Details coming on TPP financial services

With help from Megan Cassella, Victoria Guida and Doug Palmer

DETAILS COMING ON TPP FINANCIAL SERVICES: This week cleared trade advisers from industry groups and businesses could have in hand the legal text detailing how the administration will handle the issue of financial data storage in future trade deals, according to private-sector sources.


Treasury last month unveiled the outlines of a plan for financial services data as it relates to trade deals, in a bid to ease Congressional passage of the TPP. Lawmakers and financial services firms complained the TPP left financial services out of a rule that would ban governments from requiring companies to store data within their borders. The new language would apply to a separate services trade deal that includes seven TPP countries — Australia, Canada, Chile, Japan, Mexico, New Zealand and Peru. The administration said it would try to address on a bilateral basis the concerns of other TPP countries not involved in the services trade talks.

U.S. Trade Representative Michael Froman and White House National Economic Council Director Jeffrey Zients said at a Business Roundtable meeting last week that the administration would make efforts to alleviate concerns in TPP countries. The officials also said the administration was in the process of clearing the language with other agencies and lawmakers, sources said.

One financial services executive struck an optimistic note. “The administration has made substantial progress addressing the concerns of the financial industry — both the need for high standards for data security and the need for access by the regulators,” the executive said. “If the proposal is consistent with what we heard this past week, the industry will support TPP.”

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GUATEMALA LABOR CASE DRAGS ON: A long-running dispute between the U.S. and Guatemala over whether Guatemala is complying with labor obligations under the Central American Free Trade Agreement won’t be resolved this summer. The arbitration panel recently told both parties it must delay its ruling, Morning Trade has learned.

The panel’s ruling was scheduled to be submitted to each country on a confidential basis by June 22, but will be delayed until Sept. 9 because of “complicated” issues that have emerged in drafting the decision. The process was previously interrupted in November when a member of the panel was replaced. The U.S. restarted proceedings against Guatemala in 2014. An initial case was brought in 2011 but was put on hold to see if Guatemala could meet a “labor action plan.” The AFL-CIO and Guatemalan labor organizations filed a petition in 2009.

“We find it incredible that this case, already more than eight years old, is being delayed once again,” said Celeste Drake, trade and globalization policy expert at the AFL-CIO. “This delay sends the message that Guatemalan employers can continue to abuse and exploit workers with impunity.” Drake added that the delay “flies in the face of promises being made about ‘strong enforcement’ of the TPP.”

ALL EYES ON CHINA AT EGA TALKS: The latest round of negotiations on the Environmental Goods Agreement kicked off this morning in Geneva, where a main goal will be deciding whether to leave in the pact small tariffs on some products or to eliminate all of them, a Geneva source told Morning Trade. Most of the 17 participating WTO nations want complete tariff elimination on all of the goods that make the list, but China is pushing to keep a 5 percent tariff on some, the source said.

China’s continued emphasis on keeping a 5 percent tariff on some products means negotiators this week will have to decide which tariffs to eliminate entirely and which, if any, to keep, while also working to consolidate and finalize the list of products to include. The talks are supposed to last through Friday.

ASSESSMENT FELLS LUMBER DEAL’S NEAR-TERM CHANCES: The U.S. and Canada have explored options for “several key components” of an agreement governing billions of dollars in cross-border lumber trade, but top trade officials admitted “significant differences” remain an obstacle to reaching a final deal.

"Following this initial 100 days of intensive engagement, the United States and Canada have made significant advances in exploring the key issues and priorities," said U.S. Trade Representative Michael Froman and Canadian Trade Minister Chrystia Freeland. "The United States and Canada are committed to continuing negotiations in an effort to achieve a durable and equitable solution for North American softwood lumber producers, downstream industries and consumers."

The two sides have been meeting "intensively" since President Barack Obama and Prime Minister Justin Trudeau announced at a March meeting that negotiators would have 100 days to explore the issue and report back on "key features" of a possible agreement. Obama and Trudeau will have another opportunity to discuss the matter when they meet later this month in Ottawa for the North American Leaders' Summit.

CANADIANS CLEARED FOR TAKEOFF: While Canadian lumber likely won’t have an easier time entering the U.S. anytime soon, Canadian citizens will find traveling south of the border a more painless process. Legislation that expands the country’s “ preclearance” program to additional Canadian airports and railways was introduced in Parliament on Friday.

Under the legislation, which is likely to be approved, Canadian citizens would be cleared for entry into the U.S. at Quebec’s Jean Lesage International Airport, Billy Bishop Toronto City Airport, Montreal’s Central Station and on the Rocky Mountaineer. Obama and Trudeau agreed to expand the program to those departure points and the Rocky Mountaineer rail line earlier this year.

