Transatlantic Trade Update text overlaid on top of images of US, UK and EU flagsOfficials from the United States (US) spent this past week preparing for this coming week’s diplomatic talks with their counterparts from the Russian Federation, amid tension over Russia’s military build-up at Ukraine’s border and unrest in Kazakhstan that saw Russian paratroopers deployed at the behest of the Kazakh government.  European and US officials will be jointly focused on Russia, Ukraine and Kazakhstan the week ahead, as diplomatic talks with Russia commence, starting with a Russia-US bilateral forum on 10 January.  The Government of the United Kingdom (UK) echoed American officials this past week in warning Russia against a potential incursion into Ukraine.

Also ahead, the U.S. Senate is set to vote on a Nord Stream 2 pipeline sanctions bill.  Meanwhile, in the European Union (EU), the European Parliament’s proposal for addressing foreign subsidies is starting emerge.  The UK Government released a report on the Build Back Better Business Council’s progress in 2021.  Transatlantic partners are also grappling with increased COVID-19 cases of the Omicron variant.  To mitigate the spread of Omicron in workplaces, the UK Government announced it would provide critical workers with daily COVID-19 rapid tests.

In this issue, we also cover:

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

Notable US Developments

American officials continue to monitor closely the situation along Ukraine’s border, with US diplomats reaching out to broad-based Western allies and stressing support for Ukraine’s sovereignty.  The United States and Russia agreed to hold bilateral talks on 10 January, followed by a meeting of the Russia-NATO Council on 12 January and the Organization for Security and Cooperation in Europe (OSCE) on 13 January.

This past week, US Deputy Secretary of State Wendy Sherman spoke with European allies, NATO Deputy Secretary General Geoana, Spanish Ministry of Foreign Affairs State Secretary Ángeles Moreno Bau, Greek Foreign Minister Nikos Dendias, and Georgian Foreign Minister David Zalkaliani about Russia’s perceived aggression.  US Secretary of State Antony Blinken has also been making calls to a broad base of counterparts on the same topic.  He spoke with Ukraine Foreign Minister Dmytro Kuleba on 7 January.  That same day, Secretary Blinken addressed the media, noting that Ukraine is not the aggressor in the situation with Russia.  He noted a diplomatic solution in preferable, but also warned:

No one should be surprised if Russia instigates a provocation or incident – then tries to use it to justify military intervention, hoping that by the time the world realizes the ruse, it’ll be too late.”

Deputy Secretary Sherman is currently on travel, with stops in Switzerland and Belgium from 8-13 January.  State noted,

The trip follows extensive diplomacy with our European Allies and partners in developing a united approach to Russia’s unprovoked military build-up along Ukraine’s borders and our joint efforts to encourage Russia to choose diplomacy and deescalate in the interests of Euro-Atlantic security and stability.”

In Geneva on 9 January, Deputy Secretary Sherman met with Russian Deputy Foreign Minister Sergey Ryabkov to discuss the bilateral topics both sides would address during the extraordinary meeting of the Strategic Stability Dialogue (SSD) 10 January.  A readout reflected the SSD would be a forum for the United States to discuss certain bilateral issues with Russia, noting clearly it would not “discuss European security without our European Allies and partners.”

Amid tense US-Russia relations, the State Department issued a statement early this past week on the state of emergency declared in Kazakhstan, where protesters have reportedly been objecting to the rise in fuel prices and broader discontent with the government.  Kazakh President Kassym-Jomart Tokayev appealed for military assistance from the Collective Security Treaty Organization (CSTO), which includes Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan and Tajikistan; reports indicate Russian military forces are deploying to Kazakhstan.  On 7 January, the State Department approved the voluntary departure of Consulate General Almaty non-emergency US government employees and family members from Kazakhstan.  At the Friday press briefing, Secretary Blinken questioned why the Kazakh Government made the CSTO request, adding State was seeking to learn more about the nature of the request.  The Secretary noted in response to an inquiry on Russia’s deployment to the country,

I think one lesson in recent history is that once Russians are in your house, it’s sometimes very difficult to get them to leave.”

