US and Europe Trade November 1
The United Kingdom (UK), European Union (EU) and the United States (US) focused this past week on climate change and global supply chain disruptions, with the UK hosting the 26th United Nations (UN) Climate Change Conference of the Parties (COP26), which continues into this week. Transatlantic leaders started the week in Rome, attending the Group of 20 (G20) Summit over the past weekend. Also last Sunday, the US and EU announced an agreement that essentially resolves the Section 232 steel and aluminum dispute and establishes a dialogue for more broadly addressing global overcapacity challenges. The EU and UK announced a dialogue to attempt to resolve the fishing dispute between the UK and France, while talks between the two sides also continue over implementation of the Northern Ireland Protocol.
Meanwhile, despite Europe re-emerging as a COVID-19 epicenter, the US is set to resume accepting some vaccinated international travelers on Monday, 8 November, including passengers from Europe. As part of its effort to increase further the US adult vaccination rate, the US Federal Government released its controversial COVID-19 vaccine mandate for the US private sector, which has since seen multiple legal challenges filed. Notably, the UK became the first country to approve a COVID-19 antiviral pill on Thursday, giving it yet another tool to combat the coronavirus.
In this issue, we also cover:
The G20 Rome Summit;
The COP26 Summit;
Notable US, EU, and UK developments;
A brief UK-EU trade deal update; and
COVID-19 highlights among the transatlantic partners.
G20 Rome Summit
The G20 Leaders signed a Communiqué at the end of the Rome Summit on 31 October, reiterating their commitment to the Paris Agreement and endorsing actions to limit global warming to 1.5 degrees Celsius. This was viewed as a critical step ahead of the COP26 event that started on 1 November in Scotland. Similarly, the G20 Leaders agreed to end public financing of “new unabated coal power generation abroad by the end of 2021” without setting a target of phasing out coal domestically. In relation to net-zero emissions, the Communiqué acknowledged “the key relevance of achieving global net-zero greenhouse gas emissions or carbon neutrality by or around mid-century”.
The Communiqué also endorsed the Organization for Economic Cooperation and Development (OECD) negotiated global minimum corporate tax deal, among other priorities. A White House fact sheet on the G20 Summit reflected a consensus reached on the corporate tax rate, addressing the COVID-19 pandemic, climate change provisions, and combatting corruption and ransomware.
At a global supply chain resilience summit on the margins of the G20 Summit, US President Joe Biden acknowledged “ending the pandemic is the ultimate key to unlocking the [supply chain] disruptions we’re all contending with,” while adding,
But we have to take action now, together with our partners in the private sector, to reduce the backlogs that we’re facing.”
He detailed steps his Administration has taken to address domestic supply chain disruptions and announced two new efforts: (1) additional funding to help American partners cut port congestion; and (2) a new Executive Order to strengthen US defense stockpiles for minerals and materials to address shortfalls in the industrial base. President Biden urged other participating countries to also strengthen their national security stockpiles. He further directed US Secretary of State Antony Blinken and US Secretary of Commerce Gina Raimondo to establish a multi-stakeholder forum early next year to bring these officials together to address global supply chain disruptions.
President Biden noted that additional funds would be provided for technical assistance to Mexico and Central America counterparts to help alleviate supply chain disruptions and bottlenecks. At the US-ASEAN Summit, the President announced millions in funding for new US-ASEAN initiatives, including funding to link the ASEAN Single Window, a customs facilitation program, with the US Single Window System.
On 2 November, UK Prime Minister Boris Johnson and Indian Prime Minister Narendra Modi jointly launched a new flagship international initiative at the COP26 World Leaders Summit, backed by over 80 countries, to accelerate the global transition to a clean powered world. The “Green Grids Initiative – One Sun One World One Grid” (GGI-OSOWOG) seeks to:
Invest in solar, wind, storage and other renewable energy generation in locations endowed with renewable resources for supporting a global grid.
Build long-distance cross-border transmission lines to connect renewable energy generators and demand centres across continents, underpinned by effective and mutually beneficial cross-border power trading arrangements.
Develop and deploy cutting edge techniques and technologies to modernise power systems and support green grids which can integrate billions of rooftop solar panels, wind turbines and storage systems.
Support the global transition to zero emission vehicles through incorporating the role of electric vehicles to help improve grid flexibility.
Attract investments into solar mini-grids and off-grid systems to help vulnerable communities gain access to clean, affordable, and reliable energy without grid-access in their own areas, enhancing socio-economic development and a resilient power supply for all.
