President Barack Obama acknowledged from San Francisco early Friday morning that the British had exercised their sovereign rights and chosen to exit the European Union.  Washington awoke to the news and the corresponding negative reaction of the international financial markets soon after.  Secretary of State John Kerry changed his travel schedule, adding a stop in Brussels and London to a trip that had him in Italy over the weekend.  Meanwhile, President Obama travels to Canada this week to attend the annual North American Leaders’ Summit.

Democratic Members of the House staged a 24-hour sit-in on the floor of the chamber last week, protesting what they believed was the Republican leaders’ unwillingness to address gun control through legislation.  On Thursday, Speaker Paul Ryan (R-Wisconsin) abruptly adjourned the House until after the July Fourth holiday.

Senate Majority Leader Mitch McConnell (R-Kentucky) cut off an effort to keep suspected terrorists from buying guns last Thursday after Republicans and Democrats failed to reach an agreement on the issue, effectively ending debate of gun control in that chamber ahead of the November elections.  The Senate will be in session this week.

British Vote to Exit the EU

Washington awoke to news Friday morning that the British had decided to exit the EU, a development that promptly caused international markets to slump.  Many expect market uncertainty will eventually impact the anemic economic growth in the United States.  After traveling to London in April and speaking in favor of Britain remaining in the EU, President Obama released a statement on Friday saying:

“The people of the United Kingdom have spoken, and we respect their decision.  The special relationship between the United States and the United Kingdom is enduring, and the United Kingdom’s membership in NATO remains a vital cornerstone of U.S. foreign, security, and economic policy.  So too is our relationship with the European Union, which has done so much to promote stability, stimulate economic growth, and foster the spread of democratic values and ideals across the continent and beyond.  The United Kingdom and the European Union will remain indis”pensable partners of the United States even as they begin negotiating their ongoing relationship to ensure continued stability, security, and prosperity for Europe, Great Britain and Northern Ireland, and the world.”

Senate Foreign Relations Committee Chairman Bob Corker (R-Tennessee) also issued a statement on Friday recognizing the British decision, while emphasizing the “special relationship” and importance of trade between the two countries:

“[The] referendum will not change our special relationship with the United Kingdom.  That close partnership will endure, and we will continue to work together to strengthen a robust trade relationship and to address our common security interests.”

Secretary of State Kerry said on Friday of the U.K. Referendum:

“I want to emphasize that although the U.K. will be leaving the European Union, the British are in no way departing from the principles and values that undergird the Transatlantic Partnership or from the important role the U.K. plays in promoting peace and stability in the world. The special relationship that has long existed between the United States and the U.K. endures. Our two countries remain strong and vigilant NATO Allies, permanent members of the UN Security Council, commercial partners, and close friends.”

He added:

“I also want to reaffirm the U.S. commitment to the European Union and the common agenda we share with Europe on such issues as Ukraine, nuclear nonproliferation, climate change, trade, and human rights.”

Secretary Kerry will be in Brussels and London today, meeting this morning with EU High Representative for Foreign Affairs and Security Policy Federica Mogherini, and later today with U.K. Foreign Secretary Philip Hammond.  In speaking with reporters in Italy over the weekend, Secretary Kerry said,

“The most important thing is that all of us as leaders work together to provide as much continuity, as much stability, as much certainty as possible in order for the marketplace to understand that there are ways to minimize disruption, there are ways to smartly move ahead in order to protect the values and interests that we share in common.”

Squire Patton Boggs has released a client alert noting the vote does not immediately change the legal relationship between the United Kingdom and the EU.  The firm summarizes some of the more immediate considerations that may arise in your business, available here.

North American Leaders’ Summit This Week

President Barack Obama, Mexican President Enrique Pena Nieto, and Canadian Prime Minister Justin Trudeau will meet on Tuesday in Ottawa for the annual North American Leaders’ Summit.  President Obama will also address a joint session of the Canadian Parliament.

Upcoming Presidential Trip – NATO, Poland and Spain

From 7-11 July, President Obama will travel to Poland and Spain.  He will participate in the NATO Summit in Warsaw from 7-9 July.  The summit is expected to underscore the Alliance’s solidarity and to advance efforts to bolster security along NATO’s eastern and southern fronts.  While in Warsaw, President Obama will hold a bilateral meeting with Polish President Anrezej Duda.  He will also meet with the Presidents of the European Council and the European Commission to discuss U.S.-EU cooperation across a range of shared priorities, including countering terrorism, fostering economic growth and prosperity, and addressing the global refugee crisis.  The U.K. referendum will also likely be a topic of discussion, as well as ongoing free trade agreement negotiations between the United States and EU.

From 9-11 July, President Obama will visit Spain, where he will meet with King Felipe VI and Acting President Mariano Rajoy.  This visit to another NATO member country will highlight security cooperation between the United States and Spain as well.

SelectUSA Investment Summit & GES

President Obama started last week out at the SelectUSA Investment Summit in Washington, which focused on attracting investments to the United States.  In addressing the forum, President Obama spotlighted, “Over the last four years, no other country has been named by CEOs around the world more frequently as the best place to invest with confidence.”

