Transatlantic Trade Update text overlaid on top of images of US, UK and EU flagsWhile the situation between Russia and Ukraine remains a focus for transatlantic trade partners, the rhetoric this week appears to have been pared back.  Nevertheless, a group of Senators in the United States (US) may soon have an agreement on a sanctions bill to address Russia’s aggression.  Sanctions legislation was introduced on 31 January in the United Kingdom (UK), which would allow the British Government to act in concert with allies, should Russia further invade Ukraine.  In addition, some details emerged in the European Union (EU) this week on the bloc’s sanctions package.

The US House of Representatives moved forward this week with approving its trade/competitiveness bill.  Cyprus and the US discussed increasing scientific collaboration during a bilateral meeting in Washington.  The UK opened a consultative process this week, as it seeks to negotiate a trade deal with Israel.  The European Commission unveiled its EU strategy on standardization.  Meanwhile, some confusion emerged this week with respect to phytosanitary checks between the UK and Northern Ireland, complicating the ongoing talks between the EU and UK to resolve outstanding Northern Ireland Protocol implementation concerns.

In this issue, we cover:

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

Ukraine-Russia Tension

At a White House press briefing on 31 January, Press Secretary Jen Psaki said the White House has “developed specific sanctions packages for both Russian elites and their family members if Russia further invades Ukraine.”  Working with allies, the sanctions would target those with “deep … financial ties with the West.”  That same day, the United States presented in detail the full nature of Russia’s threat to Ukraine’s sovereignty and territorial integrity at the United Nations Security Council meeting in New York.

On 1 February, US President Joe Biden authorized the deployment of approximately 3,000 American service members to Romania, Poland and Germany to bolster the North Atlantic Treaty Organization’s (NATO) eastern flank, given Russia’s continued build-up of forces on Ukraine’s border and in Belarus.  France is also reportedly sending troop reinforcements to Romania under NATO command; a number of other European NATO countries are also considering adding forces on NATO’s eastern flank.  The UK Government is considering a major military deployment to strengthen Europe’s borders, along with sending defensive weapons to Estonia.  Prime Minister Johnson said on 30 January,

I have ordered our Armed Forces to prepare to deploy across Europe next week, ensuring we are able to support our NATO allies on land, at sea and in the air.”

President Biden and French President Emmanuel Macron spoke by phone Wednesday evening.

Amid the stalled diplomatic talks, which included US Secretary of State Antony Blinken and Russian Foreign Minister Sergey Lavrov talking on 1 February, the media reported the next day that the United States may be willing to offer Russia a transparency agreement to guarantee that cruise missiles will not be stationed at NATO bases in Eastern Europe.

UK Prime Minister Boris Johnson travelled to Kyiv on 1 February, meeting with Ukraine President Volodymyr Zelenskyy and announcing £88 million of new funding to help Ukraine combat corruption and reduce the nation’s reliance on Russian energy supplies.  The two leaders also signed a joint statement.  His visit came after British Foreign Secretary Liz Truss announced new legislation in Parliament on 31 January to toughen and expand the UK’s sanctions regime in response to Russia’s aggression against Ukraine.  The Government noted the legislation would mean the British could act swiftly in lockstep with the US and other allies to freeze assets and ban travel.

On 2 February, the British Prime Minister spoke with Russian President Vladimir Putin.  A 10 Downing Street summary noted:

He emphasised the need to find a way forward which respects both Ukraine’s territorial integrity and right to self-defence.  The Prime Minister stressed that any further Russian incursion into Ukrainian territory would be a tragic miscalculation.”

The leaders also “agreed that aggravation was in no one’s interest.”  Separately, Defence Secretary Ben Wallace met this week with NATO Allies and counterparts in Hungary, Croatia and Slovenia.

Ukraine’s Foreign Minister Dmytro Kuleba urged the EU this week to publish its draft sanctions against Russia, a move it believes could exert pressure on Russia and its possible military attack on Ukraine.  The Foreign Minister noted,

The best European Union and its member states can do now can be boiled down to three things: first, stay firm and united on the issue of inadmissibility of Russian ultimatums and demands”.

European Commission President Ursula von der Leyen revealed during an interview this week that a sanctions package against Russia “ranges from closing access to foreign capital to export controls on critical goods, high-tech components that Russia cannot simply replace, for example in the field of artificial intelligence and weaponry, quantum computers, lasers and space. Russia urgently needs to modernize its economy, but this cannot be done without the technologies in which we have undisputed global leadership.”

A group of bipartisan US Senators continued to negotiate this week on a package of sanctions that could be imposed on Russia.  While a deal seemed imminent earlier in the week, talks appeared to stall over two reported issues:  (1) whether some sanctions should be implemented immediately, and (2) how to handle the Nord Stream 2 pipeline between Russia and Germany.  Senate Foreign Relations Committee Ranking Member Jim Risch (R-Idaho) expressed optimism on Thursday that an announcement on an agreement would be forthcoming.