Develop innovative financial instruments, market structures, and facilitate financial and technical assistance to attract low-cost capital, including climate finance, for global solar grid infrastructure.
Ahead of the start of COP26 Summit on Monday, the White House released a fact sheet on President Biden’s strategy for addressing climate change, including via the Build Back Better Framework and the bipartisan infrastructure bill. President Biden is seeking to assert “America is back” on the international stage and leading with respect to addressing climate change. The fact sheet reflects US initiatives include:
Launching the President’s Emergency Plan for Adaptation and Resilience (PREPARE), a whole-of-government initiative that will serve as the cornerstone of the US Government response to addressing the increasing impacts of the global climate crisis in order to enhance global stability.
Submitting the first US Adaptation Communication under the Paris Agreement, a document that outlines American priorities, policies, and initiatives to implement adaptation and resilience strategies both domestically and in vulnerable countries and communities around the world.
Submitting the United States’ 7th UNFCCC National Communication, and 3rd and 4th Biennial Reports required by the Paris Agreement.
The White House also released a long-term strategy report detailing pathways available for the United States to achieve net-zero greenhouse gas emissions by 2050. In his remarks before the COP26 Summit, President Biden emphasized this is likely the last chance the world has to collectively take action “to stem” the climate change crisis. He added,
Developed and developing economies — so many of which are the most vulnerable to the impacts of climate change — have to stand together and hold each other accountable. The United States recognizes that we will meet our duty to support developing countries taking these actions because they’re going to need our help.”
European Commission President Ursula von der Leyen highlighted three areas where action is needed during her remarks at the COP26 Summit, stressing the need for a strong commitment to reduce emissions by 2030. She added this includes also agreeing on a robust framework of rules, such as rules to create a global carbon market (alluding to the EU proposal for Carbon Border Adjustment Mechanism), as well as mobilising climate financing to assist vulnerable countries.
The US, EU and other partners officially launched the Global Methane Pledge to keep the goal of limiting warming to 1.5 degrees Celsius. Countries joining the Global Methane Pledge aim to “commit to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030 and moving towards using best available inventory methodologies to quantify methane emissions, with a particular focus on high emission sources.” In addition, the European Commission pledged 1 billion EUR to “work with partner countries to conserve, restore and ensure the sustainable management of forests in a comprehensive and integrated way”.
The US, EU and UK also jointly announced their commitment to launch a partnership that will gather investments to address climate crisis through infrastructure development. Building on the goal to limit the global average temperature to 1.5 degrees Celsius to ensure infrastructure is in line with the Environmental, Social and Governance standards.
British Prime Minister Johnson said at the “Action on Forests and Land-Use” event at COP26 that the Glasgow Leaders Declaration was notable since “105 countries responsible for over 85 per cent of the world’s forest estate have now made a landmark commitment to work together to halt and reverse deforestation and land degradation by 2030.” He spotlighted, “80 per cent of tropical deforestation is driven by the global trade in agricultural commodities.” Prime Minister Johnson added:
[T]he UK and Indonesia have brought together countries that produce and consume these goods to agree a roadmap for sustainable trade that can grow our economies whilst reducing pressures on our forests. And I’m delighted this has now been signed by 28 countries accounting for around three-quarters of global trade in these commodities.”
President Biden affirmed at the forest and land-use event:
The United States will help the world deliver on our shared goal of halting natural forest loss and restoring at least an additional 200 million hectares of forests and other ecosystems by the year 2030.”
This, he explained, includes working with the US Congress to provide $9 billion in US funding through 2030 to conserve and restore global forests, along with mobilizing billions more from US partners. To preserve forests and ecosystems that could naturally capture carbon, President Biden added the US effort would also include aligning private sector investment flows in climate conservation goals, reducing the drivers of deforestation, creating sustainable supply chains, and pursuing more sustainable commodity sourcing.
On Friday, the US Department of the Interior and other parts of the US Government, such as the US Forest Service and the National Oceanic and Atmospheric Administration, joined land managers from around the globe in endorsing a Protected and Conserved Areas Joint Statement on Climate Change and Biodiversity. Further details on the outcomes from the COP26 forest and land-use event can be viewed here.
