the firm’s Public Policy Practice in Brussels in coordination with the Public Policy International Group. She is also a member of the firm’s Healthcare Industry Group leadership team.

Christina advises clients on technology, digital economy, taxation, financial services, and health regulatory and policy matters. Prior to joining the firm, Christina worked for a Brussels-based EU public affairs consultancy, focused on financial services, ICT/data protection and competition matters, and was inter alia running the Secretariat of the...

322 627-11-05
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