European partners focused on Afghanistan this week, with the United States (US) and North Atlantic Treaty Organization (NATO) member states winding down military operations in the country.  The European Parliament endorsed a report on the impact of COVID-19 on the European Union’s (EU) trade underlying the urgency to reinforce the EU’s trade policy review.  The United Kingdom (UK) announced the first group of countries who will receive genomic sequencing support to fight the coronavirus pandemic.  Meanwhile, the US increasingly examines antitrust initiatives, with Google finding itself at the receiving end of another suit in America.  And the European Commission published the EU’s Sustainable Finance Strategy this week.

In this issue, we cover:

• COVID-19 highlights among the transatlantic partners;

• Notable UK, US, and EU developments; and

• UK-EU trade deal

COVID-19 Highlights | EU, US, UK

The European Parliament endorsed a report on trade-related aspects and implications of COVID-19 this week, recognizing that the pandemic has reinforced the need for a thorough review of the EU’s trade policy.  It calls on the European Commission to step up the work on the legal instrument for mandatory due diligence across supply chains and underlines the need to ensure a supply chain diversification as a key priority in the revised trade policy.

US President Joe Biden used his Fourth of July speech to urge Americans to do their patriotic duty and get vaccinated.  He also cautioned, “COVID-19 has not been vanquished. We all know powerful variants have emerged, like the Delta variant.”  By the end of this week, the United States is expected to near 160 million people fully vaccinated.

Britain’s Public Health England (PHE) announced the first group of countries this week that will receive genomic sequencing support through the New Variant Assessment Platform (NVAP).  NVAP will enable the UK’s unique sequencing and variant assessment capabilities to support other countries’ response to COVID-19.  The first countries to benefit from this support and expertise will be Brazil, Ethiopia, Kenya, Nigeria, and Pakistan.  The UK also plans to collaborate with the African Centre for Disease Control in Ethiopia, and Singapore.

This week, UK Prime Minister Boris Johnson outlined plans for implementing the final step of the Roadmap in England, toward restoring “people’s freedoms.”  He shared, “There will be no legal requirement on the use of Covid-status certification as a condition of entry for visitors to any domestic setting.”  Proof of vaccination or a negative test will still be required for international travel.  He stressed COVID-19 is a virus that Britain will learn to live with, similar to influenza.

Notable UK Developments

On 2 July, Prime Minister Johnson welcomed German Chancellor Angela Merkel to Chequers.  A summary from 10 Downing Street reflected they agreed on some steps to further enhance the bilateral relationship, “including holding annual joint Cabinet meetings, reinforcing cultural links and expanding youth exchanges.”  They also discussed Russia’s malign behaviour and NATO’s withdrawal from Afghanistan.  Prime Minister Johnson further “reiterated the need for a permanent arrangement on the Northern Ireland Protocol that protects the Belfast (Good Friday) Agreement and safeguards Northern Ireland’s place in the United Kingdom.”

Following last month’s agreement in principle, the UK signed a free trade deal with Norway, Iceland and Liechtenstein on 8 July.  The trade agreement includes gold standard provisions in digital trade, mobile roaming, and business travel.  The UK also spotlighted the agreement recognises the protected status of certain United Kingdom wines and spirits, like Scotch Whisky.

Notable US Developments

On Thursday, 8 July, President Biden spoke of America’s withdrawal from Afghanistan, saying the US military mission will conclude on 31 August.  Next Thursday, 15 July, President Biden will welcome German Chancellor Merkel to the White House.  Meanwhile, both chambers of the US Congress were in recess this week.  Senators return to Washington next week; House lawmakers return the week of 19 July.

On Thursday, 8 July, Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and House Ways & Means Ranking Member Kevin Brady (R-Texas) sent a letter to US Department of Treasury Secretary Janet Yellen, ahead of a meeting of finance ministers from the Group of 20 (G20).  The lawmakers outlined their concerns with the high-level global tax agreement reached at the Organisation for Economic Co-operation and Development (OECD).  They stated:

"Congressional support for an agreement at the OECD will hinge on protecting American workers and the U.S. tax base.  Other countries have shown that they will aggressively seek to gain market share and strip away our tax base, so U.S. negotiators must be equally aggressive in defending American interests.  The Administration should not surrender jobs, growth, or tax revenues to other countries in order to advance a partisan tax increase agenda at home”

Senator Crapo and Congressman Brady outlined three areas where the Administration should take a strong position in favor of American interests.  They argued negotiators should ensure: (1) the global minimum tax is fair to American workers and companies – any special rates or exemptions offered to foreign competition must be available to Americans; (2) the global profit allocation formula, including any carve-outs and special inclusions, must not disproportionately affect Americans; and (3) the targeting of American workers and companies by foreign governments must end immediately.

