Leaked TPP chapter shows entrenched divisions on drugs — Obama to meet with Vietnamese party leader — Cutler heading back to Tokyo Presented by Semiconductor Industry Association

With help from Doug Palmer

DRUGS STILL A PROBLEM FOR TPP FINISH: The contentious fight over drug patents in a leaked chapter of the Trans-Pacific Partnership is casting doubt on a quick wrap-up of the deal, sources close to the talks say.


The draft of the agreement’s intellectual property chapter, obtained by POLITICO, shows that countries are stepping up their opposition to U.S. demands that they strengthen patent protections, which would necessitate a change to their national laws. “[E]veryone is trying to save their own system,” a source closely following the talks said.

The chapter calls for “patent linkage” rules that would prevent governments from letting generic drugs go to market if the brand-name versions are still patented.

Critics say this “hard linkage” system would slow down the introduction of cheaper generic medicines, adding it should be up to the patent holder, not the government, to defend drugs from generic competition. They also say the U.S. could be going beyond its domestic law by applying hard linkage rules to a new class of biologically derived medicines, known as “biologics,” which include pioneering treatments for cancer and other deadly diseases. Click here for the full story from Pro Trade’s Adam Behsudi: http://politico.pro/1S0q5qY.

IT’S MONDAY, JULY 6! Welcome to Morning Trade, where we’re thinking U.S. Trade Representative Michael Froman missed the opportunity to wrap up bilateral talks with Japan by making a bet on the World Cup final. Send along any trade tips to [email protected] or @ vtg2.

OBAMA TO MEET WITH VIETNAMESE PARTY LEADER: Speaking of TPP, President Barack Obama will meet Tuesday with Nguyen Phu Trong, the general secretary of the Central Committee of the Communist Party of Vietnam. According to a statement from the White House, the two will discuss ways to improve their bilateral relationship, and issues including TPP, human rights and defense. U.S. Trade Representative Michael Froman will meet with Trong today, and the Vietnamese party leader will speak to the U.S. Chamber of Commerce on Wednesday.

The two countries have been negotiating for months on what, if anything, Vietnam will have to do to improve labor rights before receiving the trade benefits of the TPP deal. The State Department earlier this month outlined the labor environment in Vietnam as part of its annual report on human rights violations around the world. The document noted a significant uptick in “wildcat,” or unsanctioned, strikes in 2014. Click here to read State’s full report on the Southeast Asian country: http://1.usa.gov/1ICVhfi.

CUTLER HEADING BACK TO TOKYO: Acting Deputy USTR Wendy Cutler heads back to Tokyo on Tuesday for the first time since the White House won approval of trade promotion authority, which has given new urgency to TPP negotiations between the U.S. and Japan on agricultural, industrial and automotive market access issues.

Although a U.S.-Japan deal has long been considered key to wrapping up the broader TPP talks, Froman said the two countries have made enough progress to proceed to other hurdles to finishing the pact. “I don’t really see that as an obstacle to other progress at the moment," Froman said last week at a POLITICO Playbook breakfast. "I think all the other countries recognize that even though we may not be finished with Japan, we’ve made quite good progress."

U.S. MOVE ON BAHRAIN RILES LABOR GROUP: The AFL-CIO is protesting the Obama administration’s recent decision to resume military aid to U.S. free trade partner Bahrain, which was suspended in 2011 after the Gulf state put down Shia-led protests.

“The Bahraini government has failed to keep its promises to the American government to improve the administration of labor rights including eliminating widespread workplace discrimination based on religion and political belief,” AFL-CIO President Richard Trumka said in a statement, explaining that his group has filed a labor rights case under the U.S.-Bahrain Free Trade Agreement. “By bolstering Bahrain’s government the Obama administration is undermining the struggle of Bahraini families in their efforts to attain same basic human rights that we cherish here in the United States, including the right to associate in unions.”

