[CTC] Administration Signals TPP Financial Services Fix Near; Ag Pushes 2016 Vote

[Arthur Stamoulis]

Inside U.S. Trade - 04/15/2016
Administration Signals TPP Financial Services Fix Near; Ag Pushes 2016 Vote
April 14, 2016

After a cabinet-level meeting on the Trans-Pacific Partnership (TPP), administration officials have signaled to financial services industry representatives that they will soon come forward with a proposal to address their complaints about being excluded from a ban on local data storage requirements, according to informed sources.

Treasury Secretary Jack Lew gave an update on the issue at the cabinet-level meeting, and administration officials gave no indication after the meeting about what fix the administration would propose.

Lew last month signaled that the financial services data issue is more likely to be fixed in future trade agreements than in the TPP, which he considers closed. But he has held open the possibility that it could be subject to a side letter to the TPP (Inside U.S. Trade, March 18 & 25).

Rep. Richard Neal (D-MA) this week said U.S. Trade Representative Michael Froman has made it clear to him that the administration is trying to work out the financial services problem. He said that Froman and he have talked about the issue "amiably" over the last few months.

Some industry sources are skeptical that the administration will deliver a fix on the local server requirement this early in the process when a vote on TPP at best will occur in the lame-duck session.

But if officials follow through, it would be the first of the major complaints about TPP to be addressed. At press time, there was no indication on the status of efforts to address the complaints of Finance Committee Chairman Orrin Hatch (R-UT) considering the market exclusivity period of biologic drugs.

Rep. Charles Boustany (R-LA) told reporters on April 14 that the administration and congressional Republicans were at an "impasse" on biologics, financial services and the tobacco carveout, but that these talks are now intensifying.

"There have been some discussions, and I think this is starting to ramp up. We're trying to escalate our effort," he said.

He noted that Ways & Means trade subcommittee Chairman Dave Reichert (R-WA) is trying to push these talks forward, referring to the creation of informal discussion groups on five areas where House Republicans are unsatisfied with the TPP deal. These include agricultural market access and labor provisions, in addition to the other three main objections.

Boustany, who is co-chair of the congressional TPP caucus, said he was also working with Reichert, another co-chair, and the Democratic co-chairs to share information and feedback with Froman and White House National Economic Council Director Jeffrey Zients. "We're trying to find a resolution to all this," he said.

The cabinet-level meeting is another indication that the administration is pushing for congressional consideration of the TPP in the lame-duck session, sources said. This is in line with public pronouncements by senior administration officials, including at last week's Export-Import Bank conference.

House and Senate trade leaders are vague when asked about timing of a TPP vote to the point of seeking to avoid the topic, one source said after meetings this week. Other lobbyists have said the message from leadership in some meetings has been it cannot bring up TPP because the votes are not there.

Congressional staff has signaled that it considers the prevailing criticism of TPP in the election campaign as mere rhetoric that will not mean a vote cannot take place after the election, sources said.

At this point, it is unclear whether there can be a TPP vote in a lame-duck session or whether there will even be a lame-duck session. This has increased the nervousness of some business supporters, sources said.

More than 200 agriculture groups and companies this week called on the House and Senate leadership to have a TPP vote "during this session of Congress" in an April 11 letter that laid out the benefits of TPP they perceive.

It was signed by the International Dairy Foods Association but not the National Milk Producers Federation or the U.S. Dairy Export Council. But those three groups sent their own letter to members of Congress the same day calling for a 2016 vote.

That letter focused on "a few key implementation and enforcement issues that are vital to ensuring that this agreement fully lives up to its potential to help create improved international opportunities."

The letter is meant to make clear that the groups' "engagement" in lobbying for the passage of the TPP "will certainly depend on how these issues are handled," a dairy industry source said. The source said that the groups will further clarify their stance in a new letter to be sent to the administration.

Among the issues raised in the letter are the demand that Canada not only faithfully implement its TPP market access commitments on dairy but also does not diminish current market access. Similarly, the groups want to be sure that Japan will administer its TPP-wide tariff rate quotas in a way that does not undermine the U.S. ability to export, according to the letter.

In addition, the groups want to ensure that Japan is not acting against the intent of the TPP geographical indications (GI) commitments by failing to take into account a number of factors when determining what product is eligible for GI protection. The dairy industry source said there have been statements by Japanese officials that they could approve GIs based on whether they are considered to be GIs in the European Union.

Some business sources speculated this week that Senate Majority Leader Mitch McConnell (R-KY) may not want to bring up TPP during the lame-duck session if Hillary Clinton is elected president.

This would leave her with a political dilemma of whether to advance the TPP or put it aside, with either option being a win for Republicans, these lobbyists said. If she decided to get behind the TPP, it would alienate the Democratic base, they said. If she decided to punt, it would open her to criticism from Republicans and business groups that she is ignoring a major economic initiative that was endorsed by President Obama.

However, even sources laying out this reasoning said they did not know if it is solely speculation by lobbyists or if it is an idea that McConnell's staff is actually entertaining. In addition, sources said a lame-duck vote is unlikely because some Republicans will not give President Obama a foreign policy victory late in his term. -- Jutta Hennig
 
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