Transatlantic Trade Update text overlaid on top of images of US, UK and EU flagsThe United States (US) marked a new stage in re-opening its economy this week, allowing vaccinated citizens to remove masks in a number of situations and opening vaccinations up to adolescents as young as 12.  Meanwhile, the Biden Administration’s support for negotiating a TRIPS Agreement waiver for COVID-19 related vaccines at the World Trade Organization (WTO) continues to cause debate in the United States and European Union (EU).

US Trade Representative Katherine Tai faced questions from US lawmakers focused on the TRIPS waiver and other trade issues this week, when testifying before the congressional trade committees.  The EU27 Heads of State and Government focused on green and digital transitions at an informal Summit in Portugal.  In addition, the United Kingdom (UK) Parliament adopted a measure this week that provides post-Brexit certainty to its services sector.

In this issue, we also cover:

  • COVID-19 highlights among the transatlantic partners;
  • Notable US, UK, and EU developments; and
  • UK-EU trade deal

COVID-19 Highlights | US, EU, UK

On Thursday, the US Centers for Disease Control and Prevention (CDC) eased mask-wearing guidance for fully vaccinated people, allowing them to remove masks when outdoors in crowds and in some indoor situations.  The guidance still calls for wearing masks in crowded indoor locations, such as buses, planes, hospitals, and prisons.  US President Joe Biden summarized the new guidance:  “Get vaccinate or wear a mask until you do.”  About 46 percent of the US population has received at least one dose of COVID-19 vaccine; on Wednesday, the US Food & Drug Administration expanded the emergency use authorization for the Pfizer vaccine to include children ages 12 to 15.

US support for negotiating a TRIPS waiver has created a lot of debate in the EU.  European Commission Executive Vice President and Trade Commissioner Valdis Dombrovskis reiterated the EU is open to discuss the US proposal, but Executive Director of the European Medicines Agency Emer Cooke appeared more skeptical of the “equitable access” of vaccines.  Some Members of the European Parliament are currently pushing the leaders of various political parties to table a resolution that, if adopted, would urge the European Commission to support the US proposal.  Meanwhile, the European Commission approved a contract of an additional 1.8 billion doses of the Pfizer/BioNTech coronavirus vaccines through 2023.

UK Ambassador to the WTO  Simon Manley said the following during the WTO General Council on 6 May (remarks were published 11 May):

A balanced and effective intellectual property regime has proved invaluable in this crisis, as in others, in supporting innovation and supporting collaboration, as well as ensuring the results of that innovation, including safe and effective diagnostics, vaccines and therapeutics can reach those who need them. The UK stands ready to engage in further evidence-based discussions and is committed to finding solutions to these issues. Meanwhile, we are delighted to see the WTO bringing together key stakeholders to look carefully at all the relevant trade, health and intellectual property elements so that we can support the development, production, and equitable access to these vaccines.”

UK businesses are increasingly pledging flexibility for their staff to get the COVID-19 vaccine during work hours.  With the India variant (B1.617.2) beginning to spread in certain areas across the UK, the Government took steps this week to increase surge testing, increased genomic sequencing and enhanced contact tracing.

Notable US Developments

In responding to a question at the Senate Finance Committee hearing on Wednesday that focused on the status of the US-UK trade negotiations, Ambassador Tai said there were “critical issue areas” yet to be discussed after five rounds of talks.  She added, “[I]t is really important for us to think through the objectives for this agreement now that we have some of the issues settled with the UKs exit from the European Union.”  She also acknowledged the Administration is closely monitoring the situation in Northern Ireland.

With respect to the ongoing talks with the EU and UK over the long-standing large civil aircraft dispute, Ambassador Tai acknowledged they are half-way through the four-month deadline to resolve the issue.  When pressed on whether the temporarily suspended tariffs could snapback, she stated, “[W]e are very serious about this four-month—this four-month deadline.”

When challenged about the TRIPS waiver and whether the People’s Republic of China (“China”) and Russia would be excluded from it, Ambassador Tai said:  “I am committed to a full, good-faith effort at the WTO.”  She added, “But the focus really is on promoting vaccine equity and we will have to address the concerns of all parties involved and those whose partnership we require in order to come to a kind of resolution at the WTO.”

In opening remarks, Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) warned, “The WTO TRIPS Agreement was approved by Congress. The law says Congress’ approval can only be withdrawn, quote, if and only if, end quote, Congress enacts ask a joint resolution to that effect.”  He added, “Last summer, during the height of the pandemic, both houses of Congress declined to act on such a resolution.  Yet, without any consultation with this committee, you announced via a tweet that the administration unilaterally supports waiving the patent obligations of the TRIPS Agreement.”  Ambassador Tai similarly testified before the House Ways & Means Committee on Thursday.

On 11 May, Ambassador Tai spoke met virtually with Ireland’s Tánaiste Leo Varadkar, Minister for Enterprise, Trade and Employment.  A readout reflected the discussion touched on a number of issues, with Ambassador Tai reiterating the Biden-Harris Administration’s support for maintaining the integrity of the Good Friday Agreement.

