United States (US) Trade Representative Katherine Tai, along with other American officials, travelled to Pittsburgh, Pennsylvania, this week to participate in the inaugural US-European Union (EU) Trade and Tech Council (TTC) with their European counterparts.  Group of Seven (G7) health and transport ministers met this week, reaching an agreement intended to boost the international travel industry, amid the COVID-19 pandemic.  Separately, at least three promising antivirals for COVID-19 are being tested in clinical trials, and if approved by regulators, could provide another tool in assisting with the return of employees to workplaces.  The European Commission moved forward this week with extending the COVID-19 vaccines export control mechanism, overriding EU Member States’ opposition.  And, the European Parliament’s Legal Affairs Committee adopted its Opinion on the proposed Digital Services Act, which includes endorsing a controversial provision with narrow deadlines for social media platforms to remove content.

In this issue, we also cover:

• COVID-19 highlights among the transatlantic partners; and

• Notable US, EU, and UK developments.

COVID-19 Highlights

On 30 September, United Kingdom (UK) Transport Secretary Grant Shapps hosted G7 transport and health minister counterparts, securing an agreement to align their international travel strategies through seven principles that will build a long-lasting recovery for the international travel sector.  These principles include:

1. Futureproofing the transportation sector against future health threats;

2. Ensuring the fair treatment and safety of essential transport personnel;

3. Respecting privacy and data protection in implementing vaccination certification solutions;

4. Reaffirming the pre-eminence of scientific evidence in planning international travel policy;

5. Ensuring fairness and equity in respective national responses;

6. Maintaining regular international and multilateral engagement; and

7. Delivering a safe, sustainable and resilient recovery.

The Chair’s statement also reflected the G7 ministers agreed to focus on improving data protection in vaccine certification developments, as well as prioritising the decarbonisation of transport.

The UK Government also published a policy proposal for its “Plan B” mandatory vaccine certification this week, a contingency measure under the government’s Autumn and Winter Plan.  Interested parties have until 11 October to comment on the proposal.  A press release reflected,

The government is particularly interested in views from businesses, event organisers and venue operators, including from those that have experience of using certification on a voluntary basis over the summer, and on the proposals for testing or vaccination of their workforce.”

The British Government stressed it remains confident that “Plan A” will prevent the National Health Service (NHS) from requiring certification.

After Member States rejected the extension of the COVID-19 vaccines export control mechanism, the European Commission proceeded with the extension of the mechanism for three months, until 31 December 2021.  According to the statement issued, the European Commission does not plan to propose an extension beyond the end of 2021.  The European Medicines Agency (EMA) announced this week that it started evaluating the date in relation to a booster dose for the Moderna COVID-19 vaccine.

Pfizer Inc. CEO Albert Bourla said on Sunday, 26 September, that Pfizer/BioNTech would submit data to the US Food and Drug Administration (FDA) on vaccines for children ages five to 11 within “days, not weeks.”  He also confirmed the dosage for young children is one-third that of the vaccine for adults.  Reports this week also indicated Moderna is expected to secure FDA approval for a booster dose of its COVID-19 vaccine, likely at a level that is half the prime doses.  Timing on the FDA approval, however, remains unknown.

Meanwhile, at least three promising antivirals for COVID-19 are being tested in clinical trials around the world, with results expected as soon as late fall or winter.  The top contender is a medication from Merck & Co. and Ridgeback Biotherapeutics called molnupiravir.  Two others include a candidate from Pfizer, known as PF-07321332, and a candidate produced by Roche and Atea Pharmaceuticals, known as AT-527.  So far, only one antiviral drug, remdesivir, has been approved to treat COVID-19; it is given intravenously to patients ill enough to be hospitalized.  Merck Chief Executive Robert Davis said this month that the company expects data from its larger phase 3 trials of molnupiravir in the coming weeks; and on Friday, Merck reported positive phase 3 data, saying it would seek FDA emergency use authorization (EUA) as soon as possible.  Pfizer launched a combined phase 2 and 3 trial of its product September 1, and Atea officials said they expect results from phase 2 and phase 3 trials later this year.

