TPP News from Crista Huff — September 9, 2016

by Crista Huff

 

In this issue:

• THE TPP’S PHARMACEUTICAL PROBLEM: STATUS REPORT

• DAIRY INDUSTRY CRYING OVER SPILLED MILK

• THE TPP’S ISDS PROBLEM: LETTER TO CONGRESS

• AGRICULTURE REPORT FROM THE CONGRESSIONAL RESEARCH SERVICE

• TEXTILE REPORT FROM THE CONGRESSIONAL RESEARCH SERVICE

• OTHER ONGOING CONCERNS ABOUT THE TPP

• TIMING OF THE TPP VOTE

• ODDS OF THE TPP RATIFICATION VOTE PASSING OR FAILING

• THE TTIP DEATH RATTLE

 

THE TPP’S PHARMACEUTICAL PROBLEM: STATUS REPORT

The problem: The TPP offers only 5 years of market exclusivity for biologic drugs (or 8 years, depending on the details), while U.S. law allows for 12 years of exclusivity. The pharmaceutical industry did not get what they wanted from the TPP, and is currently urging their state’s Representatives and Senators to either fix the problem, or vote “NO” on TPP ratification.

The TPP will not be renegotiated, a stance that has been publicly reiterated by heads of state in at least half a dozen of the partner countries. Many of them are quite pleased — some literally taunting the U.S. — at the great deal they received from the pharmaceutical portion of TPP negotiations. (For a list of countries that have announced opposition to TPP renegotiation, see #TPP — The Living Blog, section 22.)

What’s new: The Obama administration is working hard to find a way around the biologic problem. Various attempts to negotiate side agreements, tandem to the TPP, have failed. Senate Finance Committee Chairman Orrin Hatch (R-UT), who is essentially the Senate spokesman for the pharmaceutical industry, is now floating the idea that 12 years market exclusivity for biologic drugs could be attained on the honor system with amenable TPP partner countries. He proposed that such an agreement is workable because “honorable countries will live up to it.”

Honor. Please keep in mind that Brunei is one of the TPP partner countries. Brunei operates under Sharia Law, which specifically urges Muslims to lie to non-Muslims in order to achieve their goals.

“According to sharia, in certain situations, deception – also known as ‘taqiyya’, based on Quranic terminology, – is not only permitted but sometimes obligatory. Taqiyya is very prevalent in Islamic politics, especially in the modern era. The primary Quranic verse sanctioning deception with respect to non-Muslims states: ‘Let believers not take for friends and allies infidels instead of believers.’ ” — Middle East Forum, Oct. 2008

Sen. Hatch is ready for the TPP vote, as soon as a solution is in place that pleases the pharmaceutical industry. (Sept. 8, 2016)

 

DAIRY INDUSTRY CRYING OVER SPILLED MILK

New milk product pricing policies implemented this spring in Canada have harmed the U.S. dairy industry’s export volumes.

Back in March 2016, National Milk Producers Federation’s (NMPF) CEO Jim Mulhern said that the TPP “achieves less than we wanted in terms of throwing open new markets in Japan and Canada.” The NMPF determined that the net effect of the TPP on the U.S. dairy industry would be “neutral to slightly positive”, and is in fact counting on additional Asian countries (read: China) to join the TPP in the future, so as to potentially benefit the U.S. dairy industry.

Considering that the harmful Canadian dairy policies were put into effect after Mr. Mulhern’s statements, and that yet another change in Canadian dairy pricing is set to go into effect in November 2016, it’s looking more and more like the dairy industry will reap no net benefit from TPP ratification. The new pricing system will allow Canadian dairy processors to buy unfiltered milk products at world market prices, which will often be cheaper than the prices they’ve been paying for U.S. imports.

 

THE TPP’S ISDS PROBLEM: LETTER TO CONGRESS

Click the link, below, to read a shockingly comprehensive and powerful description of the dangers that the Investor-State Dispute Settlement (ISDS) mechanism within trade agreements presents to the U.S. justice system, American sovereignty, our citizenry and the national debt.

“220+ Law and Economics Professors Urge Congress to Reject the TPP and Other Prospective Deals that Include Investor-State Dispute Settlement (ISDS)” — Public Citizen, Sept. 7, 2016

 

AGRICULTURE REPORT FROM THE CONGRESSIONAL RESEARCH SERVICE

Here are some excerpts from the Congressional Research Service’s report, dated August 30, 2016: “TPP: American Agriculture and the TransPacific Partnership (TPP) Agreement”:

• “Exports account for around one-fifth of U.S. farm production.”

• “The corollary to the potential for greater export opportunities for U.S. farm products under TPP is that the United States would lower and eliminate tariffs on many agricultural product imports— such as tree nuts, peanuts, cotton, various fruits, tobacco, and wine, among others. The United States also would provide limited additional duty-free access to farm imports via new TRQs [tariff rate quotas] for dairy products and for sugar and sugar-containing products. U.S. farm products, such as beef, that enjoy preferential access to Canada and Mexico under the North American Free Trade Agreement (NAFTA) would relinquish that advantage as tariffs are lowered over time for TPP partners.”

The previous paragraph says that many types of U.S. foods and beverages will have increased competition, here in the United States. It also says that U.S. food products that enjoyed an increase in exports under NAFTA could lose that advantage under the TPP, because other TPP partner countries will compete to sell their products to Canada and Mexico.