The US is seeing areas of gas shortages in some regions, after a ransomware cyber-extortion attack affected a 5,500-mile long oil pipeline managed by Colonial Pipeline that carries gasoline and other fuel from Texas to the Northeast.  President Biden asserted on Thursday that the Russian Government was not involved; however, he said the criminal gang involved – DarkSide – is believed to be based in Russia.  On Wednesday, he signed an Executive Order on improving the nation’s cybersecurity.  Among other things, the order seeks to improve information-sharing between the US Government and the private sector on cyber issues, such as removing contractual barriers and requiring providers to share breach information.  A White House fact sheet is available here.

President Biden met with bipartisan, bicameral lawmakers this week, seeking to advance his American Jobs Plan, an infrastructure initiative.  A readout of a second meeting on Thursday reflected, “[I]naction [is] a red line for him and that he want[s] to see real progress toward a potential bipartisan deal by Memorial Day.”  [31 May is Memorial Day.]

Looking ahead, US Secretary of State Antony Blinken will travel to Copenhagen, Reykjavik, and Kangerlussuaq from 16-20 May.  Meanwhile, Special Presidential Envoy John Kerry is on travel from 13-19 May, with stops in Rome, London and Berlin, to meet with European government officials and business leaders on enhancing global climate ambition.

Notable UK Developments

On 11 May, Her Majesty Queen Elizabeth II addressed both Houses of Parliament.  She observed a key priority for the Government “is to deliver a national recovery from the pandemic that makes the United Kingdom stronger, healthier and more prosperous than before.”  This will include investments in new green industries to create jobs, while protecting the environment.  Another domestic priority for the Government is strengthening economic ties across the union, investing in and improving national infrastructure.  With respect to trade, the Government will focus on deepening ties in the Gulf, Africa and the Indo-Pacific.  This week, Foreign Secretary Dominic Raab announced £22 million of new investment to build cyber security resilience in developing countries and globally, particularly in Africa and the Indo-Pacific.

The UK Government also imposed new sanctions on the Libyan al-Kaniyat militia and its leaders this week.  Minister for the Middle East and North Africa James Cleverly said of the action:  “These new sanctions send a clear message that those responsible for serious human rights violations or breaches of international humanitarian law in Libya will face consequences.”

Notable EU Developments

At an informal Summit held in Porto, EU27 Heads of State and Government adopted the Porto Declaration, underscoring efforts to accelerate green and digital transitions via the historic NextGenerationEU Instrument.  The Declaration also took note of the main outcome of the Porto Social Summit, focusing on 2030 targets for the recovery of employment, investment in skills, and adequate social inclusion and protection, among other things.

On the 2021 Europe Day on 9 May, the European Commission, European Parliament and the Portuguese Presidency inaugurated the Conference on the Future of Europe after the agreement on its Rules and Procedures.  The Conference of Europe is a citizens’ led series of discussions, aiming to shape the future of EU reforms.

The Council of the European Union adopted earlier this week a Regulation on export controls applicable to sensitive dual-use goods and technologies.  The new rules introduce further restrictions on dual-use tech exports by introducing criteria for granting licenses for the export of sensitive technologies, such as surveillance systems and hacking software; it also contains a control mechanism for human rights violations and abuses.  The Regulation will soon be published in the Official Journal of the EU and will enter into effect 90 days later.

For more details on the European Commission’s draft Regulation on distortive foreign subsidies, which was mentioned in last week’s report, see our firm’s client alert here.

UK-EU Trade Deal Updates

On Wednesday, the UK Parliament adopted a bill that introduces a tool that UK regulators will use for mutual recognition of professional qualification across the European Economic Area.  The EU-UK Trade and Cooperation Agreement did not provide an automatic recognition of professional qualifications, which would have required detailed reciprocal arrangements in different sectors.  The adopted bill is therefore providing post-Brexit certainty to the UK’s services sector.

Earlier this week, Lord David Frost – UK Minister of State at the Cabinet Office – and Secretary of State for Northern Ireland Brandon Lewis met with a number of business and community representatives in Northern Ireland to listen to their experiences and to reaffirm the Government’s commitment to address issues with the Northern Ireland Protocol.  A readout of the trip reflected:

In particular they heard concerns about the level and complexity of paperwork required even on goods remaining in Northern Ireland, notably in the agrifood sector; about disruption to supply chains from Great Britain and consequent diversion of trade; and about the risks associated with the expiry of the grace periods and the introduction of further processes as a result.”

Lord Frost said talks continue with the EU, adding:

It’s clear from my visit that the Protocol is presenting significant challenges for many in Northern Ireland. Businesses have gone to extraordinary efforts to make the current requirements work, but it is hard to see that the way the Protocol is currently operating can be sustainable for long.”

Meanwhile, news regarding the detention of EU nationals by UK immigration authorities due to concerns over their intention to work in the country without a work visa made headlines this week.  The European Commission expressed concern over the incidents but stressed this is a consular matter.  Nonetheless, earlier this week, Members of the European Parliament urged European Commission President Ursula von der Leyen to put pressure to the UK, saying reciprocal protection of rights of EU and UK citizens is a fundamental issue of the EU-UK relations underpinned in the Withdrawal Agreement and should be addressed.

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