If approved, Merck officials predict the company could produce more than 10 million courses of therapy by the end of the year.  Atea and Pfizer have not released similar estimates.  In June, the Biden Administration announced it had agreed to obtain about 1.7 million treatment courses of Merck’s molnupiravir, at a cost of $1.2 billion, if the product receives emergency authorization or full approval.  The same month, the Administration said it would invest $3.2 billion in the Antiviral Program for Pandemics, which aims to develop antivirals for the COVID-19 crisis and beyond.  Merck affirmed on Friday that it “is committed to providing timely access to molnupiravir globally, if it is authorized or approved, and plans to implement a tiered pricing approach based on World Bank country income criteria to reflect countries’ relative ability to finance their health response to the pandemic.”

Notable US Developments

Both chambers of the US Congress were in session this week, working to address funding the US Federal Government beyond Thursday and the looming US debt ceiling to prevent a default on American financial obligations.  Both chambers approved a Continuing Resolution that uncoupled the US debt ceiling on Thursday; US President Joe Biden signed the bill later on Thursday evening, averting a Federal Government shutdown.  Democrats are still seeking a path forward for addressing the US debt ceiling deadline.

Late on Wednesday, Senator Joe Manchin (D-West Virginia) told reporters that he could support a Democratic spending bill, but not $3.5 trillion and not this week.  He said further negotiations are necessary, suggesting it could take the rest of this year.  Senator Manchin stated,

The child tax credit ends at the end of the year.  Everything else goes way into next year and 2023.  Do a pause and let’s really take our time to look … and hopefully we’ll get there.”

He also shared his desire to overhaul the 2017 tax bill, saying there is unity among Democrats to address this issue.  Senator Manchin added any new and expanded social programs included “should be means tested,” saying he is opposed to America moving to “an entitlement society.”  His comments to reporters came after he released a statement on his position toward the ongoing negotiations.  Meanwhile, a private document from Senator Manchin reportedly circulated on Thursday, affirming he would only support a measure that does not exceed $1.5 trillion.

The House was set to vote on Thursday on the Senate-approved $1.2 trillion bipartisan infrastructure package, amid threats from progressive Democrats that they would not support the measure.  Progressives are balking at the ongoing negotiations over Democrat’s larger $3.5 trillion spending package moving via reconciliation – negotiations continue with no timetable for concluding – and their desire that the infrastructure bill advance in tandem with their climate and social spending package.  The vote was postponed late on Thursday, with the White House acknowledging more time is needed.  Meanwhile, Speaker of the House Nancy Pelosi (D-California) indicated Friday morning that she hopes the chamber will vote on the measure today.

US Secretary of the Treasury Janet Yellen warned on Tuesday – ahead of testifying before Congress – that her Department would exhaust its borrowing authority by 18 October, if Congress fails to act on the debt ceiling.  After Monday’s Senate defeat, the House voted on Wednesday, along party lines (219-212), on a measure to suspend the cap on how much the nation can borrow until 16 December 2022.  Senate Republicans, however, are expected to vote against the bill, continuing to argue their Democratic colleagues should address the debt ceiling on their own, via the reconciliation process.  Senate Majority Leader Schumer indicated this week that he would likely bring the bill to the floor for a vote next week.

Testifying before the Senate Banking Committee on Tuesday, Secretary Yellen suggested Pillar One of the emerging global tax deal being negotiated at the Organization for Economic Cooperation and Development (OECD) could be enacted in the United States possibly without the need of a treaty, an avenue that would require two-thirds of the Senate approve.  Pillar One is focused on where companies sell their goods and services in determining what nations have taxation authority; Pillar Two would enact a global minimum tax rate.

On 23 September, the House passed its $768 billion FY 2022 National Defense Authorization Act (NDAA) by a vote of 316 to 113.  After three days of debate that included nearly 500 amendments, the House approved a measure that authorizes an increase of $25 billion over President Biden’s Budget Request to tackle emerging threats.  Senate Armed Services Committee leadership filed their version of the NDAA on 22 September; the Senate has yet to complete its floor amendment process and vote on its version before lawmakers can conference the bill to resolve differences between the chambers’ versions.

On Tuesday, 28 September, the US Department of Defense (DOD) published a Federal Register notice soliciting public comments and information to assist the Pentagon’s assessment of defense industrial base supply chains for its one-year report, pursuant to Executive Order (E.O.) 14017, America’s Supply Chains.  In particular, the Department selected four topics to focus on:  (1) select kinetic capabilities, (2) energy storage/batteries, (3) microelectronics, and (4) castings and forgings.  DOD is also seeking information on the following five systemic enablers, as they relate to the aforementioned four topics:  (1) workforce, (2) cyber posture, (3) interoperability, (4) small business, and (5) manufacturing.  The notice also outlines five questions pertaining to the above topics and systemic enablers.  Interested parties have until 13 October to submit comments.