Also at COP26, ASEAN’s Catalytic Green Finance Facility, managed by the Asian Development Bank, announced it would increase access to finance for critical infrastructure for ASEAN countries to support the development of sustainable infrastructure projects, such as renewable energy, clean transportation or urban infrastructure, in developing countries across the region. British Foreign Secretary Liz Truss also announced the UK would “co-invest” £110 million of financial support in the initiative, along with help to mobilise further public and private funds to deploy over £5 billion into green projects across the region.
On 2 November, the European Bank for Reconstruction and Development (EBRD) launched the High Impact Partnership on Climate Action (HIPCA) at a COP26 event. British Minister for the Middle East and North Africa James Cleverly announced £50m UK funding for HIPCA, which aims to provide investments in solutions that reduce or prevent greenhouse gas emissions, strengthen resilience and reduce vulnerability to climate change, and protect the environment. The UK’s funding will be used to mobilise private sector funds to support energy transition and green infrastructure and growth across North Africa and the Middle East, including in Morocco, Algeria, Egypt, Tunisia, Jordan and Lebanon.
On the margins of COP26 on Saturday, USAID Administrator Samantha Power and Rockefeller Foundation Executive Vice President Elizabeth Yee signed a memorandum of understanding forming the basis of a strategic partnership between the US Agency for International Development (USAID), Power Africa, and the newly launched Global Energy Alliance for People and Planet (GEAPP). Goals of the initiative include (1) providing reliable and affordable access to electricity across sub-Saharan Africa; (2) supporting a clean energy transition, including via distributed renewable energy (DRE)-related investments; and (3) partnering with African governments to institute reforms to create an environment for clean energy. France, Germany, the UK, the US and the EU separately launched an International Just Energy Transition Partnership with South Africa on the margins of the COP26 Summit. The partnership aims to accelerate the decarbonisation of South Africa’s economy, by mobilizing an initial commitment of 8.5 billion USD.
On Friday, US Secretary of Energy Jennifer Granholm announced the US Department of Energy’s new goal to remove gigatons of carbon dioxide (CO2) from the atmosphere and durably store it for less than $100/ton of net CO2-equivalent. The “Carbon Negative Shot” is the US Government’s first major effort in carbon dioxide removal (CDR) – a key facet of the Biden Administration’s plan to achieve net-zero emissions by 2050. The initiative seeks to catalyze CDR innovation and position the US as a leader in CDR research, manufacturing and demonstration.
Notable US Developments
On 31 October, the US and EU announced an agreement to resolve US duties on steel and aluminum and related retaliatory tariffs imposed by the EU. The agreement is for two years and prioritizes decarbonization of the industries, aimed at the People’s Republic of China (“China”). In sum, the agreement would result in:
The United States replacing existing Section 232 tariffs against steel and aluminum from the EU with a Tariff-Rate Quota (TRQ) system, whereby “historically-based volumes of EU steel and aluminum products” will enter the United States duty-free (tariffs will apply above that level, presumably at the 10 and 25 percent rates applied to aluminum and steel, respectively).
A fact sheet from the EU clarified “historical volumes” means “[t]he volume of EU steel and aluminium that was exported to the US prior to the imposition of the 232 measures in 2018.” Media reports suggest this amount will be around 3.3 million metric tons.
Notably, a press briefing on Saturday with senior Biden Administration officials confirmed the steel TRQ will be subject to a melt-and-pour requirement, meaning any steel entered under the quota must have been melted and poured in the EU, further ensuring Chinese steel is not transshipped or utilized in European steel products. They also affirmed the Section 232 exclusion process would continue.
The EU lifting its retaliatory tariffs; both sides will also suspend related disputes initiated at the World Trade Organization (WTO).
The US and EU expanding coordination on trade remedies and customs matters and “to meet regularly to consult and develop additional actions to address non-market excess capacity in these sectors.”
The EU and US have also committed that future steel and aluminum agreements will address “both global non-market excess capacity as well as the carbon intensity of these industries.”
A technical working group is to be created that will develop a common methodology and share data related to the emissions of traded steel and aluminum.
While work on the methodology has yet to commence, measuring the carbon intensity of steel production will be one of the challenges in this new arrangement, particularly since the EU’s proposal for a Carbon Border Adjustment Mechanism is still being negotiated.
Further details on the outcome of the EU-US agreement can be accessed here. The US Department of Commerce confirmed separately on Sunday that the Biden Administration is also consulting with Japan and the United Kingdom on steel and aluminum, suggesting these countries may be the next to negotiate a TRQ agreement.