On 5 January, US Trade Representative Katherine Tai spoke with Lithuanian Foreign Minister Gabrielius Landsbergis of the ongoing trade tension between Lithuania and the People’s Republic of China (“China”).  A summary from the Office of the US Trade Representative (USTR) stated that Ambassador Tai had “expressed the United States’ continuing strong support for Lithuania” in its dispute with China.  Secretary Blinken multiple times this past week offered support for the European Union member, including via a call with the Bucharest Nine group of eastern flank NATO allies and a call with EU High Representative for Foreign Affairs and Security Policy Josep Borrell.

On 3 January, US President Joe Biden met virtually with a roundtable with farmers, ranchers, an independent poultry processor, and members of his Cabinet to discuss the need for greater competition in beef, pork and poultry processing.  The President announced his Administration’s Action Plan for a fairer, more competitive meat and poultry supply chain (fact sheet available here).  In sum, the Biden Administration is seeking to address perceived control of the beef, pork, and poultry markets by a handful of companies, who allegedly squeeze farmers and ranchers and which leads to increased consumer prices.  The US Departments of Agriculture and of Justice released a statement of shared principles and commitments to protect against unfair and anticompetitive practices.

On 5 January, John Porcari, US Port Envoy to the White House Supply Chain Task Force, spoke at a White House press briefing, on efforts to address domestic supply chain challenges.  He shared the Ports of Los Angeles and Long Beach announced a new fee on long-dwelling empty containers at the beginning of the year, building on the fee imposed on long-dwelling import containers in November, adding this action should further unclog American ports.  Porcari also said the Biden Administration is ramping up efforts to ensure American exporters are treated fairly, citing the Port of Oakland, which has announced “new actions to improve U.S. exports, particularly agricultural exports.”

The second session of the 117th Congress convened this past week.  Democratic lawmakers are focused in the near-term on election reform, following the anniversary of the 6 January breach of the US Capitol.  Senate Majority Leader Schumer said that he plans to schedule debate on changing the Senate’s filibuster rules by Martin Luther King Jr. Day (17 January), if Republicans continue to block voting rights legislation.  Also on the Senate agenda is a pending vote on a Nord Stream 2 pipeline sanctions bill.  The upper chamber is supposed to vote on the bill by 14 January – fulfilling a December agreement that allowed for several of President Biden’s nominations to be approved by the Senate.

On 7 January, the US Department of Labor released its December Jobs Report, which reflected the economy added 199,000 jobs, far short of the anticipated 422,000 jobs.  The unemployment rate in December was down to 3.9 percent from 4.2 percent in November.  Separately, the Labor Department’s Job Openings and Labor Turnover Survey released on Tuesday reflected 4.5 million Americans quit their jobs in November.  With the Omicron COVID-19 variant surging in America, labor market experts anticipate more volatility this month, as the variant effects school re-openings, corporate return-to-office plans, large events, etc.

Notable UK Developments

On 6 January, the UK Government released a report summarizing the Build Back Better Business Council (BBBBC) first 12 months, since the BBBBC was established in January 2021.  The report details progress on topics such as infrastructure, workforce skills, and innovation.  Separately, on 5 January, the UK Government released its new plan for healthcare, adult social care, and related funding.

On 7 January, UK Foreign Secretary Liz Truss attended a virtual NATO Foreign Ministers’ meeting, where she made clear the UK’s support for Ukraine and stressed NATO’s important defensive role.  She stated,

We will defend democracy in eastern Europe and around the world. Our support for Ukraine’s sovereignty and territorial integrity is unwavering.  We are clear that any Russian incursion would be a massive strategic mistake, for which there would be a severe cost.”

That same day, Foreign Secretary Truss briefed the House of Commons on what the UK Government is doing about the situation with Ukraine and Russia.