Notable US Developments

On 31 January, President met with His Highness Sheikh Tamim Bin Hamad Al-Thani, Amir of the State of Qatar, along with US Secretary of State Antony Blinken.  Apart from bilateral and regional matters, American officials were also keen to discuss ensuring the stability of global energy supplies, particularly for Europe, should Russia further invade Ukraine and global sanctions be imposed.  The US and Qatar also announced Qatar Airways’ new purchase commitment of Boeing Aircraft on Monday.

On 31 January, the US Department of Agriculture (USDA) said it would contribute to a new project at California’s Port of Oakland in an effort to help clear backlogs of American agricultural exports that are facing shipping disruptions.  USDA is partnering with the Port of Oakland to set up a new 25-acre “pop-up” site to make it easier for agricultural companies to fill empty shipping containers with commodities, beginning in early March.

On 3 February, the US and Slovakia signed a Defense Cooperation Agreement, making it easier to coordinate on common defensive efforts, such as conducting joint training exercises.  The United States has a number of these agreements with NATO Allies.

On 1 February, Secretary Blinken met with Republic of Cyprus Foreign Minister Ioannis Kasoulides in Washington.  A readout of the meeting reflected that apart from discussing bilateral and regional matters, the two sides discussed increasing scientific collaboration on issues such as climate change and emerging technology through the upcoming signing of a bilateral Science and Technology Agreement.  The United States also continues to support the “Cypriot-led, UN-facilitated efforts to reunify the island as a bizonal, bicommunal federation with political equality to benefit all Cypriots.”

As part of a US delegation visiting Lithuania this week, the US Export-Import (EXIM) Bank officials visited with members of the Lithuanian Confederation of Industrialists (LPK), discussing opportunities and the role US-based goods and opportunities can play in fostering success for Lithuanian companies.  The EXIM delegation also met with the Lithuanian Banking Association and the Investors’ Forum toward fostering local private financing partnerships as EXIM drives further economic cooperation between the two countries.

On 4 February, On February 4, 2022, the US and EU concluded negotiations to allow for resumption of bilateral trade in bivalve molluscan shellfish.  For the first time since 2011, American producers are eligible to export live, raw and processed oysters, clams, mussels, and whole or roe-on scallops.  EU producers are also eligible to export live and raw bivalve molluscan shellfish to the United States.

After floor debate this week, the US House of Representatives approved H.R. 4521, the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act of 2022, by a narrow vote of 222 to 210 on Friday, with just one Republican supporting it.  The bill includes a number of Democratic priorities, such as Trade Adjustment Assistance, which must be reconciled with the more narrow Senate-approved United States Innovation and Competition Act (“USICA”; S. 1260).  Notably, the US Chamber of Commerce targeted the Democratic trade provisions and other trade language in a letter to lawmakers opposing the bill on Wednesday.  Democrats are reportedly pushing to reconcile a package that could land on the President’s desk before his State of the Union address on 1 March.

Notable UK Developments

The UK, in conjunction with the US and Canada, imposed new sanctions against the Myanmar military regime, targeting individuals responsible for undermining democracy and rule of law.  The 31 January action marked the one-year anniversary of the military coup, with the UK designated three members of the regime that allegedly “have been instrumental in suppressing democracy and stifling opposition voices.”  The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated seven individuals and two entities connected to Burma’s (Myanmar) military regime.

On 1 February, the UK Government published a notice seeking input on which aspects of its current trading arrangements with Israel should be improved or amended.  Interested parties have until 30 March to provide comments.  International Trade Secretary Anne-Marie Trevelyan launched consultation on 2 February for a new UK-Israel trade deal, during a three-day visit to Israel.  The British Government also confirmed a UK-Israel Innovation Summit for this spring, with the Israeli Prime Minister and a trade delegation set to attend.

Notable EU Developments

Last week, Executive Vice President and Trade Commissioner Valdis Dombrovskis welcomed the French Presidency’s determination to prioritize sustainable and responsible trade at an event the Presidency hosted.  The Trade Commissioner stressed the EU wants to “ramp up the capacity of trade and trade policy to support sustainable development.”  As part of this, the proposals connected to the review of the Trade and Sustainable Development chapters in trade agreements, are expected this coming summer.

The European Commission unveiled on Wednesday its EU strategy on standardization, which aims to strengthen the EU’s assertiveness by better representing the European business interests and values in international standardization.  The new measures are part of the open strategic autonomy concept, and are responsive to the growing Chinese market power and US dominance over emerging technologies.  The proposed strategy focuses on five actions, starting with identifying strategic areas for the EU innovation and policy agenda (e.g. chips certification and data standards) and improving the governance of the European standardization system to prevent undue foreign influence. While presenting the new strategy, Internal Market Commissioner Thierry Breton underlined,

Technical standards are of strategic importance. Europe’s technological sovereignty, ability to reduce dependencies and protection of EU values will rely on our ability to be a global standard-setter”.

