Panetta: TPP could be dead after this year

With help from Victoria Guida, Adam Behsudi and Jenny Hopkinson

PANETTA: TPP COULD BE DEAD AFTER THIS YEAR: Former Defense Secretary Leon Panetta said Thursday he saw a “very low probability” of the Trans-Pacific Partnership ever becoming law if Congress does not pass the agreement before the end of this year, because of the opposition of leading presidential candidates on both the right and the left.


“I would say a failure to pass this before the end of [President Barack Obama’s] term would mean it’s unlikely to be proposed in the future, given the positions staked by Mr. Trump, Sen. Cruz and Secretary Clinton,” Panetta told reporters on a conference call with another former secretary of defense, William Cohen, to urge lawmakers to consider the damage that failing to pass the 12-nation agreement would have on U.S. national security interests.

Cohen said he was “a little more hopeful” the pact could be revived if Clinton wins in November with a message of “responsible world leadership.” But both Washington veterans said the White House and Republican leaders need to strike deals soon on outstanding issues for the pact to have a credible chance of being approved in the lame duck session after the election.

IT’S FRIDAY, APRIL 29! Welcome to Morning Trade, where I’d like to recommend the music of Thomas Tallis if you’re feeling a little stressed. It got me through the final weeks of the 1996 Farm Bill and 20 years later it still does the job. You know the deal: thoughts, news, fool-proof life strategies? Send them to [email protected] and @tradereporter.

FORMER DEFENSE CHIEFS SEND LETTER: Panetta, Cohen and six other former defense chiefs, including Chuck Hagel and Donald Rumsfeld, in a letter Wednesday urged Congress to approve TPP or risk letting China write the trade rules for this century.

"And let us be clear: trade rules written by China would not promote a trading system consistent with American interests and values," the group said. The main obstacle to approval, Republicans leaders say, is that there is not enough support to approve the agreement because of concerns raised by financial services, pharmaceutical and tobacco companies.

The former defense chiefs urged Congress to take a larger view. “With a trade agreement of this magnitude, there will be elements that some dislike, but the overall benefits to our economy and national security cannot be overstated,” they said. Pros can click here to read the letter.

ON TTIP, DOES SLOW AND STEADY WIN THE RACE? The U.S. and EU continued to make progress on a range of issues at their negotiating round in New York this week, but not on any controversial issues, Pro Trade’s Victoria Guida reports from the Big Apple. For example, while sector-specific regulatory negotiations had previously only focused on objectives, the two sides moved to text-based discussions in some of the areas, a USTR official said. The U.S. tabled texts for pharmaceuticals, medical devices and cosmetics, while the EU also tabled a text on pharmaceuticals which it plans to publish publicly after the round.

The two sides tackled phase-outs for the 97 percent of tariffs that they’ve already committed to eliminate, trying to shorten the length of time those duties go to zero on lines that won’t be phased out immediately.

“In almost every instance, we got more agreement,” the USTR official said.

EU TIES CHEESE NAME PROTECTION TO MEAT MARKET ACCESS: The U.S. cheese industry is likely going to have to agree to some of the EU’s geographical indication demands for the U.S. meat industry to get better access to the European market under TTIP, Guida reports.

"At some point in the negotiations, we will have to make an offer on beef and pork and poultry, sensitive sectors in the EU," an EU source told reporters at the TTIP negotiating round. "It will not be possible to make an offer or a generous offer unless we get GI [geographic indications] protection. That's the quid pro quo."

Most of the roughly 200 GIs that the EU has requested are non-controversial, the source argued. But the EU has asked for protection of some commercially important names, such as asiago, feta and parmesan. But the source said this is subject to negotiation. "It's quite possible that some names, even if they're protected as GIs in Europe, would not be protected in the U.S. because the U.S. consumer regards them as a common name," he said. "We're not dogmatic on this."

HOGAN: EU NOT RUSHING TTIP FOR OBAMA: Meanwhile, European Agricultural Commissioner Phil Hogan underscored Thursday that the EU won't sign off on a trade deal with the United States that doesn't include recognition of its GIs for food. The Irish politician also said he's not going to rush to reach a TTIP agreement before Obama leaves office. There will be no sacrifice of the quality of European food and agricultural products "for the sake of a deal with the U.S. or anyone else," Hogan said during an event in Brussels to mark to the launch of POLITICO Pro Europe's Agri and Food newsletter.

GIs are needed as a sort of "rural intellectual property" and to ensure good prices for farmers' raw products, he said. "We are certainly playing a tough card at the moment in terms of agriculture," he said. "But they've made an assumption that we are going to cave" on GIs and other protections for sensitive products. "There will be no deal if that's the case."

SOME MORE T-TIDBITS:

— In New York, the two sides discussed financial services, focusing in particular on rules issues like the so-called “prudential carveout” that gives governments free reign to regulate as they see fit for the health of their financial systems. Don’t hold your breath for market access talks in that sector anytime soon, as the two sides are still working out how and where to communicate about financial regulations. The U.S. continues to be adamant that forum should be the Financial Markets Regulatory Dialogue.

