[CTC] Lew Floats Possibility Of Side Deal To Address TPP Data Localization

[Arthur Stamoulis]

Inside US Trade
Lew Floats Possibility Of Side Deal To Address TPP Data Localization
March 16, 2016
 
U.S. Treasury Secretary Jack Lew on Wednesday (March 16) raised the possibility that financial services industry complaints about being excluded from a ban on local data storage requirements in the Trans-Pacific Partnership (TPP) could be addressed in the form of a side agreement since there is little that can be done to change the text of the signed agreement.
 
“There is the possibility of having some kind of side agreement, but I don't want to exaggerate what could be done with the 11 countries in TPP,” Lew told a House subcommittee. “It is a complicated issue so I am going to be cautious rather than being overly optimistic."
 
He emphasized the need to distinguish a potential solution in the context of the TPP and a policy that would be applied to future trade agreements. “We are looking to see if there is something, particularly going forward, that would inform future discussions,” he said in testimony to the House Appropriations Committee's subcommittee on financial services and general government.
 
Lew cited the Transatlantic Trade and Investment Partnership (TTIP) as an example of a future trade agreement that may have a different approach than TPP when it comes to including financial services within the scope of the ban on local data storage requirements.
 
He emphasized that he has “put a fair amount” of his effort into finding a compromise on the issue and said the issue had gotten the “attention of all the regulators."
Lew said officials are trying to “thread the needle” between the administration's opposition in principle to data localization and the care that must be applied to data requirements applied to the financial services industry and prudential regulation.
 
“We are working to see if there is a way to thread this needle to make sure the prudential concerns can be addressed without having it become something [of a] real problem for financial services companies,“ he said.
 
Lew's testimony is the latest indication that the Obama administration is trying to work out the problems with TPP flagged by certain industry sectors and their congressional supporters.
 
U.S. Trade Representative Michael Froman told business representatives at the March 14 kick-off event for the revamped U.S. Coalition for TPP that he has had “constructive” conversations with Senate Finance Committee Chairman Orrin Hatch (R-UT) and senior House members about advancing the TPP, sources said.
 
Hatch has been pressing the administration to extend the duration of marketing exclusivity for biologic drugs under TPP before he is willing to have his committee consider the agreement. A business source said that the administration has made overtures to Hatch on how to fix the biologics issue after avoiding engagement for some time.
 
Businesses have accepted the Republican congressional leadership's message that there will be no vote on TPP before the November election, but the head of the Business Roundtable (BRT) this week vowed to work toward a vote this year in the lame-duck session. Business clearly does not want the TPP deal to languish for fear it will lose support, a business lobbyist said. BRT is a member of the U.S. Coalition for TPP.
 
At the March 14 kick-off event, Froman in his initial presentation did not address the timing of a potential TPP vote, but ultimately said the administration wants a vote as soon as possible, sources said. Froman attended the event with National Economic Council Director Jeffrey Zients.
 
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