On 29 September, the US Department of Labor released its annual Findings on the Worst Forms of Child Labor report, which focuses on eliminating child labor in certain US trade beneficiary countries and territories.  The Department also released a Better Trade Tool, a new web-based tool that integrates the Department’s List of Goods Produced by Child Labor or Forced Labor with international trade data.

Following a classified briefing on the Biden Administration’s approach to the Nord Stream 2 (“NS2”) pipeline, Senate Foreign Relations Committee (SFRC) Ranking Member James Risch (R-Idaho) issued a statement on 29 September.  He warned,

Russia is creating a gas crisis to blackmail the European Union into approving NS2, and to cement its energy dominance over Europe.  Energy transitions take decades, and vague promises from Germany to hold Russia accountable and build a green energy economy in Europe will not address the short-term energy and geopolitical challenges that our allies will face in the next few years.”

Notable EU Developments

The Office of the US Trade Representative released a brief summary of US-EU TTC on Wednesday.  The TTC discussed four key topics:  (1) global trade challenges, (2) artificial intelligence, (3) semiconductors, and (4) data governance and tech platforms.  Ambassador Tai emphasized,

[T]he TTC is an important platform for assuring that the United States and the European Union remain global leaders in technology and innovation, projecting our shared democratic values internationally, and protecting fundamental labor rights.”

The TTC also released a joint statement; a joint fact sheet outlined issues the TTC expects to focus on further, including:  (1) global trade challenges and addressing non-market, trade distortive practices, (2) semiconductor supply chains, (3) investment screening, (4) export controls, and (5) artificial intelligence.

Federal elections in Germany were held on 26 September 2021, to choose Germany’s next Parliament.  The Social Democratic Party (SPD) narrowly won with 25.7 percent over 24.1 percent for the Christian Democrats (CDU/CSU), while the Greens obtained 14.8 percent, and the liberal Free Democrats (FDP) received 11.5 percent of the votes.  Negotiations are currently ongoing in order to form a post-election majority coalition that will determine the formation of the new German Government.  Coalition negotiations are likely to take months, and Federal Finance Minister Olaf Scholz, who has emerged as the leading contender to serve as the next Chancellor of Germany, is optimistic talks will be concluded before Christmas.

On 30 September, the European Parliament’s Legal Affairs Committee adopted its Opinion on the proposed Digital Services Act, despite concerns raised by some Members of the European Parliament.  One of the controversial provisions endorsed relates to the obligation for social media platforms to remove illegal content within very short deadlines (i.e. remove 30 minutes after being notified the broadcast of a live sports or entertainment event, 24 hours for illegal content that can seriously harm public policy, security and health, and 72 hours for other illegal content).  Due to the multi-faceted aspects of the proposed law, various Parliamentary Committees are involved in the formation of the European Parliament’s position, which is still progressing.  Notably, there is still a lot of negotiating ground to cover by both EU co-legislators before the law is finalized.

Separately, a piece of legislation, the public Country-by-Country Reporting Directive, that raised tension between co-legislators reached its last procedural step this week, after the Council endorsed it.  The proposal, which will be subject to publication in the Official Journal of the EU in the coming weeks, would require the public disclosure of income tax information by EU and non-EU multinational companies doing business in the bloc.

Notable UK Developments

UK Prime Minister Boris Johnson spoke with South African President Cyril Ramaphosa on 30 September, ahead of the Group of 20 (G20) Summit (30-31 October) and COP26 (1-12 November).  A 10 Downing Street summary reflected:

They discussed how the UK and South Africa can work together on accelerating the shift away from coal and towards renewable energy, to support the effort to limit global temperature rises.”

The leaders also discussed global travel restrictions during the pandemic, affirming they would work together on this matter.

On 27 September, the Department for International Trade reported Emma Wade-Smith OBE has been appointed Her Majesty’s (HM) Consul General to New York and Her Majesty’s Trade Commissioner (HMTC) for North America.  Wade-Smith – who is currently HM Trade Commissioner for Africa and has previously held senior diplomatic roles in the US – will begin in November 2021.  Her portfolio will include promoting British trade and investment in the US and Canada, along with working with businesses across North America to support growth and innovation.