TPP facing rough year ahead

With help from Doug Palmer and Adam Behsudi

TPP FACING ROUGH YEAR AHEAD: It doesn’t sound like there’s much chance the Trans-Pacific Partnership comes up before the lame duck. Senate Finance Committee Chairman Orrin Hatch became the latest to give that assessment, echoing similar statements from Senate Majority Leader Mitch McConnell.


“I doubt that’s going to be concluded before the end of the congressional year, fiscal year,” he told POLITICO, when asked how quickly his issues with the deal might be resolved. “I don’t think anybody believes this is going to be done before the lame duck because it’s very complex, and there are a lot of political interludes that are, you know, you just have to put up with.” But Hatch said he remained “confident we can work out these problems.”

The administration certainly has its work cut out for it. On the one hand, the Utah Republican continued his campaign against language in the deal that provides fewer than 12 years of protection for biologic drugs by calling on Australia and other TPP partners to recognize the importance of that length of protection. On the other hand, Finance ranking member Ron Wyden talked about a provision in TPP that shouldn’t change, despite criticisms from McConnell and others.

“I pushed very, very, very aggressively for that tobacco provision to be part of this,” Wyden told POLITICO about the carveout that protects tobacco control-related policies from being challenged in investor-state cases. “I have watched the tobacco companies over the years particularly focus on global markets where they can, in effect, get kids addicted at an early age, and so I feel very strongly about that provision. I worked very hard for it.”

IT’S FRIDAY, JAN. 22! Welcome to Morning Trade, where your host is (hopefully) off to China this weekend, assuming her flight makes it out of Boston on Saturday. Send any recommendations for things to do in Shanghai to [email protected] or @vtg2 .

FINANCE STAFF TRIP TRIES TO VERIFY TPP CLAIMS: A bipartisan group of Senate Finance Committee staff were able to use a recent trip to Malaysia, Japan and Australia earlier this month “to examine firsthand what TPP means for U.S.-Asian relations, as well as its potential impact on the U.S. economy,” committee spokeswoman Julia Lawless told POLITICO in a statement.

“The group participated in a series of meetings with top government officials and examined the countries’ economies and issues central to the TPP trade pact,” she said. “Having a strong understanding of the issues on the ground and maintaining a robust dialogue with our nation’s international trading partners is critical to the advancement of a strong international trade agenda.”

A participant on the trip said the mission was oversight, including comparing comments made by foreign governments against those made by the administration and business groups, including political constraints within each country. The participant also said that staff made the point that lawmakers will want clarity on entry into force. The staffer noted “there were concerns about ensuring effective implementation.”

THE NATIONAL SECURITY DEBATE ON TPP: Liberal Democrats opposed to TPP have added another complaint to the list of reasons Congress should reject the deal. They argue it undermines national security because it omits a small footnote contained in other recent trade pacts.

The footnote reinforces the idea that participants have authority to decide when another nation's investment threatens their national security. Rep. Brad Sherman (D-Calif.), who voted against TPP fast-track authority in the summer, warns that without that footnote, the U.S. would be threatened by lawsuits if it rejects a foreign investment on security grounds.

But TPP champions and other experts say the detractors have it wrong. They argue the missing language in the agreement is actually a positive for the U.S. because it could help turn the tables on China, should it ever join the TPP — as well as other countries that might use national security as a protectionist cover. Click here to read the story from yours truly: http://politico.pro/1TacIZd .

DIGITAL TRADE PACT ON THE HORIZON? It's time for global trade rules to catch up with the explosive growth in digital trade over the past decade, a group of experts said in a new paper released today at the World Economic Forum in Davos, Switzerland, our Doug Palmer reports. The proposals to address what has been dubbed “the newest battleground in international trade” include negotiating a digital trade agreement among willing members of the World Trade Organization and developing a dispute settlement mechanism.

The unifying idea behind the paper's 18 policy options is “that designing and maintaining a rules-based international trading system supportive of the digital economy is crucial,” Ricardo Meléndez-Ortiz, chief executive of the International Centre for Trade and Sustainable Development, and Richard Samans, managing director of the World Economic Forum, said in an introduction to the report from the E15 Initiative, a joint project of the two groups.

As many governments seek to control the data that crosses their borders, there is concern that the "balkanization" of the Internet could erode its benefits in areas such as ecommerce, cellphone apps, cloud computing, data analytics, digital streaming, social media and more. Click here to read the full story: http://politico.pro/1Tc70pA

AIDE: CUSTOMS BILL IN GOOD SHAPE: An aide to Sen. Wyden has a response to a few upper chamber leaders expressing doubts earlier this week that the customs bill conference report has the votes needed to pass in the Senate: “The trade enforcement bill has the votes to clear cloture. Period.”

