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May 10, 2021

This Week in Trade for May 7

Last Week (May 3 — 7)

In Surprise Move, White House Backs COVID Pharmaceutical Patent Waiver. The U.S. announced its support for a proposal by India and South Africa at the World Trade Organization to relax patent protections for COVID vaccines. "This is a global health crisis, and the extraordinary circumstances of the Covid-19 pandemic call for extraordinary measures," USTR Katherine Tai said in a statement. The surprising development was cheered by developing nations and progressive Hill Democrats but blasted by the U.S. business community and key EU nations, the other bloc that up until now resisted this initiative at the WTO. Germany emerged as a key holdout of the new U.S. position, questioning the practical implication of the U.S. reversal. "The limiting factor in vaccine manufacturing is production capacity and high-quality standards, not patents," said a German government spokesperson on Thursday according to Politico.

USTR Hearing on DST Tariff Retaliation. USTR held a series of hearings this week on whether to impose section 301 tariffs of up to 25% on a number of countries that have adopted Digital Services Taxes (DSTs), including the UK, India, Italy, Spain, Turkey and Austria. The Section 301 Interagency group, which USTR chairs, heard public testimony on potential retaliation from a range of private sector firms and associations. Analysts believe that USTR will likely authorize tariffs in the coming weeks in response to the various countries' DST regimes but delay their application for six months in order to give time for the OECD Inclusive Framework process to reach a global resolution.

USTR to Review CAFTA-DR. USTR Katherine Tai said May 4 that her office planned to review the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), expressing concern that it has not sufficiently advanced development in Central America. "It is the only trade agreement that we have that is with a group of countries where that entire group are developing countries … And I think that there was a lot of expectation and hope that the CAFTA-DR would stimulate development," Tai said. Economic security issues in the region have become an increased focus for the Biden administration as it seeks to stem an influx of migrants from the region.

WTO DG Appoints Deputies. This week new World Trade Organization Director General Ngozi Okonjo-Iweala announced the appointment of four Deputy Directors. The new deputies hail from the EU, China, the U.S. and Costa Rica. The U.S. deputy is Angela Ellard, the long-time chief trade counsel of the Ways and Means Committee Republican staff. Ways and Means Committee Chairman Richard Neal praised the selection. "Angela Ellard is a great choice for one of the new WTO Deputy Directors-General, and will join the WTO as it ushers in a new era with more women in leadership than ever before," Neal said.


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