Transatlantic Trade Update text overlaid on top of images of US, UK and EU flagsThis week in the United States (US), Senators focused on the impeachment trial for former US President Donald Trump, while the House of Representatives moved forward with the budget reconciliation process for another COVID relief bill.  US President Joe Biden announced new US sanctions on Burma, while his Administration secured contracts for additional doses of COVID-19 vaccines.  The European Union (EU) moved forward this week with new trade defence authorities, while it continued to address fallout related to having triggered Article 16 of the Northern Ireland Protocol.  Russia was also at the forefront of EU officials’ minds this week.  Meanwhile, the United Kingdom (UK) secured some new Indian investments that should create additional jobs for UK citizens.

In this issue, we also cover:

COVID-19 Updates | US, UK, EU

On Thursday, 11 February, US President Biden announced the Administration had secured contracts for 100 million more Moderna and 100 million more Pfizer vaccine doses to be delivered by the end of July.  This is in addition to the 400 million doses that the Trump Administration had already ordered from Pfizer and Moderna by that date.

In the UK, clinical trials funded by the Government showed that tocilizumab reduced the risk of death by 14 percent for patients on oxygen on top of benefits from dexamethasone.  The Government announced on 11 November that National Health Service (NHS) patients who are hospitalised due to COVID-19 would be able to receive the life-saving treatment tocilizumab, which should hopefully help alleviate pressure on the hospital system.

In light of the debates the past two weeks regarding COVID-19 vaccines in the EU, Russia believes it has more opportunities to offer assistance with its own Sputnik V coronavirus vaccine.  Hungary is the first EU Member State to have approved the use of Sputnik V vaccine for its national vaccination efforts.  Other EU countries, such as Austria and Germany, are not opposed to using and further developing the Sputnik V COVID-19 vaccine, provided the European Medicines Agency (EMA) grants its approval for a conditional marketing authorization.  However, in response to conflicting media coverage about the Sputnik V vaccine application, the EMA released a statement on 10 February confirming that it has not received an official application for the Sputnik V vaccine, adding it remains in contact with the Gamaleya National Centre of Epidemiology and Microbiology to define next steps.

Ukraine Prime Minister Denys Shmyhal believes that Russia’s efforts are aimed at gaining political influence in eastern Ukraine and other countries in Eastern Europe.  Executive Vice President Valdis Dombrovskis issued a statement following a meeting with the Ukrainian Prime Minister on 10 February, reaffirming the EU’s support for addressing Ukraine’s COVID-19 needs.

On 11 February, the European Commission announced the EU’s partnership with the World Health Organization on a new regional program that is worth over €40 million (US$48.5 million).  The program will offer readiness and vaccination support to Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine.

Update:  EU COVID-19 Vaccine Export Control Mechanism

European Commission President Ursula von der Leyen’s management of EU vaccination policy came under question during her appearance before the European Parliament this week, with the EU far behind on vaccination efforts.  The European Commission’s export control mechanism on COVID-19 vaccines manufactured in the EU by companies with an Advanced Purchase Agreement with the EU has caused significant tensions over the last weeks, particularly with respect to the attempt to override a crucial part of the Northern Ireland Protocol.  The media reported that EU authorities were embarrassed by what appeared to be a unilateral threat from the Commission to the UK, a sovereign nation, and a clear risk to civil society in Northern Ireland – a weird flex for an institution which purports to promote and protect peace and civility.”

During her speech before the European Parliament on 10 February, Ursula von der Leyen “deeply regretted” the mistakes made by the Commission, while insisting, “In the end, we got it right, and I can assure you that my Commission will do its utmost to protect the peace in Northern Ireland”Members of the European Parliament (MEP) criticized the EU’s response, such as Irish MEP Grace O’Sullivan (Greens) calling the attempt to override the Northern Ireland Protocol a “grave mistake”, while others, such as Manfred Weber (EPP, Germany), argued “An export ban of European produced vaccines must remain on the table” to ensure oversight of vaccine doses in the EU.

UK-EU Trade Deal | Updates

Talks continued this week during the Withdrawal Agreement Joint Committee between Cabinet Office Minister Michael Gove and European Commission Vice President Maroš Šefčovič, as they attempted to find solutions to ensure trade continuity between Northern Ireland and Great Britain.  Minister Gove accused the EU of opening “Pandora’s box”, in its attempt to override the Northern Ireland Protocol, during an intervention at a House of Commons Committee.  However, to address the current border disruption, Minister Gove proposed specific changes via a letter sent to Vice President Šefčovič that would include changing the trade rules on goods moving from Great Britain to Northern Ireland and introducing two-year extension waivers for post-Brexit checks.

A joint statement published after the end of the meeting reflected the parties agreed to intensify discussions at the EU-UK Specialised Committee level in order to come up with solutions to address the border disruption in line with the Northern Ireland Protocol no later than 24 February.  Vice President Šefčovič also agreed to meet with business leaders from Northern Ireland next week to discuss and better understand the difficulties and tensions rising over the enforcement of EU customs checks.