EU Trade Commissioner Valdis Dombrovskis emphasized,
The US decision to restore past trading volumes of EU steel and aluminium exports means we can move on from a major irritant with the US. It gives us breathing space to work on a comprehensive solution to tackle global overcapacity. The EU will therefore reciprocate this de-escalation by suspending our own rebalancing measures.”
Notably, the EU aluminum sector was not pleased with the outcome of the EU-US deal, issuing a statement that noted,
Replacing the Section 232 tariffs with another trade-distorting measure is a lose-lose situation for the aluminium industry and their downstream customers on both sides of the Atlantic”.
On 2 November, Ambassador Tai addressed the American Iron and Steel Institute and the Steel Manufacturers Association General Meeting. She stated “China is the biggest driver” of global steel overcapacity and added the new US-EU agreement would begin to address this issue, by toughening “enforcement mechanism to prevent leakage of Chinese steel and aluminum into the U.S. market.” Enforcement of the new agreement with the EU, she added, is key. Notably, the positive progress in the US-EU relationship has some US lawmakers and the American business community hopeful that the two sides will work to address other global trade challenges, such as WTO reform.
Meanwhile, in Washington, Democrats in the US Congress continued this past week to work on a bill that actualizes the President’s Build Back Better Framework on a social and climate change spending package. Notably, the President’s Framework includes tax credits for electric vehicles “made in America with American materials and union labor,” which several foreign Ambassadors to Washington, D.C., are challenge as violating international trade rules. The Canadian and Mexican Ambassadors have previously pressed US lawmakers to reconsider the tax credits, saying they would conflict with the US-Mexico-Canada Agreement (USMCA). Twenty-five envoys from the European Union, including many of its member states, along with South Korea, Japan and others reportedly sent a letter on October 29 letter to US Senate and House leaders, stating the proposed credits would be “detrimental to international automakers and vehicle importers.” The tax proposal is backed by President Biden, the United Auto Workers (UAW) union and many congressional Democrats, but it is opposed by major international automakers, including Toyota Motor Corp, Volkswagen AG, Daimler AG, Honda Motor Co, Hyundai Motor Co and BMW AG.
Late Friday evening, the US House of Representatives approved the Senate-passed $1.2 trillion bipartisan infrastructure bill, sending the measure to the President’s desk for action. A White House fact sheet on the bill (released 6 November) touts climate change provisions, such as repairing and rebuilding American roads and bridges with a focus on climate change mitigation, and reducing greenhouse emissions through investments in zero-emission public vehicles, among other things. The fact sheet also says some provisions would address supply chain disruptions at US airport and ports.
US Vice President Kamala Harris is set to head to Paris, France, on Monday, 8 November, with Second Gentleman Douglas Emhoff accompanying. Vice President Harris is seeking to boost the US-France bilateral relationship, after tension flared over a new Australia-UK-US (“AUKUS”) security initiative. She will also participate in the Paris Conference on Libya; and attend other events/engagements, while in France this week.
Notable EU Developments
A European Commission spokesperson confirmed this week that the EU-Australia trade talks have been postponed once again, amid the Franco-Australian tension linked to the new AUKUS security initiative.
On 3 November, the EU and US announced a Joint Farming Platform, where the two sides will join forces to create climate friendly and environmentally sustainable farming. A joint statement on the new initiative stressed the intention to “exchange knowledge and information, and to promote mutual understanding and trust, as we work together to address global challenges and achieve common goals.”
Notable UK Developments
On 31 October, the UK Department for International Trade welcomed the Biden Administration’s commitment to consult closely on bilateral and multilateral trade issues, including steps to de-escalate the steel and aluminium dispute. A spokesperson for the Department noted,
The International Trade Secretary recently held positive discussions with US Trade Representative Katherine Tai in London. The UK is committed to addressing both global steel overcapacity and decarbonisation, and we remain focused on agreeing a resolution that sees damaging tariffs removed to the benefit of businesses on both sides of the Atlantic.”
On 5 November, US Senator Rob Portman (R-Ohio) – co-founder and co-chair of the UK Trade Caucus – travelled to London to discuss the stalled US-UK trade deal. He met with British officials and stakeholders from the British-American business community. Ahead of the trip, Senator Portman cited similarities between the US and UK economies as a rationale for why a US-UK trade agreement would be a “natural first” for the United States before the US turns to negotiating an agreement with the EU, which has more complex issues to resolve. He has reportedly also had discussions with Ambassador Tai and UK Ambassador to the United States Karen Pierce on resuming the trade negotiations.