Of particular note is the reference to new TRQs for dairy products. The dairy industry is already displeased with the projected net effect of the TPP on its industry. (See previous news item.) In addition, U.S. dairy is crying “foul!” over new 2016 dairy pricing in Canada, which has negatively impacted U.S. dairy exports to Canada. I can’t imagine that the U.S. dairy industry is going to be pleased with the increased milk product competition on American soil under the TPP.

• “TPP also seeks to address several non-tariff measures that can impede trade in food and agricultural products. Among these are sanitary and phytosanitary measures (SPS), which concern actions by governments to assure food safety and guard against plant pests and animal diseases. TPP seeks to curb the use of SPS measures as impediments to trade and provides procedures for resolving disputes that arise, including recourse to dispute settlement.”

The previous paragraph says that the TPP will lower food safety standards with partner countries, and that imports of foreign food products might not be healthy to ingest. The report goes on to say that if the lower safety standards lead to food products that cause illness, the U.S. can deal with that in the global court via the Investor-State Dispute Settlement (ISDS) mechanism in the TPP.

 

TEXTILE REPORT FROM THE CONGRESSIONAL RESEARCH SERVICE

The Congressional Research Service issued a report on the effects of the TPP on the U.S. textile industry, on Sept. 1, 2016. The report concluded that ratification of the TPP could lead to reduced demand for U.S. textile exports, due to increased competition from Vietnam and Japan.

 

OTHER ONGOING CONCERNS ABOUT THE TPP

The financial services industry is looking for an enforceable commitment, such as a side letter to the TPP, which would obligate countries to refrain from imposing data localization requirements on financial services firms. At this point, the problem is addressed in the Trade in Services Agreement (TISA), which is currently being negotiated, but four TPP partner countries are not included in TiSA: Vietnam, Malaysia, Singapore and Brunei.

The tobacco industry remains opposed to the TPP due to the tobacco carveout from the Investor-State Dispute Settlement (ISDS) mechanism. It is estimated that between six and fifteen House and Senate votes are in play over this issue.

Additional anti-TPP factions are at odds with labor standards within the TPP, a lack of enforcement against currency manipulation, and rule-of-origin issues.

 

TIMING OF THE TPP VOTE

Sen. Orrin Hatch (R-UT) said this week that he’s ready for the TPP vote, as soon as a solution is in place that pleases the pharmaceutical industry. “We’re not going to get this done before the end of this fiscal year, it seems to me.” (Sept. 8, 2016)

The White House is meeting with leaders of trade associations and big corporations today, to urge them to commit to a bigger push for TPP passage, with the aim of accomplishing the TPP vote during 2016. (Sept. 8, 2016)

Vice President Joe Biden told CNN, “we’re going to attempt in the lame-duck actually to have a vote.” (Sept. 6, 2016)

Vietnam is worried that the TPP will not be ratified by Congress in 2016.

 

ODDS OF THE TPP RATIFICATION VOTE PASSING OR FAILING

“Without [a biologics fix], TPP is not going to pass; and with it, it’s going have a rough time passing.” — Sen. Orrin Hatch (R-UT), Sept. 2016

FastTrack trade promotion authority (TPA) passed the House by a vote of 218-208. At this point, there are ten House Republicans who had voted YES on TPA, who have publicly announced that they will vote NO on TPP. There are additional House Republicans who plan to vote NO on TPP, but have not announced their decisions to the public.

Fast Track trade promotion authority (TPA) passed the Senate by a vote of 60-38. Four YES votes that are now theoretical NO votes include Senators Burr, Kaine, Portman and Toomey.

 

THE TTIP DEATH RATTLE

It has become apparent that E.U.-U.S. negotiations on the Transatlantic Trade and Investment Partnership (TTIP) have failed. The two parties have not agreed on a single chapter within the 27-chapter trade agreement.

Both German Vice Chancellor Sigmar Gabriel and French President Francois Hollande concur that TTIP is likely dead. French Minister of State for Foreign Trade Matthias Fekl plans to request a cessation of TTIP negotiations at an E.U. meeting of trade ministers in Slovakia, on Sept. 22-23.

“After Germany was hit with two major ISDS claims against its decision to phase out nuclear power and its new coal-fired electric plants regulations, the government notified the EU that it could not accept a TTIP pact that expanded the existing ISDS regime.” — Public Citizen, Sept. 8, 2016

E.U. partner countries Sweden, Netherlands, and Finland; and German Chancellor Angela Merkel remain pro-TTIP.

A TTIP failure helps the case against the TPP, because the U.S. dairy industry — and to a certain extent, the U.S. financial services industry — did not get what they wanted from the TPP, but were agreeing to it in order to end up with a better deal in the TTIP. Now that the carrot is no longer on that stick, perhaps they will not push so hard for TPP ratification.

“The negotiations with the United States have de facto failed,

even though nobody is really admitting it.”

— German Economy Minister Sigmar Gabriel

 

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Crista Huff is a stock market expert and a conservative political activist. She works with End Global Governance and issues groups to defeat the Trans-Pacific Partnership trade agreement. Send questions and comments to research@goodfellowllc.com.

 

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