According to media reports, the European Commission is expected to seek a two-month extension for the ratification period of the EU-UK Trade and Cooperation Agreement, in order to provide additional time for EU technicalities to be addressed ahead of the European Parliament ratifying the deal.  For example, the legal-linguist translation in all 24 EU official languages remains outstanding.  Such an extension would push back the provisional application to 30 April 2021; this would need to be confirmed jointly by EU Member States and the UK before such a step can be taken.

Ireland’s European Affairs Minister Thomas Byrne proposed this week to introduce a new safety clause acting as an “early warning system” in case Article 16 of the Northern Ireland Protocol is triggered.  The Irish Government is exploring various political avenues of approaching both the European Commission and the UK Government to include such a mechanism going forward.  The European Commission and the UK Government have yet to publish a formal position on this matter.

Notable UK Developments

UK International Trade Secretary Liz Truss concluded a five-day visit (5-9 February) to India this week, securing investment deals that will create jobs.  This includes a major investment by Tata Consultancy Services that is expected to bring 1,500 high-skilled jobs to sites all over the UK.  Indian pharmaceutical and biotechnology giant Wockhardt also confirmed further investment in Wrexham, Wales.  Further readout of the trip is available here.

UK’s International Trade Department also provided readout of a 4 February UK-Peru Trade Ministers’ meeting this week.  The Ministers agreed to work together on COVID recovery and climate change.  They also “agreed to continue exchanging information on sanitary and phytosanitary legislation, as well as regulatory co-operation, to be precise about the requirements of both parties and avoid unnecessary trade disruptions.”

Notable EU Development

On Wednesday, the European Union approved new trade defence authorities that broaden the EU’s scope for retaliation against trade rivals when a dispute is appealed “into the void” at the World Trade Organization (WTO).  The European Commission published Regulation (EU) 2021/167, amending Regulation (EU) 654/2014, in the Official Journal of the EU on 12 February.  The regulation enters into force on 13 February 2021 and pertains to the exercise of the Union’s rights for the application and enforcement of international trade rules.

The Regulation is directly applicable to Member States and broadens the trade defense tools currently available for the EU, particularly countermeasures in international trade disputes; it is in line with the principle of “open strategic autonomy”.  In other words, the bloc will be able to push back against trade challengers, if Brussels wins a first instance dispute at the WTO, particularly since the WTO Appellate Court is inactive.  The expanded powers include retaliation against services and intellectual property registered within the Union; includes goods.

Notable US Developments

Congressional committees released text of language for the COVID relief package this past week, as Democrats push forward with advancing another COVID relief bill under the budget reconciliation process with a goal of getting the package to the President’s desk by mid-March.  Republicans continue to object to the budget reconciliation process for the next COVID relief package, as House committees marked-up and approved language this week for the COVID bill, largely along party line votes.

In an interview that aired on Sunday, President Biden conceded that raising the minimum wage via the COVID relief package may not be possible, adding he would continue to work on this via a standalone measure.  On Monday, the Congressional Budget Office (CBO) released a report that predicted that the Raise the Wage Act of 2021, if enacted in March 2021, would increase the cumulative budget deficit over the 2021–2031 period by $54 billion.  CBO also said that the minimum wage increase could result in 1.4 million jobs being lost by 2025, while adding it would lift 900,000 people out of poverty.

Meanwhile, the Senate focused on the impeachment trial for former President Trump, which began on Tuesday.  The House impeachment team closed its presentation against President Trump on Thursday, arguing that Senators need courage to hold him accountable for the 6 January Capitol attack.  President Trump’s defense team is set to start its presentation on Friday.  Many believe the impeachment trial will not result in a conviction, since more than 17 Republican Senators would need to vote in favor of convicting President Trump.

US-EU Developments

On 29 January, Global Europe program director Daniel Hamilton published an opinion piece on the sixteen-year trade war between Airbus and Boeing, saying it is wearing on the transatlantic relationship.  Both companies, he noted, are pioneer in the aerospace sector and key industries for their respective countries, resulting in favorable tax treatment and government subsidies.  However, governments have shifted to a compliant approach as an outcome of the WTO proceedings, he said.  Hamilton suggested the US and EU instead define what constitutes an “appropriate” subsidy in the aircraft industry, and establish a US-EU-UK dispute settlement mechanism to regulate irregularities.  This, he argued, would allow the two sides to leverage the strength of the transatlantic economy to address mutual concerns over “questionable” activities by the People’s Republic of China (“China”).

As suggested by EU Commissioner of Trade Valdis Dombrovskis on 8 February, the Biden Administration has favored a climate of cooperation and collaboration between the US and the EU.  The EU is looking forward to addressing some of the topics set out in the 12-page agenda on transatlantic relations issued last December.  This document includes potential cooperation in health, economic recovery, environmental policy and trade.  The EU also looks forward to addressing tariff, once the US Senate confirms US Trade Representative-nominee Katherine Tai.  Amid efforts to tighten the EU-US transatlantic relations, Chinese Foreign Minister Wang Yi urged the EU this week “to act independently”.  Meanwhile, US Secretary of State Anthony Blinken stressed the importance of maintaining shared values between the transatlantic allies.