This week, World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala expressed optimism over the possibility of resolving the trade dispute between Beijing and Brussels in the next few weeks, following the complaint the EU submitted last week.  The US said on 27 January that it would request to join these WTO consultations.

As reported by Politico, it appears the EU and US have made progress in their negotiations for a new EU-US data transfer agreement.  An agreement could possibly be announced at the next EU-US Trade and Technology Council, currently scheduled for May 2022.

UK-EU Trade Deal Update

On Wednesday, Northern Ireland’s Agriculture Minister Edwin Poots, a long-standing opponent of the post-Brexit trade rules in Northern Ireland, gave an order to halt post-Brexit sanitary and phytosanitary checks at Northern Irish ports.  Despite the Northern Irish Ministerial order, UK Environment Secretary George Eustice confirmed that the sanitary and phytosanitary checks between Great Britain and Northern Ireland would continue, echoing the same understanding shared by the European Commission on Thursday.  On Friday, Belfast High Court Judge Justice Colton suspended the “order or instruction given by the Minister for Agriculture until further order of this court or completion of these proceedings”, granting legal certainty for businesses on the evolving situation.

European Commission Vice-President Maroš Šefčovič issued a statement following a videoconference with UK Foreign Secretary Truss on 3 February.  He emphasized the “uncertainty and unpredictability for the people and businesses in Northern Ireland” brought by the recent conflicting orders.  Vice-President Šefčovič noted:

The Protocol, the cornerstone of the Withdrawal Agreement, is an international agreement. It is therefore the UK government’s responsibility to uphold its legal obligations stemming from the Protocol – the only solution we have found with the UK government to protect the Good Friday (Belfast) Agreement, taking into account the type of Brexit the UK government chose.”

The European Commission is closely monitoring the evolving situation.  Vice-President Šefčovič and Foreign Secretary Truss are due to continue the discussions on implementation of the Northern Ireland Protocol on 11 February.

The recent order to halt sanitary and phytosanitary checks at Northern Irish ports led to the protest by the Democratic Unionist Party, which consequently led to the resignation of Northern Ireland First Minister Paul Givan.  Based on the coalition achieved, the Deputy First Minister from the Sinn Féin party, Michelle O’Neill, will inevitably be replaced from this role in parallel to First Minister Givan.  The resignation could lead to snap elections, earlier than the Assembly elections currently scheduled in May.

Secretary of State for Northern Ireland Brandon Lewis issued a statement following the resignation of First Minister Givan, stressing:  

We remain fully committed to fixing the problems with the Protocol and to protect the Belfast (Good Friday) Agreement in all its dimensions. We will continue our intensive talks with the EU in order to resolve these. I will be speaking to the leaders of the five parties of the Northern Ireland Executive, and the Irish Government, to encourage a return to stable devolved government in Northern Ireland.”

COVID-19 Highlights

Reuters reported on January 31 that a Danish study indicates that Omicron sub-variant BA.2 could be more transmissible than the more common “original” BA.1 variant and more able to infect vaccinated people.  BA.2 has now become the dominant strain, overtaking BA.1, in Denmark.  This week, the World Health Organization classified BA.2 as a “variant of concern.”

The World Trade Organization (WTO) deliberations relating to a trade response to the pandemic continued this week without an agreement on the TRIPS waiver on how export restrictions on vaccines could be limited.  WTO Director General Ngozi Okonjo-Iweala urged the WTO members to find a resolution by the end of next month.  The French Council Presidency is optimistic that an agreement about the vaccines patents could possibly be achieved in the context of the EU-African Union Summit, scheduled on 17-18 February in Brussels, a move that could also help speed up the WTO deliberations.

In view of the continued unpredictability of the level of COVID-19 infections in the bloc, the European Commission proposed this week to extend the EU Digital COVID Certificate by a year, until 30 June 2023.  The EU Digital COVID Certificate is a commonly used tool across the EU used for travel and other purposes, certifying vaccination, testing or recovery against COVID-19.  Some improvements have been proposed by the European Commission, namely to address the bottlenecks of aligning a COVID-19 certificate when vaccine doses are administered in different Member States.

Some US governors are pushing the Biden Administration to have the Centers for Disease Control and Prevention (CDC) provide clear guidance that will allow US states to transition out of the COVID-19 pandemic and into endemic status.  On 31 January, the US Food & Drug Administration (FDA) approved a second COVID-19 vaccine, originally known as the Moderna COVID-19 Vaccine; the approved vaccine will be marketed as Spikevax for the prevention of COVID-19 in individuals 18 years of age and older.  Also on Monday, Novavax submitted its formal request to the FDA for emergency use authorization (EUA) for its COVID-19 vaccine, NVX-CoV2373.