Obama can’t bank on financial services support for TPP Presented by Semiconductor Industry Association

With help from Doug Palmer and Victoria Guida

OBAMA CAN’T BANK ON FINANCIAL SERVICES SUPPORT FOR TPP: U.S. banks and insurance companies — usually big backers of free trade deals — are signaling they might stay on the sidelines while the Obama administration seeks to win Congress’ votes for the Trans-Pacific Partnership, report POLITICO Pro’s Victoria Guida and Colin Wilhelm.


Officials from the Treasury and State departments, as well as the Office of the United States Trade Representative, met Friday with financial services industry representatives to determine what assurances they are seeking on the trade deal and to make a case for their support. In particular, financial firms say they don't like the way the agreement would allow governments to require them to maintain data servers within foreign borders, despite prohibiting such requirements for all other companies. The deal also gives Malaysia — one of the biggest new markets in TPP for banks and insurance companies — considerable leeway to restrict foreign investment in its financial sector.

The president is likely to eventually win over some CEOs by calling them directly and saying, “‘We need you on this,’” said a financial industry source. “But the business groups ... like [the Securities Industry and Financial Markets Association] for example, would they sit this one out? That is a possibility for sure.” Click here to read the full story: http://politico.pro/1I950LR .

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ITA COUNTRIES GET BUSY IN GENEVA: Countries negotiating an expansion to the Information Technology Agreement will meet in Geneva today to try to finish out the work of deciding how long it will take for duties to be eliminated on the roughly 200 technology products that will be added to the tariff-cutting deal, according to an industry source.

Ambassadors will meet in the morning and a technical meeting is scheduled this afternoon to try to bring countries closer to a Dec. 4 deadline for completing work on tariff phase outs. The ultimate goal is to have a final deal ready by the World Trade Organization’s ministerial meeting in Nairobi next month.

Countries had already agreed that most items would have tariffs eliminated within three years. Sensitive items will be given five years, but only the most sensitive items would get a seven-year phase out period. However, China has been demanding that the longest phase out period be applied to a broad swathe of products.

The 54 countries involved in the talks reached a deal in July on a list of products, ranging from video game consoles to next-generation semiconductor chips, that would get tariff cuts under a revised and expanded agreement. The breakthrough was considered a success in the most politically difficult phase of the discussions.

DSB TO REAPPOINT TWO APPELLATE BODY MEMBERS: Trade action continues in Geneva this week with a meeting of the World Trade Organization’s dispute settlement body. Brazil is scheduled to request a panel fighting Indonesian restrictions on imports of chicken meat and chicken products. The meeting will also decide on the reappointment of two WTO Appellate Body members for another four-year term: Ujal Singh Bhatia and Thomas Graham. Prior to his first term on the Appellate Body, Singh served as India’s ambassador to the WTO. Graham, an American, previously worked in private legal practice and at one point in his career served at deputy general counsel at USTR.

TUNA TRADE RETALIATION POSSIBLE BY MID-2016: The United States could face Mexican trade retaliation by the middle of next year following the latest WTO ruling against U.S. “dolphin-safe” tuna labels, a spokesman for the Mexican tuna industry said.

Mexico has been fighting the U.S. dolphin-safe label program at the WTO since 2008. Last week, an appellate body ruled the way the United States operated the program was unfair to Mexico because it did not hold other suppliers to the same standard for proving that no dolphins were harmed in the process of catching the tuna.

Mark Robertson, president of Potomac Global Advisors, a Washington-based consulting firm, said he doesn’t know how much Mexico will seek in retaliation, though he expects the economic analysis to be completed next month for a presentation to the WTO Dispute Settle Body and the penalty phase of the proceedings to be concluded as early as next May.

THAILAND’S GSP BENEFITS UNDER THE MICROSCOPE: The Office of the U.S. Trade Representative will review Thailand's eligibility for tariff benefits under the Generalized System of Preferences because of allegations that the country is not adequately protecting labor rights. The agency is already reviewing eligibility for Ecuador, Fiji, Georgia, Iraq, Niger and Uzbekistan, according to a Federal Register notice published today. An interagency public hearing will be held in connection with all of these reviews Jan. 14-15.

USTR also announced in the notice that it had reviewed labor issues in the Philippines and decided not to change its GSP benefits "in view of progress made by the government of the Philippines in addressing worker rights issues in that country." Read the notice here: http://bit.ly/1R55JQ6 .

STEEL GROUP CHEERS CHINA TALKS: U.S. steel producers are welcoming what they call “an important step” by the Obama administration to address China’s excess steel production capacity through government-to-government talks in 2016. “Overcapacity in China’s steel industry is a major factor fueling the import surge currently injuring the U.S. industry,” American Iron and Steel Institute President Thomas Gibson said in a statement. “We look forward to the ongoing work of the U.S. and Chinese governments on this topic.”

The United States and China agreed at their annual Joint Commission on Commerce and Trade meeting, in Guangzhou, “to hold discussions in 2016 regarding capacity, production and trade in the steel sector,” including updates on previous Chinese commitments to establish mechanisms that strictly prevent the expansion of crude steelmaking capacity and achieve major progress in addressing excess production capacity in the steel sector within five years.

ICYMI: ISRAELI-PALESTINIAN POLITICS MUDDY EX-IM PATH: Congress is expected to resuscitate the Export-Import Bank next month, but senators from both parties are pitching a condition: that applicants for loans essentially vouch support for the Israeli economy in order to be approved. The move, described by multiple sources, is meant to counter a pro-Palestinian campaign to undermine Israeli exports because of its occupation of the West Bank and blockade of the Gaza Strip, POLITICO’s Burgess Everett and John Bresnahan report.

Specifically, the Ex-Im Bank would have to consider whether applicants for loans oppose “policies and actions that are politically motivated" and meant to inhibit "commercial relations specifically with citizens or residents of Israel." In the past, Ex-Im has taken into account applicants’ stance on human rights and terrorism, prompting advocates of the new language to propose the new qualification.

Lawmakers are planning to resurrect the bank as part of a must-pass transportation and infrastructure bill next month. The attempt to insert the pro-Israel language is being led by Sen. Rob Portman (R-Ohio), who faces a tough reelection next year, along with prominent Jewish Democrats Sens. Ben Cardin (D-Md.) and Ron Wyden (D-Ore.). Senate Minority Leader Harry Reid (D-Nev.) is also strongly advocating for inclusion of the language, meant to undercut the so-called boycott, divestiture and sanctions campaign against Israel. Read the full story: http://politi.co/1Of1Szd.

INTERNATIONAL OVERNIGHT

Vietnamese travel firms feel threatened by the foreign investment the TPP will bring, Thanh Nien News reports: http://bit.ly/1Hlv0nc

Thailand’s deputy prime minister travels to Japan with the purpose of getting Tokyo’s support for the country’s eventual TPP membership, Kyodo News reports: http://bit.ly/1QH6v6O

Critics say a Vietnamese labor rights activist’s alleged beating and detention questions the country’s ability to comply with TPP obligations, Voice of America reports: http://bit.ly/1PXZtch

The Trans-Pacific Partnership deal Congress is now considering is one of the most crucial ways to guarantee national security, say David Carden and David Adelman, two former ambassadors who served in Asia, in a column for POLITICO’s Agenda: http://politi.co/1Ofbn1h .

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