On 10 February, the US Department of State issued a statement of concern regarding a “declining media pluralism in Hungary.”  State expressed particular concern over the “imminent loss of the broadcasting license of one of the country’s most popular radio stations, Klubradio,” adding it is yet another departure of an independent voice from Hungary’s airwaves.

US-UK Developments

Speaking at a virtual conference hosted by the Washington International Trade Association this week, House Ways & Means Committee Chairman Richard Neal (D-Massachusetts) said that a free trade agreement with the UK “makes a great deal of sense.”  He also expressed hope that the United States could secure a trade deal with the UK (and Kenya) that Congress could consider it this year.

Axios reported late on Thursday that the Biden Administration may be considering Cindy McCain, the widow of former Senator John McCain (R-Arizona), as a potential US Ambassador to the United Kingdom.  London, however, is not guaranteed, as aides to President Biden have reportedly said that no decisions have been made about ambassadorships.  British media reported on the possibility of McCain for the London post back in November.

Sanctions Updates | US, EU

On Monday, 8 February, the EU and UK made a joint call for the United Nations Human Rights Council to schedule a forum to address the situation in Myanmar.  Both the EU and UK condemned the coup and violent acts carried by the military and police forces, including the illegal detention of protestors.

On Thursday, 11 February, the US Government took steps to hold accountable those responsible for the 1 February coup in Burma (a.k.a., Myanmar).  This included new US sanctions targeting the Burmese military and its leaders, as well as their business interests.  The US Department of the Treasury designated 10 individuals and three entities for their association with the military apparatus responsible for the coup.  Under a new Executive Order signed by President Biden that day, Treasury can also target the spouses and adult children of these individuals.  The US Department of Commerce also moved to limit exports of sensitive goods to the Burmese military and other entities associated with the recent coup.  The US Government is further preventing Burmese Generals involved in the coup from accessing more than US$1 billion in Burmese government funds held in the United States.

Meanwhile, the US Agency for International Development (USAID) is redirecting $42.4 million of assistance away from work that benefits the Government of Burma, including support for reforming economic policy, to programs that support and strengthen civil society and the private sector.  The United States is sustaining its assistance to Burma for healthcare, civil society groups, and other areas that benefit the Burmese people directly, along with support for Rohingya and other vulnerable populations.

Amid Russia’s expulsion of German, Polish and Swedish Ambassadors from its territory claiming they supported protests in favor of Alexei Navalny, EU High Representative Josep Borrell traveled to Russia and met with Sergei Lavrov, Russian Foreign Affairs Minister to discuss the situation arising from Navalny and his supporters’ detention.  Upon his return, Borrell faced criticism as the media characterized him as being “embarrassingly outplayed” by Russia’s Foreign Minister.  Lavrov accused the EU of being an “unreliable partner”.  During a joint press conference in Moscow, a Sputnik journalist pressured Borrell to answer questions related to the EU’s policy on Crimea and to criticize the US embargo on Cuba.  Lavrov seized the opportunity to further spotlight differences between Brussels and Washington, saying,

I see here no surprise, Josep, because when I visit different countries, they often ask me about Ukraine and now they asked you about Cuba, because you have quite important and intense relations with Cuba and I think it’s quite a positive example that here we should use common sense, that we should avoid illegitimate, unilateral pressure [and] use embargoes, blockades.”

The meeting was intended to improve diplomatic relations between Russia and the EU, but instead spotlighted differences between the two parties.  As stated by Borrell,

My meeting with Minister Lavrov and the messages sent by Russian authorities during this visit confirmed that Europe and Russia are drifting apart. It seems that Russia is progressively disconnecting itself from Europe and looking at democratic values as an existential threat. We are at a crossroads. The strategic choices we make now will determine international power dynamics in the 21st century, and notably, whether we will advance towards more cooperative or more polarised models, based on closed or on freer societies,”

Despite US sanctions (imposed in January), the Nord Stream 2 gas pipeline project will resume in the Baltic Sea, led by Russian vessel Fortuna.  The Nord Stream 2 consortium insists the work in Danish waters is carried out “in line with the relevant permits”.  Further information will be provided in “due time” by the Nord Stream consortium, as the construction advances.

Meanwhile, on 9 February, EU media freedom groups called on the EU to impose further sanctions on Belarus following the previous months’ media suppression that resulted in around 400 arrests.  In the open letter, the signatories recommended the EU suspend all economic assistance and freeze financial assistance disbursements to the Government of Belarus; urged assistance be provided to journalists in the country.


Frank SamolisMatthew Kirk and Wolfgang Maschek contributed insights to this report.