[CTC] Miracle drug deal could revive TPP chances

[Arthur Stamoulis]

Politico 
Miracle drug deal could revive TPP chances

By Doug Palmer
09/06/2016 05:07 AM EDT

President Barack Obama's Asia-Pacific trade deal has been shunned by Republican leadership, opposed by both presidential candidates and mired in negative publicity, but if Obama can strike a deal with key committee chairmen on life-saving medicines, he might still be able to get his signature achievement passed this fall.

No one fought harder last year to give Obama the legal authority to quickly wrap up the Trans-Pacific Partnership than Senate Finance Chairman Orrin Hatch <http://go.politicoemail.com/?qs=54038f93221f1a11777e8aef9f16606ffd41cb56409c1f6b76fda08d90a8d607>. But since then, arguably no one - not Hillary Clinton, Donald Trump, Senate Majority Leader Mitch McConnell <http://go.politicoemail.com/?qs=54038f93221f1a11ce9407a7ac9727987d588e6c295626f2cc1d1462b8646eee> or House Speaker Paul Ryan <http://go.politicoemail.com/?qs=54038f93221f1a1184711525d011bb8caf180fb7c10c0464b8a3584f6ebfabb8> - has been a bigger obstacle to its approval.

Finding some way to satisfy the Utah senator on intellectual property protections for "biologic" drugs - cutting-edge medicines used to treat cancer and other killer diseases -- remains the key to persuading Republicans to take up the Asian-Pacific trade deal, even if Trump and Clinton continue to bash the pact. 

After a summer in which opponents on both sides of the aisle dominated debate on the agreement, gaining support from those GOP and Democratic lawmakers who took a tough vote in 2015 to push it toward the finish line looks harder than ever.

House Ways and Means Chairman Kevin Brady <http://go.politicoemail.com/?qs=54038f93221f1a1161787fcf3bb6cfafa7928be995f2897dea42744113f0d099>, whom Obama also needs to win over, dismissed the idea that the political environment has been so poisoned by the harsh rhetoric of the presidential campaign that it would be impossible to pass TPP, even if the biologics issue and a handful of other lawmaker concerns are resolved. 

"Clearly, America cannot grow economically unless we are aggressively selling our products around the world," the Texas Republican said. "These trade agreements are proven to accomplish that. So, while [the harsh rhetoric] adds a new element, I certainly don't think it has materially affected our ability to tear down barriers through these trade agreements."

Treasury Secretary Jack Lew voiced the same contrarian view. 

"I personally believe that for members of Congress that voted for trade promotion authority, TPP is an easier vote," Lew said last week at the Brookings Institution. "TPP has in it demonstrable provisions that improve labor standards, that improve environmental standards, that show how the business environment will become a level playing field."

There's no denying that current political environment for trade is "complicated," Lew added, but Obama "remains committed to getting it done and will use every ounce of energy he and those of us in the administration have to push it forward."

As Obama continues a trip to Asia this week, he's hoping to refocus the conversation on the economic and national security benefits of the pact, arguing it would define the rules of trade in China's backyard and forge stronger economic ties with 11 other countries in the fast-growing region. 

But back on Capitol Hill, the conversation is aimed at wooing Hatch and Brady, who have tremendous control over the fate of the TPP. Hatch in particular complains that the administration failed to get the other countries in the trade deal to agree to protect test data on biologics for 12 years - the same period that Congress provided in the 2010 Affordable Care Act and a top priority for drug makers.

Instead, the U.S. negotiated an approach that gives countries a choice between instituting eight years of data exclusivity or five years plus other measures that effectively bring the period to eight. Critics such as Hatch say the second option really provides only five years of protection - not nearly enough time for drug companies to recover their research and development costs before other companies start making cheaper generic versions.

U.S. Trade Representative Michael Froman has ruled out renegotiating the issue, noting it was the very last thing resolved in talks that lasted over five years. But Froman says he is willing to address Hatch's concerns through the plans the administration is developing to implement the agreement with each of the other TPP countries. Other vehicles, such as the enacting bill the administration will send Congress, could be used to assure lawmakers that TPP countries will be expected to provide lengthy protection periods for biologics.

Looking ahead to the next administration, Hatch is unlikely to get a better deal under a President Trump, who has threatened to walk away from the deal completely, or a President Clinton, who has vowed not to pass it in its current form. On biologics, that could mean less generous terms for pharmaceutical companies rather than more.

However, both Hatch and Brady are quick to point out that biologics isn't the only issue blocking consideration of the pact. Other outstanding concerns touch on dairy and financial services, as well as a tobacco provision that has raised the ire of North Carolina and Kentucky lawmakers. 

"Members on both sides of the aisle continue to have significant substantive concerns with the agreement, and those need to be addressed," Hatch said in a recent statement. "Even more, the Congress as a whole must have confidence that our TPP trading partners will abide by their commitments."

To accomplish that goal and build strong bipartisan support, the administration needs to develop "written implementation road maps that clearly demonstrate how each party intends to comply with the trade pact," Hatch said.

Brady said he believed there has been good progress on several outstanding issues, including one - labor rights in Mexico - mentioned more often by Democrats. Additionally, "my sense is good discussions are occurring in the area of biologics, but no resolution yet," he said, adding that getting TPP members to "clarify" their commitment would be one way to give lawmakers confidence.