TPP SEWS UP TEXTILE ENDORSEMENT: The main U.S. textile industry group has formally endorsed TPP, which could help persuade any wavering southeastern Republicans to vote for the pact if it comes up in 2016. "We believe that the agreement concluded late last year in Atlanta meets our core objectives and is worthy of our full support,” National Council of Textile Organizations Chairman Jeff Price said in a statement Thursday.

U.S. textile and apparel industry employment is at less than 400,000 today. Most of those jobs are located in southeastern states like North Carolina, South Carolina and Georgia. Last year, 19 of the 26 Republican representatives from those three states voted for trade promotion authority, helping it pass in the House 218-208. No Democrats from the three states supported TPA.

U.S. trade negotiators responded to industry concerns by including strong rules-of-origin provisions that deny duty reductions on textiles or clothing made from yarn or fabric produced by a non-TPP country, such as China, unless the goods are on a negotiated list of exceptions. The textile group also praised provisions in the pact that provide multiyear tariff phase-outs for "sensitive textile and apparel products" and protect textile trading relationships with Central and South American countries under previous U.S. trade pacts.

TECH FIRMS, U.S. OFFICIALS LOBBY SAFE HARBOR: With just 10 days to go before the Jan. 31 safe harbor deadline set by Europe's data regulators, the Pro Technology team says U.S. negotiators “have been asking U.S. tech companies to warn the EU how difficult it will be to offer websites, apps and other digital services to Europeans in a post-safe harbor world.”

After the European Court of Justice nullified the old pact in October, U.S. companies maintained a low profile. But now they're being vocal and presenting a united front. One of their talking points: “Tech companies are no longer at the mercy of a government eager to secretly scoop up data — at least no more so than they are in Europe. That's thanks, in part, to last year's USA Freedom Act, which curbed the NSA's data collection program.” Click here to read more: http://politi.co/1KtXEyr .

In a possible setback for the safe harbor negotiations, the Senate Judiciary Committee postponed a Thursday markup of the Judicial Redress Act. Sen. John Cornyn (R-Texas) wants to tie the bill — which extends certain U.S. privacy rights to EU citizens — to trans-Atlantic data-transfer agreements such as safe harbor. Members of the European People's Party — the center-right block in the European Parliament — were not amused, saying the delay “could have negative consequences on the conclusion of the Safe Harbor II negotiations before the deadline.”

LOBBYISTS HOST HAPPY HOUR FOR USTR OFFICIAL: Ashley Jones, who was director of outreach and member services on the House Energy and Commerce Committee for Rep. Frank Pallone (D-N.J.) until May, got a new job as assistant U.S. trade representative for private-sector engagement this month, POLITICO’s Isaac Arnsdorf reports.

Some of Jones’ friends threw her a happy hour Thursday night to celebrate, according to an invitation obtained by PI: Susan Brophy, Jocelyn Moore and Gregg Rothschild of Glover Park Group; Jonathon Jones and John Michael Gonzalez of Peck Madigan Jones; and David Castagnetti of Mehlman Castagnetti Rosen Bingel & Thomas. Some of these friends are lobbyists who represent clients before the USTR: Jones, Gonzalez and Castagnetti are all registered to represent Business Roundtable before the agency on major issues such as the Trans-Pacific Partnership. Castagnetti also lobbies the USTR for the Personal Care Products Council and Yahoo.

USTR spokesman Trevor Kincaid said it complies with ethics rules because everyone will be paying their own tab. Executive branch employees are usually allowed to accept gifts under $20, but the Obama administration has officials sign a pledge forswearing even that, said Kenneth Gross, a political law expert at Skadden. “If everybody picks up their own drinks it's OK,” he said.

Even so, “the last thing I'd want to do is have lobbyists announce my new appointment into government service,” said Craig Holman, the government affairs lobbyist for Public Citizen.

INTERNATIONAL OVERNIGHT

The new Canadian government is still undecided on TPP, but the Saskatchewan government is pushing for it, The Canadian Press reports: http://bit.ly/1QoRQfT .

Chinese Premier Li Keqiang is asking German Chancellor Angela Merkel to push the European Union to grant Beijing market economy status, Reuters reports: http://reut.rs/1OAX4Tr .

European Trade Commissioner Cecilia Malmström argues in a POLITICO Europe op-ed that focusing on the status of the Doha round is a “backward-looking question”: http://politi.co/1RCDav4 .

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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