Policy fights await release of trade deal

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The Obama administration is preparing to release the text of the sweeping Trans-Pacific Partnership (TPP) trade agreement, setting the stage for a host of policy fights that could threaten congressional approval of the president’s prized trade deal.

Obama has little margin for error as his administration and supporters of the deal press lawmakers to back a 12-nation pact, a top item on his economic agenda.

{mosads}Congress handed Obama a crucial tool earlier this year, voting to forgo the opportunity to make any changes to the deal reached after years of negotiations with foreign leaders.

The deal was completed on Oct. 5 and the administration said it was aiming to release the text within 30 days after that.

However, there remain several sticking points that could stand in the way of final passage next year.

Here are some of the issues that could slow the pact’s approval: 

1. Biologic drugs

Pharmaceutical companies had pressed for 12 years of exclusive rights to their clinical trial data, a time frame meant to help them recoup the expense of developing a set of drugs that are both complicated and costly to produce.

The TPP offers just eight years of exclusivity protections across all 12 nations, including Australia, where drugmakers have five years of protections, and in
developing nations such as Peru where there were none at all. 

U.S. Trade Representative Michael Froman has said that the issue was the single hardest to negotiate. Just how hard the powerful U.S. pharmaceutical industry is prepared to fight back will become clear after the full text of the deal is released.

2. Tobacco carve-out 

The deal excludes the tobacco industry from certain legal protections for other agricultural sectors, a provision that has enraged industry groups and some lawmakers, including North Carolina’s Republican senators.

Sens. Thom Tillis and Richard Burr, who voted in favor of giving Obama fast-track authority, have vowed to make an effort to topple the entire deal over what they view as a slight that could undermine the Tar Heel State’s economy.

Proponents of the exemption maintain it would give nations a stronger ability to establish public policies with more power to deliver potent health messages. The TPP deal, they argue, doesn’t affect the export of tobacco leaf and instead focuses on public health challenges such as packaging and other anti-smoking campaigns.

3. Currency

A majority of lawmakers on Capitol Hill have argued that currency manipulation provisions needed to be included in any final trade agreement if it were going to pass Congress.

But the Obama administration, including Treasury Secretary Jack Lew and the president himself, have said that adding a framework for punishing countries that lower the value of their currency to gain a trading advantage would have further complicated already difficult negotiations. 

Instead, the 12 nations agreed to create a forum where the finance ministers would meet a couple of times a year to examine whether any countries in the deal are manipulating their currency and how to put them on a path to correcting the practice. 

Labor unions including the AFL-CIO have argued that currency manipulation could wipe out any potential tariff benefits and that what has been included in the TPP isn’t enforceable.

After the completion of the TPP, Ford Motor Co. said that the TPP “fails to meet the test” set by Congress on currency, saying it would oppose the deal and urged lawmakers to follow suit. 

4. Labor/human trafficking 

Lawmakers on both sides of the Capitol have expressed frustration with the handling of a State Department report that upgraded Malaysia’s human trafficking status, making that country eligible for inclusion of the TPP and keeping the deal intact.

Those critical of the move said they would wait for an explanation of how Malaysia was promoted before deciding whether to support the TPP.

The deal is generally expected to give the United States a greater ability to put pressure on developing nations to improve labor practices. That includes requiring minimum wages and unions in Vietnam and ways to cut down on human trafficking in Malaysia. Some lawmakers have since pointed to signs that the labor rules are stronger and enforceable.

Rep. Sandy Levin (Mich.), the top Democrat on the Ways and Means Committee, said there was “substantial progress with Vietnam and Malaysia in the areas of worker rights as we seek to ensure they comply with the enforceable standards in the agreement.”

He added, however, that there wasn’t satisfactory progress on a plan to “ensure that Mexico — a country where economic competition with U.S. workers is the most intense — changes its laws and practices to comply with its obligations in the agreement.”

Froman has said the trade deal “establishes the strongest labor standards of any trade agreement in history,” and that all the new rules are fully enforceable.

But the TPP might not go far enough for Democrats, who could say there is simply too much leeway for nations to make changes. And the enforcement mechanisms might go too far for some Republicans, who could argue that the TPP could hurt U.S. companies doing business in developing nations.

5. Investor-State Dispute Settlement 

Sen. Elizabeth Warren (D-Mass.) has repeatedly said that the TPP could allow foreign companies to use a legal process written into the deal to bypass U.S. courts in order to fight regulations, possibly requiring taxpayers to pay millions of dollars in damages. 

The White House and Warren sparred over the issue in May. While there hasn’t been much chatter lately, the argument could be revived once lawmakers have read through the text. 

Tags Elizabeth Warren Jack Lew Michael Froman Richard Burr

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