Finance chair: Trade deal may need to be renegotiated

Finance chair: Trade deal may need to be renegotiated
© Greg Nash

The top Republican overseeing trade in the Senate on Friday suggested inadequate intellectual property protections may halt the passage of a sweeping Asia-Pacific trade agreement.

Senate Finance Committee Chairman Orrin Hatch (R-Utah) said he is most concerned about a provision in the Trans-Pacific Partnership (TPP) that provides pharmaceutical companies with up to eight years of exclusive rights to their clinical trial data, instead of the 12-year standard set by Congress six years ago.

"As it stands right now, I’m afraid that the current draft of the TPP agreement may fall short,” he said during remarks during a Global Intellectual Property Center summit at the U.S. Chamber of Commerce.

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“I am very concerned that, particularly with regard to intellectual property, the administration may not have gotten the best deal possible,” Hatch added.

Hatch’s support for the deal is critical to its passage in Congress. President Obama will need the Finance chairman and other key Republicans — Speaker Paul Ryan (R-Wis.) and Rep. Kevin BradyKevin Patrick BradyLawmakers under pressure to pass benefits fix for military families How centrist Dems learned to stop worrying and love impeachment On The Money: Senate passes first spending package as shutdown looms | Treasury moves to roll back Obama rules on offshore tax deals | Trade deal talks manage to weather Trump impeachment storm MORE (R-Texas), the new chairman of the House Ways and Means Committee, among them — if he wants to see years of TPP negotiations culminate into a ratified deal that covers 40 percent of global growth.

The Obama administration is trying to quell concerns by arguing that they pushed for the best deal they could get on intellectual property, Hatch said.

In 2009, a a bipartisan majority in Congress provided 12 years of data exclusivity for new biologics, which is part of the healthcare law. The TPP doesn't change U.S. law. 

But Hatch said the TPP deal may limit the ability of U.S. companies to recoup the costs of their investment — it can take 15 years to break even on the cutting-edge medicines used for cancer and other treatments.

With a possible impasse ahead, Hatch suggested that if Congress isn’t satisfied with the agreement, the Obama administration may have to renegotiate portions of the deal, an extremely complicated prospect that could torpedo the entire agreement. 

“While I understand that parties have deemed the negotiations closed, the agreement cannot enter into force if Congress doesn’t agree to it,” he said. 

“At the end of the day, USTR may need to go back to the negotiating table and try again.”

Making changes to the 12-nation TPP may prove impossible because they would likely upset the delicate balance of the deal.

"The idea that renegotiating this agreement could deliver a better deal is patently false,” a senior administration official told The Hill.

“TPP includes a strong eight-year effective standard on biologics drugs and is the first trade agreement ever to provide a minimum standard for an extended period in this area," the official said.

U.S. Trade Representative Michael Froman has said the biologics provision was the most difficult to negotiate.

“This is the strongest possible outcome and reopening it would unravel a deal that cuts more than 18,000 different taxes various countries put on Made-in-America goods, reflects American leadership in the Asia-Pacific, and levels the playing field for American workers, innovators and businesses," the official said. 

Hatch acknowledged that the move “is not ideal, but it is certainly not unprecedented."

“I understand that renegotiation may be difficult, particularly with so many parties involved,” he said. “But at the end of the day, the alternative to renegotiation may very well be no TPP at all.”

The White House has renegotiated bilateral agreements before, including Colombia and South Korea, but would face a herculean task in trying to make changes within a 12-country agreement. 

Hatch also noted other broader concerns including market access, the tobacco carveout and labor policies. He also wants to examine the strength of copyrights and patents, and the protection of trade secrets in the deal.

"This agreement may be very difficult to pass as-is," he said.

At the same summit, Rep. Mike Pompeo (R-Kansas) called the biologics provision “a concern” but said trade agreements are tremendously important to residents of his home state.

Congressional Democrats wanted fewer years of protections to keep prices down on breakthrough drugs as the industry faces a backlash over rising costs. 

Overall, the text of the TPP deal, which was released on Thursday morning — a month after its completion — got mixed reviews around Washington.

Labor unions like the AFL-CIO, and some environmental groups and congressional Democrats, including Democratic presidential hopeful Sen. Bernie Sanders (I-Vt.), expressed immediate opposition to the deal, saying it was worse than they expected.

Congressional Republicans sounded cautious tones.

House Ways and Means Chairman Kevin Brady (R-Texas) said he would "study the agreement carefully, consult with my colleagues and constituents in the coming months, and give the administration the opportunity to answer all of our questions and address our concerns before we vote on it."

Rep. Pat TiberiPatrick (Pat) Joseph TiberiOhio New Members 2019 Many authors of GOP tax law will not be returning to Congress GOP Rep. Balderson holds onto seat in Ohio MORE (R-Ohio), chairman of the trade subcommittee who led the charge to pass trade promotion authority this summer, said he also planned to thoroughly review the agreement.  

“I will reserve judgement until I review it and hear from my constituents and stakeholders, but I hope this agreement is one that will help our employers better compete around the world so they can create American jobs here at home,” he said. 

Even with the early criticisms of the massive agreement, Hatch said he would take a deep dive into the details. 

"Obviously, we need to spend more time going through and discussing the text before making any definitive statements," he said. "And, of course, there are other factors to consider with this trade agreement beyond data protection for biologics, and I intend to review all of them very closely."