ITC report won’t unstick TPP just yet

With help from Doug Palmer, Victoria Guida and Brian Mahoney

ITC REPORT WON’T UNSTICK TPP JUST YET: The U.S. International Trade Commission is set to release its long-awaited estimate of the economic effect of the Trans-Pacific Partnership this week, likely with mildly positive findings, but the report won’t quite provide the impetus for congressional action on the deal that the administration had hoped.


The May 18 release of the congressionally mandated report could have kicked off a window between now and the July recess for hearings or even markups of the TPP implementing bill, but the continued criticisms of the trade deal on the presidential campaign trail and in Congress have made the deal is too politically toxic to take up.

“We know there are benefits associated with this trade agreement,” House Ways and Means Trade Subcommittee Chairman Dave Reichert told POLITICO. “We know how critical this agreement is. But we also know we have issues that we have to resolve before it moves forward.”

However, if the ITC report is upbeat on the overall effect of the deal, as he expects it to be, “certainly we’re going to use that to promote TPP,” Reichert said.

Indeed, staunch TPP opponent Rep. Rosa DeLauro noted that it’s “a report people look to” and acknowledged the findings will help set the debate on the overall economic benefits and on which sectors will win and lose. Pros should look for the full story later today.

IT’S MONDAY, MAY 16: Welcome to Morning Trade, where we are looking forward to warmer days and hope the sun decides to stay out for more than just a few hours. Got any hot trade news to help warm us up? Let me know: [email protected] or @abehsudi.

AFL-CIO TO FAULT COLOMBIA TRADE DEAL: The AFL-CIO will mark the fourth anniversary of the U.S.-Colombia trade agreement by demanding the U.S. government do more to enforce laws designed to protect Colombian unionists from violence and limit illegal subcontracting.

Murders of unionists in Colombia have declined significantly since the enactment of a labor “action plan” developed alongside the United States-Colombia Trade Promotion Agreement. But Colombia is still a dangerous place to be a union supporter: the country averages 26 “labor homicides” a year, according to an April report from the Labor Department.

Since 2011, the AFL-CIO claims, only one person has been convicted for murdering a trade unionist. Meanwhile, “discrimination against trade unionists continues,” and instances of illegal subcontracting and outsourcing have grown by 10 percent, the federation said in a statement Sunday.

The federation will use the occasion as a warning against Congressional passage of the Trans-Pacific Partnership. “While supporters of the Trans Pacific Partnership (TPP) contend that this new trade agreement contains strong labor protections, Colombian union leaders and experts will discuss how their experience can guide other countries to learn lessons of previous failed promises,” the AFL-CIO said.

DONOHUE ON TPP AND TRUMP: The head of the U.S. Chamber of Commerce said Friday that he still believes it’s possible to win congressional approval of the Trans-Pacific Partnership this year and expressed hope that Donald Trump will moderate his opposition to the agreement.

"I think ... we're within reach of getting this deal done," Tom Donohue told reporters during a roundtable discussion to drive home the Chamber's support for the landmark agreement between the United States and 11 other countries in the Asia-Pacific. "But we're not going to get anything done until the main event is over," he added, referring to the presidential election.

The 77-year-old leader of the biggest U.S. business organization emphasized that the Chamber does not endorse candidates running for the White House, even though it does get involved in congressional races. "I hear mostly concern [about Trump] from our members," Donohue said. They ask, "'Who is this guy? What do we know about him? How will he behave?’”

But "I think it's been very interesting to watch the metamorphosis of Trump [in his] run for office," Donohue continued. "He, on a regular basis, clarifies his view as he becomes better informed. ... I don't know whether he's going to win. But if he does, he's going to have to deal with reality." To read Doug Palmer’s story, click here.

‘TTIP LITE’ NOT WORTH THE EFFORT: Meanwhile, Donohue took a swipe at Francois Hollande’s recent criticism of the U.S. position in talks on the proposed Transatlantic Trade and Investment Partnership, suggesting the French president’s remarks were motivated by reelection concerns.

“All of a sudden he says he doesn’t like the agreement, he doesn’t support it, it changes the culture of his great country, and oh, by the way, it hurts his agriculture guys,” Donohue said. “Take note he’s so far behind in the polls only God knows what he’ll say next.”

Donohue also said the Chamber was not interested in a “lite” version of the agreement that would only eliminate tariffs and leave out more challenging areas like investment and regulatory cooperation. “We wouldn’t support that. It would be much too much effort for too little return and we would have left out all the things that are of high value,” he said.

The veteran business leader dismissed the idea that TTIP is dead if a deal isn’t struck by the end of the Obama administration. “Absolutely not,” Donohue said. “The reason I believe that is because the fundamental challenges facing the nation — and by the way, the world — are not going to simply go away,” and the next president will be looking for ways to boost growth.