— Neither side has made offers on the automotive rule of origin, which will determine how much content has to be European or American in order to receive tariff benefits. Former Missouri Gov. Matt Blunt, who heads up the American Automotive Policy Council, said during a presentation at the TTIP stakeholder event that the auto groups have not yet settled on a position on that issue. He was asked by a delegate whether the groups preferred the rule used by NAFTA or TPP.

TRADE MINISTERS TO MEET JUNE 1 ON SERVICES TALKS: Top trade officials from the United States, the EU and 21 other countries negotiating the Trade in Services Agreement will meet in Paris on June 1 to take stock of the three-year-old talks. The high-level gathering will take place during the 18th round of negotiations scheduled for May 26 to June 3, the European Commission said in a report. The 23 “parties” involved in the talks are expected to exchange revised market access offers ahead of the May round.

The 17th round in April focused primarily on certain annexes establishing rules and definitions for certain service sectors. The parties made "good progress" toward agreeing on text in annexes covering telecommunications, e-commerce, localization, financial services and rules for foreign workers, the EU report said. Parties also discussed rules for transport services, including maritime, air and road, an area of particular sensitivity for the United States.

UNIONS TURN UP HEAT ON CARRIER: Ahead of the Indiana primary, Democratic presidential candidate Bernie Sanders is expected to speak at a union rally today outside the Indiana State Capitol to protest Carrier Corp.’s decision to move 1,400 manufacturing jobs to Mexico from its plant in Indianapolis. Organizers said Democratic front-runner Hillary Clinton was also invited to take part.

AFL-CIO President Richard Trumka will give a speech at the rally, along with Sen. Joe Donnelly and members of USW Local 1999, which has endorsed Sanders for president. The event “will give voice to the urgency of rewriting trade rules and the tragic cost of unfair trade deals” like NAFTA and TPP, the United Steelworkers said in a statement.

Sanders has been a vocal critic of both NAFTA and the TPP, while Republican front-runner Donald Trump has threatened to slap a tax on any company that moves production abroad and tries to export back to the United States.

A video of a Carrier executive delivering the bad news to workers earlier this year went viral and propelled the company’s decision into the presidential election spotlight. Michelle Caldwell, a spokeswoman for Carrier, said Thursday the manufacturer looked “forward to continuing discussions with the United Steelworkers and to reaching an agreement that provides clarity and certainty for our Indianapolis employees during this transition.”

MODI TO ADDRESS CONGRESS: Indian Prime Minister Narendra Modi is making a return visit to the United States to give a speech to a joint meeting of Congress, probably on June 8, House Speaker Paul Ryan announced on Thursday. But over at the White House, spokesman Josh Earnest said they were still working with New Delhi on the details.

“The White House been in close touch with a range of Indian officials to discuss a potential visit by Prime Minister Modi to Washington,” Earnest said. “We’re still engaged in those discussions. Obviously the president has a strong working relationship with Prime Minister Modi.”

It would be Modi’s fourth visit to the United States since his election in May 2014. He was most recently in Washington for the nuclear summit, and Obama and Modi also met in December during the Paris climate talks. Obama visited India in January 2015 as the “chief guest” of the Modi government for the annual Republic Day celebrations.

OBAMA: DON’T BE A PIRATE: Finally, Obama got preachy on Facebook on the subject of overseas counterfeiting and piracy and put in a plug for approval of TPP. “When someone in a foreign country sells ripped-off copies of an American artist's music, a writer's film, or even your favorite athlete's jersey, we all lose,” the world leader said in a post on Thursday.

“But strong intellectual property protections make sure no one can undercut our economy or take advantage of America's great creators — which is why we put those protections in the Trans-Pacific Partnership,” Obama said. To drive home the point, he asked his followers to share their favorite American books, films and sports team that “we have to protect.”

His own included “Song of Solomon” by Toni Morrison, “The Godfather — Part 1 & 2”, “The Wire” and the Chicago Bulls. To fill out “The List” yourself, click here.

How the man in charge of Medicare plans to win back doctors' hearts and minds. In an exclusive interview for POLITICO's new 'Pulse Check' podcast, CMS acting head Andy Slavitt dishes on the Obama administration's dramatic changes to physician payment and talks about how rising drug prices are health care's latest major challenge — and an opportunity. To listen to the full interview and ensure you don’t miss upcoming ‘Pulse Check’ episodes, subscribe to the podcast on iTunes: http://apple.co/1YTVD60.

INTERNATIONAL OVERNIGHT

— Trump's 'America first' speech has alarmed U.S. allies, Reuters reports.

— Roberta Jacobson has been confirmed as U.S. ambassador to Mexico, POLITICO reports.

— Carl Icahn has sold all of his Apple stock, the Financial Times reports.

— Simple changes to tariffs could help U.S. manufacturers, the Cato Institute says.

THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: [email protected] and @ABehsudi; [email protected] and @vtg2; [email protected] and @tradereporter; [email protected] and @mjkorade; and [email protected] and @JsonHuffman. You can also follow @POLITICOPro and @Morning_Trade.

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