On 6 January, the Foreign, Commonwealth & Development Office (FCDO) expressed concern over the situation in Kazakhstan, urging calm and for protests to be peaceful.  The FCDO added,

We also call for a resumption of internet services and for the Kazakh authorities to respect their commitments to freedom of speech and expression.”

Notable EU Developments

The European Parliament’s position on the EU proposal for addressing foreign subsidies is taking shape, after the publication of the Draft Report by the International Trade (INTA) Committee Rapporteur Christophe Hansen (EPP, Luxembourg), and the publication of the Draft Opinion by the Economic and Monetary Affairs (ECON) Committee Rapporteur Stéphanie Yon-Courtin (RE, France).  Among the key amendments proposed in the draft INTA Committee Report is a proposal to repeal the tool when effective multilateral rules against foreign subsidies are in place.  The Rapporteur also proposes to facilitate the notification methods to start investigations for EU countries, a provision that is also promoted in the draft ECON Committee’s Opinion.  The draft INTA Committee Report will be discussed on 25 January.  Members of the Committee can submit amendments to the draft Report until 31 January.

France has taken over the EU Council Presidency, effective January 2022 for the next six months, with a number of trade policy priorities highlighted in its work progamme.  Apart from advancing the negotiations on the proposal of the Carbon Border Adjustment Mechanism, the French Presidency seeks to gather Member State support for introducing mirror clauses in agricultural trade to address reciprocity in standards of imported food.  Paris also envisions further integrating the Green Deal objectives in the EU Trade Policy, through revisions of the Generalized System of Preferences (GSP) and the upcoming review of the Trade and Sustainable Development chapters.  Defensive trade policies are also on top of the French Presidency’s priority list, with a goal to make progress on the international procurement instrument and the anti-coercion instrument.  Finally, Paris also supports an EU action in response to the recent diplomatic and trade tension between Lithuania and China.

In early January, the European Commission announced the beginning of the Member State consultations in connection to a long anticipated Delegated Act on the Taxonomy for nuclear energy and gas.  The draft Delegated Act would first need to be endorsed at this preparatory phase before it can be submitted to the co-legislators for a final approval.  The Delegated Act, will introduce a green labeling system for investments in the energy sector, including in the nuclear energy and natural gas sectors, complementing the current EU Taxonomy legislative regime, an EU-wide classification system for sustainable activities.  The future act has been subject to a lot of political discourse, as it would define how investments will be directed to decarbonize the EU’s economy.

UK-EU Trade Deal Update

From 1 January 2022, a new system in the post-Brexit custom controls on EU imports came into force, requiring British importers to complete a full customs declaration on goods entering Great Britain from the EU.  Furthermore, to benefit from preferential tariffs, exporters and importers will be required to prove their products have been produced or manufactured in the EU or the UK.  Additionally, importers must provide a notice regarding any fresh food, animals and plant imports, before these enter Great Britain.  Additional checks are due to enter into force in the summer (e.g. veterinary checks on food products) and in autumn (e.g. dairy products and other regulated products of animal origins, such as fish).

In view of the ongoing negotiations on the Northern Ireland Protocol, full custom control checks between Northern Ireland and the UK have now been paused.  A new set of EU-UK talks in this regard are still to be scheduled between European Commission Vice President Maroš Šefčovič and the recently appointed Chief Brexit Negotiator and Foreign Secretary Liz Truss.  For the time being, no specific date has been announced.

From 3 January 2022, thousands of British websites with a “.eu” domain name were taken offline, after their right to use the domain name lapsed as part of the UK’s withdrawal from the EU.

COVID-19 Highlights

The end of 2021 was marked with record number of COVID-19 infections throughout Europe, as the Omicron variant spread rapidly, leading to additional restrictions imposed across European jurisdictions.  European Commission President Ursula von der Leyen outlined the EU’s 2021 vaccine sharing and the targets for 2022 in a statement this week, underlying, “More than 255 million of these doses were already delivered to recipient countriesthrough the COVAX mechanism.  These will be followed by 700 million additional doses, she continued, expected to be delivered to countries in need by mid-2022.