On 2 July, House Armed Services Committee (HASC) Chairman Adam Smith (D-Washington) and Ranking Member Mike Rogers (R-Alabama) introduced the initial version of the Fiscal Year (FY) 2022 National Defense Authorization Act (NDAA; H.R. 4350), which contains legislative proposals submitted by the Defense Department.  HASC Subcommittees are set to mark-up their respective sections of the bill on 28-29 July.  The full committee markup is slated for 1 September.  The Senate Armed Services Committee (SASC) also announced this week that it will hold its subcommittee markups over two days, 19-20 July, with the full committee markup set for 21 July.  The NDAA is typically viewed as a legislative vehicle for trade-related, foreign policy and other matters, such as sanctions, that Members of Congress are seeking to advance.

On Tuesday, 6 July, White House Press Secretary Jen Psaki previewed a forthcoming Executive Order (E.O.) on competition at a press briefing.  Among other things, Psaki shared, the pending E.O. would direct USDA to issue new rules defining when meat can bear “Product of the USA” labels so that consumers have accurate, transparent labels that enable them to know where their food comes from and to choose to support American farmers and ranchers.  On 1 July, the US Department of Agriculture issued a statement after the Federal Trade Commission’s (FTC) vote to strengthen its enforcement of the Made in USA standard.

President Biden is set to sign the E.O. Friday afternoon (9 July).  According to a White House fact sheet released Friday morning, the order establishes a whole-of-government effort to promote competition in the American economy.  The E.O. includes 72 initiatives by more than a dozen federal agencies to address some of the competition problems across the U.S. economy.  The order also touches on antitrust concerns and announces a policy that enforcement should focus in particular on labor markets, agricultural markets, healthcare markets (which includes prescription drugs, hospital consolidation, and insurance), and the tech sector.  The E.O. also establishes a White House Competition Council, led by the Director of the National Economic Council, to monitor progress on finalizing the initiatives in the Order and “to coordinate the Federal Government’s response to the rising power of large corporations in the economy.”

On 7 July, a group of 36 states and Washington, D.C., brought an antitrust case against Google, challenging the company’s control over its Android app store.  The suit contests Google’s plan to compel all app developers who use its Google Play Store to pay a 30 percent commission on sales of digital goods or services, effective in September.  This is the first suit in the United States to challenge Google’s control in the mobile app store market.  Meanwhile, British and Australian antitrust authorities have opened probes into Google’s dominance in the industry.

Notable EU Development

The European Commission published the EU’s Sustainable Finance Strategy this week, alongside a legislative proposal on European Green Bonds.  The proposal envisages creating a high-quality voluntary standard that would be available to all issuers of bonds, either public or private, inside or outside the EU, with the goal to assist them in raising funds on capital markets that would be directed towards sustainable investments.  Co-legislators will now review the proposal.  It is expected to face some controversy, especially ahead of next week’s anticipated suite of legislative proposals within the Fit for 55 package, a package of proposals that aims to align EU policies with the EU’s carbon neutrality goals.  This package will contain proposals to revise the EU’s Emission Trading System, the Carbon Border Adjustment Mechanism and revise the EU’s Energy Tax Directive.  Regarding the latter, the EU envisages introducing minimum taxation levels to fuel and electricity used for flights within the EU.  The EU’s proposal for a digital levy, which was expected to be published next week within the broader package of measures, has been postponed until 20 July, ahead of US Secretary Yellen’s visit to Brussels next week.

UK-EU Trade Deal Updates

After last week’s consensus on a three-month grace period for custom checks for chilled British meats, there were few developments this week to further advance the deal on enforcement of the Northern Ireland Protocol.  UK Cabinet Member David Frost, stressed that last week’s EU’s concessions “don’t address the heart of the problem” related to the restriction of flow of goods from Britain.  Vice-President Maroš Šefčovič countered, reinforced the bloc’s message to the UK that if it continues to violate the Northern Ireland Protocol, Brussels will have “no choice but to step up” its legal proceedings against the UK.