Preclearance already exists at airports in Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Ottawa, Montreal and Halifax; and at multiple seaports and railways in British Columbia.

CANADA EXTENDS TPP COMMENT DEADLINE: In other news from north of the border, the Canadian Parliament’s House of Commons Standing Committee on International Trade extended the deadline for interested parties to submit comments on the TPP. The new deadline is Oct. 31, indicating that Canadian lawmakers don’t expect to act on the trade pact until later this year. Canada’s Liberal-led government agreed to sign the deal, which was largely negotiated under the previous Conservative government, but said it would undertake a thorough analysis.

COLOMBIA FINALIZES LEUKEMIA-DRUG PRICING DECISION: Colombia on Friday followed through on issuing a declaration of public interest that will effectively lower the price of Imatinib, a leukemia drug marketed in the country by Novartis under the name Glivec. Colombian Health Minister Alejandro Gaviria moved ahead with the declaration after he said talks broke down with the drug’s manufacturer.

Colombian embassy officials in Washington said in leaked communications that U.S. congressional staff warned that U.S. aid for Colombia’s peace process could be jeopardized if the country invalidated the patent through a compulsory license. The government hasn’t taken that step, but health advocacy groups are urging them to do so.

“The Colombian government should basically ignore the Obama Administration at this point, because they will be out of power in November,” said Jamie Love, director of Knowledge Ecology International. “Hillary Clinton is less inclined to side with the drug companies, and no one knows what Trump's views will be.”

CUBAN ORGANIC IMPORTS ON A ‘LONG ROAD’: Importers are salivating over Cuba's untapped organic market, given the trouble the U.S. has keeping up with its growing demand for organic products. If most of Cuba’s 400,000 farms gained organic certification, shipments to the U.S. would likely surge. Coffee and bananas, which are mainstays of Cuban agriculture, are the top two organic U.S. imports by value, and mangoes are not far behind, representing a combined $600 million in U.S. imports in 2013, according to USDA figures. Cuban sugar, which once dominated world exports, is also highly sought.

Hopes were lifted in recent months after Agriculture Secretary Tom Vilsack and Cuban Agriculture Minister Gustavo Rodriguez Rollero signed an agreement to foster collaboration between both countries’ agricultural sectors, and the U.S. Agriculture Coalition for Cuba and Cuba's state-run Grupo Empresarial Agricola — which represents 54 Cuban agribusinesses and more than 650 farming cooperatives — signed a memorandum of understanding to discuss how U.S. companies can assist Cuban farmers.

But talks on establishing a mutual organic certification system could take years, if not a decade, even if the sanctions lifted tomorrow, sources watching the developments say, reports Sabrina Rodriguez for POLITICO Pro Ag and Pro Trade. And that assumes the communist government adopts the American system and doesn’t go its own way. Plus, even before considering certification, Cuba would have to update its aging roads and port system for exporting to the United States, and its agricultural products would have to meet U.S. food safety and pest standards.

“Lots of technical discussions need to go on to make sure the Cuban product can enter the United States,” said Devry Boughner Vorwerk, USACC’s chair. “I think it’s a long road.” Pros can read the rest of Rodriguez’s story here.

HILLARY’S STUCK IN ANTI-TPP STANCE: It’s too late for Hillary Clinton to change her position against the TPP — and the presumptive Democratic presidential nominee is likely hoping the deal gets passed before President Obama’s tenure is over, Bill Reinsch, a former undersecretary of commerce under Bill Clinton, told Morning Trade.

Reinsch, who also led the National Foreign Trade Center and now works as a trade policy fellow at the Stimson Center, said another change in TPP position from Hillary Clinton could be fatal to her campaign, as she could be accused of flip-flopping. She supported it when she served as secretary of state under Obama, though Reinsch noted he thought that was part of an effort to be a “team player.”

If Clinton is elected in November, and TPP has not been approved by the time she would take office in January, she would likely look to make the deal more acceptable to her standards as well as to those of Congress, rather than reject it out of hand like her Republican rival Donald Trump would, Reinsch said.

INTERNATIONAL OVERNIGHT

— Vietnamese companies will need assistance to conform to new procurement rules under the TPP, the Viet Nam News reports.

— The U.S. needs to declare a moratorium on trade deals like the TPP, former journalist Paul Blustein writes in a POLITICO op-ed.

— Wisconsin Republican Sen. Ron Johnson is staying mum on TPP despite rejection of the deal by his Democratic opponent, Russ Feingold, and Donald Trump, The Chippewa Herald reports.

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