The US Centers for Disease Control and Prevention (CDC) reported on 3 January that the Omicron COVID-19 variant now represents nearly every case sequenced in the United States.  The once-dominant Delta variant is now only 4.6 percent of sequenced cases.  On 4 January, President Biden provided an update on Federal efforts to address the increased surge of Omicron cases in America, acknowledging the lingering challenges associated with COVID-19 testing capabilities.  He urged schools to stay open, as they returned to session after the holiday break.  Pfizer Inc. shared on 4 January that the US Government had agreed to buy an additional 10 million doses of its antiviral pill, Paxlovid, after original order of 10 million doses.

On 3 January, the US Food & Drug Administration (FDA) amended the emergency use authorization (EUA) for the Pfizer/BioNTech COVID-19 vaccine to: (1) expand the use of a single booster dose to include use in children 12 through 15 years of age; (2) shorten the time between the completion of primary vaccination of the Pfizer-BioNTech COVID-19 Vaccine and a booster dose to at least five months; and (3) allow for a third primary series dose for certain immunocompromised children 5 through 11 years of age.  On 5 January, the CDC endorsed COVID-19 booster shots for children 12 to 15 years old.  On 31 December, US-based Novavax submitted its final clinical data packages with the FDA to satisfy the requirements for seeking EUA for its COVID-19 vaccine.  EUA consideration by the FDA typically takes a month.

Meanwhile, on 7 January, the US Supreme Court heard arguments on the Sixth Circuit Court’s decision to lift the Fifth Circuit’s stay of the Occupational Safety and Health Administration’s (OSHA) vaccine or test Emergency Temporary Standard (ETS) for US employers with 100 or more employees.  The Court also heard oral arguments on a stay of the Centers for Medicare and Medicaid Services’ (CMS) Vaccine Mandate for health care workers that participate in the Medicare and Medicaid government programs.  While the Supreme Court has thus far declined to take up cases related to state and local government vaccine mandates, the Court has been asked to address some constitutional questions with respect to these two Federal vaccine mandates.  Initial analysis of the questions asked by the Supreme Court justices appears to indicate the conservative-leaning Court is skeptical of OSHA’s employer vaccine mandate, but it may be more receptive to the legal arguments related to the health care sector.  While a timeline on the Supreme Court’s decision on the two cases is unknown, many expect decisions will be issued in the coming days.

A recent study published by the UK Health Security Agency reflected that COVID-19 booster doses appear to be 90 percent effective at preventing symptomatic infection.  In reviewing the booster programme, the Joint Committee on Vaccination and Immunisation (JCVI) advised there is no immediate need to introduce a second booster dose, or fourth jab.

To help isolate asymptomatic cases and to limit outbreaks in workplaces, the UK Government announced it would provide 100,000 critical workers in England with free lateral flow tests to help keep essential services and supply chains running.  Starting 10 January, critical workers will be able to take a test on every working day and the provision of precautionary testing will be for an initial five weeks.

The UK Government announced on 7 January that businesses in England most impacted by the Omicron variant will be able to tap into a multimillion-pound support package in the coming weeks, after the Government delivered funding to councils across the country that day.  Firms in the hospitality, leisure and accommodation sectors will be able to apply for one-off grants of up to £6,000 per premises depending on a rateable value; and more than £100 million worth of discretionary funding is also being made available for local authorities to support other businesses.

This week, France shared that it had detected another COVID variant with 46 mutations – B.1.640.2, dubbed “IHU” – after a fully vaccinated traveler arrived from a three-day stay in Cameroon and tested positive.  Twelve people have reportedly tested positive for the new variant in southeastern France.  On 8 January, reports emerged that health researchers in Cyprus identified a new strain of the COVID-19 virus that combines at least 10 mutations of the Delta and Omicron variants, dubbed, “Deltacron.”  Twenty-five cases of Deltacron have thus far been reported.