UK-EU Trade Deal Updates
Negotiations on the Northern Ireland Protocol continued this past week, as UK Cabinet Minister David Frost arrived in Brussels to discuss the matter with European Commission Vice-President Maroš Šefčovič. Despite intense negotiations, there are no signs of a breakthrough, which increases concerns the UK may consider triggering Article 16, the safeguard clause of the Protocol.
Apart from the Northern Ireland Protocol talks, the France-UK row over fishing licenses dominated the EU-UK discussions this week. The two sides, however, committed to restart a political dialogue to hammer out their differences.
Hans Kluge from the World Health Organization’s (WHO) regional Europe office warned this week that “Europe is back at the epicenter of the pandemic” as the continent finds itself “at another critical point of pandemic resurgence”. According to media reports, AstraZeneca submitted a package of data to the European Medicines Agency (EMA) for analysis and decision on whether a third shot of its COVID-19 vaccine should be recommended.
On 1 November, Novavax – a Maryland-based biotech company – reported Indonesia has become the first country to grant emergency use authorization (EUA) for its COVID-19 vaccine. Novavax previously reported Phase 3 trial data of its shot – which is given in two doses 21-days apart – found it was 100 percent effective against moderate and severe disease and was 90 percent effective at preventing COVID-19. Unlike the mRNA COVID-19 vaccines (Pfizer/BioNTech, and Moderna), Novavax’s vaccine uses a protein containing part of the coronavirus to stimulate an immune response, an older technology that vaccine hesitant individuals may find more acceptable.
Novavax anticipates filing for EUA with the US Food & Drug Administration (FDA) by the end of the year. Earlier this week, Novavax announced it had submitted all the relevant data regarding its COVID-19 vaccine to the European Medicines Agency (EMA), which will now review the data and decide whether to grant a conditional marketing authorization for the use of the company’s vaccine in the EU. The company has also filed submissions with the Canada, the UK and Australia.
On 2 November, the US Centers for Disease Control and Prevention (CDC) approved the Pfizer/BioNTech COVID-19 vaccine for children aged five to eleven. The Biden Administration is encouraging US health providers to begin vaccinating the approximately 28 million American children in the age group as soon as possible.
On 4 November, the Biden Administration released a pre-published version of the Occupational Safety and Health Administration (OSHA) emergency temporary standard (ETS) on vaccine mandates for private sector employers with 100 or more employees; the Federal Register published the ETS on Friday. In the preamble, the ETS claims unvaccinated workers face “grave danger,” as part of the Administration’s legal justification for the action. OSHA estimates the ETS applies to about 84 million American workers. Further details on the ETS are available here.
Taking aim at Republican-led states, the Administration stated the ETS pre-empts any state or local laws, including laws that ban or limit an employer’s authority to require vaccination, masks, or testing. Meanwhile, several state Attorneys General have filed lawsuits against the Biden Administration’s vaccine mandates, including the ETS. Responding to one suit, the US Court of Appeals for the Fifth Circuit (based in New Orleans) granted a stay that temporarily halted the ETS on 6 November. The US Federal Government has until Monday to respond to the petitioners’ motion.
On 4 November, the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) approved Ridgeback Biotherapeutics and Merck Sharp & Dohme’s antiviral, Lagevrio (molnupiravir), saying it “is safe and effective at reducing the risk of hospitalisation and death in people with mild to moderate COVID-19 who are at increased risk of developing severe disease.” The UK is the first country to approve a COVID-19 antiviral that can be taken at home. The US FDA’s Antimicrobial Drugs Advisory Committee (AMDAC) is set to meet on 30 November to consider authorizing the use of molnupiravir.
On 5 November, the WTO members agreed to extend a moratorium on bringing non-violation cases under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, despite the stalled talks over a proposed TRIPS waiver for COVID-19 vaccines. The decision is expected to be adopted at the WTO’s 12th Ministerial Conference (MC12), which is set to begin on 30 November.
 The global supply chain resilience summit included leaders and representatives from the US, Australia, Canada, Democratic Republic of the Congo, the European Union, Germany, India, Indonesia, Japan, Mexico, Italy, Republic of Korea, Netherlands, Singapore, Spain, and the United Kingdom.
 DRE projects include but are not limited to micro and mini-grids, solar home systems, and distributed power generation.
© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 312