EU TTIP REPORT: PRICES, WAGES WILL RISE: TTIP would provide a boost to the U.S. and EU economies and raise both consumer prices and disposable household incomes, according to a draft report released by the European Commission on Friday.

The EU and U.S. gross domestic products, which made up about 46 percent of global GDP in 2014, would increase by 0.5 and 0.4 percent, respectively, by 2030 under TTIP, the report says. “Given the size of the economies in absolute terms this is a considerable gain and a gain that accrues each year,” it says.

Consumer prices would rise by an average of about 0.3 percent in Europe and see no increase in the U.S., but the EU increase would be offset by a 0.4 percent boost to disposable household income, while that income in the U.S. would rise 0.3 percent, the impact assessment by independent consultant Ecorys says. Click here to read more.

ANOTHER STEEL RULING COMING: The Commerce Department on Tuesday will announce its final determinations on anti-dumping and countervailing duties on imports of cold-rolled steel flat products from China and Japan. The retaliatory duties were requested by AK Steel Corp., ArcelorMittal USA, Nucor Corp., Steel Dynamics Inc. and U.S. Steel. In 2015, imports of the steel products from China and Japan were valued at about $272 million and $139 million, respectively. The case is among a raft of other investigations the U.S. steel industry has petitioned for as it tries to defend itself from plummeting prices caused by the glut of supply on the global market.

CHINA STRIKES BACK AT THE WTO: China is challenging the United States’ compliance with a World Trade Organization ruling that faulted U.S. methodology in more than a dozen anti-subsidy cases against Beijing. The consultation request occurred within a week of Washington’s challenge of China’s compliance with a case faulting duties it placed on U.S. broiler chickens.

The Chinese government requested consultations with the United States as a precursor to compliance proceedings in the dispute, which questions duties on a wide range of products, including steel pipes and solar cells. The U.S., which had an April 1 deadline to comply with the original WTO ruling, has redone some of the investigations, but China alleges many of those re-investigations didn't fix its concerns over what the U.S. considers a subsidy.

LEW: PROGRESS ON TPP FIN SERV CONTROVERSY: Treasury Secretary Jack Lew doesn’t think the controversy surrounding how financial data is treated in the TPP will hold up passage of the trade deal. Citigroup, JP Morgan Chase and other financial firms are upset that they're carved out of a TPP provision banning governments from requiring data to be stored within their borders, an exception fought for by Treasury in deference to U.S. regulators who weren't able to access some data stored overseas during the 2008 financial crisis. Treasury has been meeting regularly with industry to come to a solution.

On Friday, Lew said the regulators and the banks don't have a "radical difference of objective," but that the talks are hard because the topic is complex. He said he believes there is "a pathway forward” and “real progress” is being made toward finding a solution.

Treasury seems hesitant to negotiate a side letter addressing the issue in TPP over fear it could reopen the deal, financial services industry sources say. Instead, the department has been focused more on developing an acceptable approach in future negotiations, like the U.S.-EU talks or the Trade in Services Agreement. It's unclear whether that approach can satisfy industry, although some TPP countries are also participants in the TISA talks.

NZ ENVOY TO HATCH: DON’T WORRY, BE HAPPY: New Zealand Ambassador Tim Groser said Senate Finance Committee Chairman Orrin Hatch’s position on biologics in the TPP was “principled” but that the Utah Republican should not be worried about the level of protection the deal will provide for the new class of drugs.

Not enough attention has been paid to TPP language saying that all countries must provide "effective market protection" for biological drugs, Groser told reporters Friday at a lunch hosted by the National Foreign Trade Council.

“[New Zealand] will meet our TPP obligations, which require us to give effective market control through a variety of different mechanisms,” said Groser, who recently served as his country’s trade minister. “The shortest period of time between the marketing of the original [biological drug] and the entry of [a biosimilar] through our regulatory process ... the shortest period is over 20 years. So this is not just pure theory I’m spouting.”

INTERNATIONAL OVERNIGHT

— Greece is prepared to block the TTIP unless it adequately protects geographical indications, Euractiv reports.

— France and Germany are banding together to ask that the EU tighten measures to defend against imports of cheap Chinese steel, Reuters reports.

— China’s lead negotiator for accession to the WTO called a non-binding European Parliament resolution opposing granting China market economy status protectionist, CCTV reports.

— Vietnamese farmers are recognizing the need to adapt when the TPP goes into force, the Vietnam News reports.

— Election politics are turning the traditional debate over trade on its head, the Kansas City Star reports.

— ICYMI, India released its National Intellectual Property Rights Policy in which it defended its compliance with the WTO TRIPS Agreement.

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