If an implementation deal can be reached, Hatch could go from being one of the TPP's biggest obstacles to one of its biggest champions. His support could dramatically improve the odds of getting the 51 votes needed in the Senate, even though tobacco state senators like McConnell, Thom Tillis <http://go.politicoemail.com/?qs=54038f93221f1a11ed949e31d3359cd0d6167d668fbd8ad49df7eecd11794250> and Richard Burr <http://go.politicoemail.com/?qs=54038f93221f1a11d0173efc240c9ea33821c91ef684b3c91fd83f87b8e3bde6> could still have their own reason to oppose the pact.

Sixty senators voted last year to give Obama "fast-track" trade promotion authority, which would expedite passage of the TPP by allowing the president to submit the deal to Congress for a straight up-or-down vote, without any amendments. So far, five Republicans, including Pat Toomey <http://go.politicoemail.com/?qs=54038f93221f1a11baa646866ec8e31ac8737b6e572249c2019e8e36f189bd5d> and Rob Portman <http://go.politicoemail.com/?qs=54038f93221f1a1165a178cd5b61326d3cd6bf3564de89713285ac6d8b2b4ce0>, who are in tight reelection races, and Democratic vice presidential nominee Tim Kaine  <http://go.politicoemail.com/?qs=54038f93221f1a11a0ae6cc2be37c534e125666dd965bdc721391c3e6a650057>say they won't vote for the trade agreement for reasons other, or in addition to, the biologics concern. That leaves 54 senators in favor of the TPP, assuming a deal can be reached on biologics and no other defections.

But McConnell's tobacco problem is another major obstacle in the Senate and even more so in the House, which passed the fast-track bill in a razor-thin 218-208 vote.

Tobacco state lawmakers object to the administration's decision to include provisions in the trade deal that would deny cigarette manufacturers the ability to pursue damages from government regulatory actions. The move to single out tobacco for exclusion from investment protections that are afforded other industries under the TPP was inspired by cases that Philip Morris International brought against anti-smoking regulations in Australia and Uruguay under investment pacts, fueling criticism of such protections.

Ironically, Philip Morris lost both its cases, but the provision barring tobacco companies from using TPP's "investor-state dispute settlement" provisions, as they are known, remains in the TPP pact, making tobacco growers worry that they will have no defense against foreign anti-smoking regulations that discriminate against American tobacco products.

Last year, 34 House lawmakers - including 27 Republicans who voted for fast track - warned Froman against carving tobacco out of the investment protections in the TPP, but he did anyway. The administration argues the decision was vital to gaining the support of the 13 Senate Democrats and 28 House Democrats who voted for the fast-track bill, but if the White House loses a dozen or more House Republicans over the tobacco clause, it will need to make up the difference from lawmakers who didn't support the legislation.

It also would be a major risk not to address a priority issue for the Senate majority leader, although the administration argues that U.S. tobacco growers will see significant new export opportunities <http://go.politicoemail.com/?qs=54038f93221f1a1164b9f9e6ebce043b5078dec257d1c2f7a75c17a5f2ee83f3> under TPP as a result of commitments by Japan, Vietnam, Malaysia and Brunei to phase out tobacco tariffs.

Meanwhile, six Republicans who voted for fast track last year recently urged Obama to submit the TPP to Congress for a vote in 2016 because trade deal doesn't contain "enforceable rules" against currency manipulation - an important issue for Ford Motor Co. and other U.S. automakers and workers in union-heavy states like Ohio and Pennsylvania.

Another half-dozen House Republican supporters of fast track have said in recent weeks that they cannot support TPP in its current form for a variety of reasons, including some of the issues under negotiation with the White House, which reduces the number of yes votes in the chamber to less than 200 when combined with the tobacco state lawmakers.

But a deal with Hatch and Brady would lay the foundation for the White House and House Republican leaders to pursue votes from lawmakers who supported past trade agreements, if not the fast-track bill specifically. Those include several dozen Republicans and Democrats who voted for one or more of the South Korea, Colombia and Panama trade deals approved by Congress in 2011, but against TPA.

While the TPP took a beating at both the Republican and Democratic party conventions, there is a history of lawmakers voting in greater numbers for free trade agreements than for trade promotion authority. But with House Minority Leader Nancy Pelosi <http://go.politicoemail.com/?qs=54038f93221f1a113fb6da8cdb1f16469c8d9d72390c638a27938f7ff2e4e261> formally opposed to the deal, it could be hard for Obama to get much more than the 28 Democrats who voted for fast track.

Even with a deal on biologics, Republican leaders might not make a final decision on whether to push for a vote until Nov. 9. While McConnell has already said there would not be a vote this year, it's possible his position could change through talks with the administration on the unresolved sticking points. 

But if Trump unexpectedly trounces Clinton by winning key Midwestern industrial states, Republican leaders may simply fold their hand in recognition of a seismic shift in their party on trade - effectively killing any movement on the TPP for at least the next few years. 

In contrast, a Clinton victory across the Rust Belt would suggest trade was not a decisive factor for voters, discrediting Trump's unconventional stance on the issue for a Republican presidential candidate.

Whatever the outcome of the election, Brady said the stakes for American companies striving to compete against Chinese, European and other firms in the Asia-Pacific are too high for the administration and Republicans not to make every effort to resolve the sticking points and set the stage for a vote.

"That would be a mistake for America," Brady said. "Continuing the difficult work to resolve the few outstanding issues on the Trans-Pacific is not just important, it's critical to the overall success of this. ... The House Republicans are not going to abandon the trade field in the region. We're going to push even harder to tear down those barriers."


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