President Obama ended the week in San Francisco, attending the annual Global Entrepreneurship Summit (GES), which focuses on innovation.  The President signed an Executive Order on Friday to institutionalize key entrepreneurship programs of his Administration highlighting entrepreneurship is a hallmark of American leadership in the world.  The White House released a fact sheet on the GES, available here.

North Korea – Censured Again

After a failed attempt early last week, North Korea claimed on Thursday to have conducted a successful test-firing of a ballistic missile, swiftly drawing the censure of the United Nations Security Council.  In a press statement, the Security Council urged all countries “to redouble their efforts” to fully implement sanctions against North Korea, particularly those imposed in March, which were the toughest in two decades.  U.S. Ambassador Samantha Power sharply criticized North Korea’s “inherently destabilizing behavior” on Wednesday.

Venezuela Dialogue – U.S. Participates

Secretary General of the Organization of American States (OAS) Luis Almagro cited the current Government in Caracas as responsible for the near-collapse of Venezuela’s economy and called for the recall of President Nicolás Maduro.  Under Secretary of State for Political Affairs Tom Shannon joined the mediation efforts underway in Caracas last week, saying that a follow-on meeting date has yet to be determined.

Zika Funding Compromise Reached – Veto Threat Issued

Last week, House and Senate Republicans reached a compromise on funding a response to the Zika virus without Democrats’ input.  Before adjourning, House Republicans advanced (239-171) a spending measure that includes a $1.1 billion plan for the Zika virus.  The measure would provide $230 million for the National Institutes of Health to develop a vaccine and $476 million for the Centers for Disease Control and Prevention for mosquito control efforts.

Democratic Senator Bill Nelson (Florida) objected to the compromise, citing the $750 million in budget cuts to other health care programs.  The bill would cut $543 million in unused funds for implementing the Affordable Care Act, $107 million from funds used to fight Ebola, and $100 million in administrative funds from the Health and Human Services Department.  The $1.1 billion is also short of President Obama’s request for $1.9 billion to combat the virus.  The Senate is expected to take up the bill before it leaves Washington this week for its July 4 recess, but its prospects are unclear at best.

TPP – Implementing Bill Reportedly Being Drafted

Despite the public backlash to trade in an election year, U.S. Trade Representative Michael Froman said last Monday that the Obama Administration has begun drafting an implementing bill for a potential lame-duck vote on the Trans-Pacific Partnership (TPP) under Trade Promotion Authority (TPA). Ambassador Froman acknowledged that Majority Leader McConnell “has made clear publicly that he doesn’t want to see a vote [on TPP] before the [November] election,” which leaves the lame-duck session as the best window of opportunity for trying to advance a TPP implementing bill.

Privacy Shield – Agreement Reached

The European Commission and U.S. negotiators wrapped up their discussions over the transatlantic data-flow “privacy shield” agreement late on Thursday.  A Commission official reported the deal contains “additional clarifications regarding the Ombudsperson mechanism, onward transfers and data retention, as well as on an additional U.S. document on the bulk collection of data.”  The Article 31 Committee will next vote on the text of the agreement.

NDAA – Pre-Conferencing Stage

Senate Armed Services Committee Chairman John McCain (R-Arizona) reported last week that the leaders of the House and Senate Armed Services Committees met on Thursday to begin the process of reconciling the differences in their versions of the National Defense Authorization Act (NDAA).  A formal House-Senate conference does not begin until the two chambers appoint their conferees, which has yet to occur.

Congressional Hearings This Week

  • On Tuesday, 28 June, the Senate Armed Services Committee is scheduled to hold a hearing titled, “Improving Strategic Integration at the Department of Defense.”
  • On Tuesday, 28 June, the Senate Foreign Relations Committee is scheduled to hold a hearing titled, “Global Efforts to Defeat ISIS.”
  • On Tuesday, 28 June, the Senate Appropriations Subcommittee on State-Foreign Operations (SFOPs) is scheduled to hold a mark-up of the Fiscal Year (FY) 2017 SFOPs measure.
  • On Wednesday, 29 June, the Senate Commerce, Science, and Transportation Committee is scheduled to hold an executive session, where they will consider S. 3084, The American Innovation and Competitiveness Act, among other matters.
  • On Thursday, 30 June, the Senate Foreign Relations Committee is scheduled to hold a hearing titled, “Corruption: Violent Extremism, Kleptocracy, and the Dangers of Failing Governance.”
  • On Thursday, 30 June, the Senate Armed Services Committee is scheduled to hold a closed hearing titled, “National Security Cyber and Encryption Challenges.”
  • On Thursday, 30 June, the Senate Appropriations Committee is scheduled to markup the FY 2017 SFOPs measure.

Looking Ahead

Washington is expected to focus on the following upcoming events:

  • 29 June: North American Leaders Summit in Ottawa, Canada.
  • 7-11 July: President Obama travels to Poland and Spain
  • 8-9 July: NATO Summit in Warsaw, Poland
  • 18-21 July: Republican National Convention in Cleveland, Ohio
  • 25-28 July: Democratic National Convention in Philadelphia, Pennsylvania
  • 4-5 September: G-20 Leaders’ Summit in Hangzhou, China
  • 13 September: 71st Session of the U.N. General Assembly (UNGA) Begins
  • 20 September: UNGA General Debate Commences
  • 19-20 November: Asia-Pacific Economic Cooperation (APEC) Leaders’ Summit in Peru