WIKILEAKS RELEASES DRAFT TISA PROPOSALS IN EIGHT AREAS: Wikileaks on Thursday added to its growing batch of leaked negotiating documents from the Trade in Services Agreement talks, releasing draft annexes on financial services, telecommunications, electronic commerce and maritime transport. The leaks came just ahead of this week’s TISA negotiating round in Geneva.

The documents reflect the positions of various countries as of April except for the e-commerce annex, which is from May. The document dump follows another leak Wednesday, which included the April version of the core TISA text as well as draft annexes on domestic regulation, movement of natural persons, transparency and government procurement.

All of the documents, as well as analyses of their contents, can be found here: http://bit.ly/1CekgEj.

PUBLIC CITIZEN RAISES ALARM ON FINANCIAL SERVICES: Watchdog group Public Citizen, which is highly critical of the trade agreements under negotiation, pointed to the TISA leak as proof that regulations put in place as a result of the financial crisis are under attack.

“Learning from the crisis means not repeating the deregulatory and non-enforcement mistakes that led up to it,” the group’s president, Robert Weissman, said in a statement. “Yet a secret international trade agreement, the Trade in Services Agreement (TISA), threatens to adopt and impose a global financial deregulatory standard.”

Weissman cites specifically proposals targeting limits on overall bank size, consumer protections, protections against new speculative financial instruments, and limits on transfers of personal financial data.

“It is unimaginable that such an agreement is under negotiation while the global economy is still recovering from the most severe crisis since the Great Depression, and while Greece and other countries are still reeling from developments related to the crisis,” he argued. Click here to read Public Citizen's analysis: http://bit.ly/1CUscWh.

NFTC CUBA TRIP RECAP: CLARITY NEEDED: The Cuban government is more eager than ever for foreign investment, but the situation for U.S. companies that want to do business there remains unclear in the wake of the historic opening Obama announced last year, Jake Colvin, vice president for global trade issues at the National Foreign Trade Council, said last week.

Companies are unsure what the outcome of Cuban reforms will be and are worried about the legal status of certain business activities under regulations issued by the Treasury Department, Colvin told POLITICO Pro after visiting the island with a representatives from 15 U.S. information technology, telecommunication, infrastructure, energy and health care companies.

“There isn't 20/20 vision yet from either side about what the playing field looks like or what the opportunities look like,” he said. The group met with U.S. and foreign diplomats based in Havana, as well as officials from the Cuban Ministry of Trade and Industry and other government agencies. They also caught up with Sens. Pat Leahy (D-Ver.), Ben Cardin (D-Md.) and Dean Heller (R-Nev.), who were in Cuba as well.

“It was really just a lot of feeling out” the situation, Colvin said, noting American business officials and the managers of Cuba’s state-run companies had some difficulty communicating because they come from such different political and economic systems. “I also think it's complicated on the Cuban side by the fact that they're going through reforms that are still ongoing. So there appears to be some hesitancy about being definitive, about getting out too far ahead of any reforms,” he said.

USTR LAUNCHES GSP PRODUCT REVIEW: The Generalized System of Preferences is back, and that means the Office of the U.S. Trade Representative can conduct its annual review of products that should be added or removed — a process that was suspended during the nearly two years the program was expired.

USTR is now launching that review, it announced in a pre-published Federal Register notice, and will accept petitions until July 31. There will also be a public hearing as part of the GSP review Aug. 11.

In addition to petitions on which products should be included, USTR will also consider adding five cotton products from least developed countries and consider whether waivers for some products should remain in the program despite their exceeding 50 percent of all U.S. imports of that good or a certain value threshold.

INTERNATIONAL OVERNIGHT

The Dominion Post editorial board argues New Zealand should be ready to walk away from a TPP deal if it isn’t good enough: http://bit.ly/1IZJjbe.

Obama may take his first trip to Vietnam later this year, The Jakarta Post reports: http://bit.ly/1dGCKlb.

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