McConnell seeks to protect tobacco industry in trade deal

Senate GOP Leader Mitch McConnellAddison (Mitch) Mitchell McConnellMcConnell expects Paul to return to Senate next week Former Hill staff calls for mandatory harassment training Gaming the odds of any GOP tax bill getting signed into law MORE (R-Ky.) is pressing the Obama administration to protect his state’s tobacco industry in a trade deal.

McConnell is pressuring U.S. negotiators to ensure that tobacco companies can take part in the dispute settlement portion of the trade deal, with talks scheduled next week on the Trans-Pacific Partnership (TPP) trade pact with several countries in Asia and Latin America.

Malaysia, backed by other TPP partners and some health groups, wants to exclude tobacco companies from the dispute settlement system to keep them from filing suits that would seek to prevent tax hikes on tobacco products, or regulations requiring bigger warnings on labels.

Tobacco companies say removing tobacco from the dispute settlement system would prevent the companies from suing governments over regulations that they consider damaging to their business, including efforts to remove their brands from packaging.

They’ve been backed by McConnell, who is worried about a cash crop in his state taking a hit.

U.S. officials have denied that they are considering a new proposal to exclude tobacco, but McConnell’s office said the GOP leader weighed in with U.S. Trade Representative Michael FromanMichael FromanUS will investigate aluminum imports as national security hazard Overnight Finance: WH floats Mexican import tax | Exporters move to back GOP tax proposal | Dems rip Trump adviser's Goldman Sachs payout Froman heads to Council on Foreign Relations MORE.

“The leader does have concerns with this unprecedented approach and its impact on jobs, and he’s relayed those concerns to Ambassador Froman directly,” Michael Brumas, a McConnell spokesman, told The Hill. 

McConnell’s opposition to a deal would be a crippling blow if the administration completes negotiations and sends it to Congress for approval, particularly if the GOP retakes the Senate.

Froman is headed to Vietnam and Australia next week for talks on the trade deal, but U.S. officials insist they’re not even considering excluding tobacco.  

“The United States has not tabled any new U.S. proposal on tobacco products and is still engaged on congressional and stakeholder consultation on an appropriate approach,” an official with Froman’s office said. “We do not expect to table a new proposal in Sydney.”

Senate Finance Committee ranking member Orrin Hatch (R-Utah) has argued that excluding any companies from the provisions of a trade deal’s dispute settlement system would set a dangerous precedent.

Other farm groups have also offered support for tobacco growers.

“Excluding tobacco from any chapter of our trade agreements would strike another serious blow to our state’s economy and not do anything to advance public health,” said Erica Peterson, executive vice president of the N.C. Agribusiness Council said in a statement. 

“It would merely allow other countries to pass protectionism policies that benefit tobacco growers in their countries and disadvantage our N.C. growers.”

North Carolina is the nation’s largest exporter of tobacco and most of the state’s crop is shipped overseas rather than sold here. 

Peterson said that the North Carolina delegation has sent letters to President Obama and Froman expressing its strong opposition to any removal of tobacco from the trade deal.

Sen. Kay HaganKay HaganDemocrats can win North Carolina just like Jimmy Carter did in 1976 North Carolina will be a big battleground state in 2020 Linking repatriation to job creation MORE (D-N.C.), whose state is the nation’s top exporter of tobacco, has long maintained that the crop be treated like any other agricultural product in TPP negotiations, an aide told The Hill.

In Kentucky, the General Assembly this week called on the Obama Administration to defend the economic interests of the state’s tobacco growers by ensuring that tobacco products are not removed from any chapter of TPP.

“In recent years, tobacco growers across Kentucky have become increasingly dependent on exports,” said state Rep. Ryan Quarles (R).

“Excluding tobacco from any chapter of our trade agreements would strike another serious blow to our state’s already shaky economy and not do anything to advance public health,” he said in a statement. 

A full exclusion of tobacco has been lauded by anti-smoking groups such as the Campaign for Tobacco Free Kids and the American Lung Association. 

Those same groups have criticized USTR for retreating to a less restrictive proposal, which they say would stymie U.S. and other nations’ plans to reduce tobacco use.

If completed, the TPP would set up a trade deal among the economies of the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.