<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class=""><br class=""><div class=""><div class="WordSection1" style="page: WordSection1;"><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class="">INSIDE US TRADE<o:p class=""></o:p></div><h1 style="margin-right: 0in; margin-left: 0in; font-size: 24pt; font-family: 'Times New Roman', serif;" class="">Froman Seeks To Convey TPP Vote Momentum, But Key Questions Linger<o:p class=""></o:p></h1><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class="">June 23, 2016 <o:p class=""></o:p></div><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">U.S. Trade Representative Michael Froman in public comments on the Trans-Pacific Partnership this week conveyed that the administration is doing everything it can to prepare for a potential vote in a lame-duck session, but some of the deal's supporters said they are finding a more downbeat view on Capitol Hill than USTR is conveying.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Froman announced this week that USTR is drafting the implementing bill and other documents needed for a TPP vote, though it is clear this is <a href="http://insidetrade.com/node/154780" style="color: purple;" class="">an internal effort</a>that does not yet involve the staff of the congressional trade committees.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""> He also announced work on so-called implementation plans that would spell out what each TPP country would have to do before the U.S. would <a href="http://insidetrade.com/node/152935" style="color: purple;" class="">certify it has met the obligations</a> of the trade deal. That effort does involve trade committee staff and has intensified in the past few weeks.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">At the same time, the effort has not yet reached a point where USTR has reached out to TPP countries on implementation plans.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Regarding biologics, the lack of outreach to TPP partners may be in response to outside factors. For example, Australia, a key country on that issue, is preparing for a July 2 election and the current government is in a caretaker mode, sources said. Other countries that objected to the U.S. demand for a 12-year biologics marketing exclusivity period in TPP are New Zealand, Peru and Chile. Australia and Chile provide currently five years of exclusivity for biologics, and government officials from those countries have said they do not believe a change in their laws will be required to comply with TPP.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Biologics is one of the issues that members of the socially liberal but fiscally conservative New Democrat Coalition raised with Froman in a meeting last week in an apparent effort to gain more clarity about talks between Finance Committee Chairman Orrin Hatch (R-UT) and the administration. In addition to TPP, the meeting covered the state of negotiations on the Transatlantic Trade and Investment Partnership and trade enforcement, according to a congressional aide and a USTR spokesperson.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""> Given the conflicting positions each side has taken on biologics, and the political context that makes it hard for Hatch to be seen as giving in to the Obama administration, pro-TPP sources said it is difficult to see how there can be a compromise or what form it would take. The administration is in a tough spot because TPP countries during the negotiations strongly rejected its demands for a 12-year marketing exclusivity for biologics, and have subsequently said that they cannot accept it.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Hatch has publicly demanded 12 years of marketing exclusivity, and there are indications that this also reflects his position in talks with the administration. He has publicly insisted that his demand does not require renegotiation of the TPP, but can be addressed in side letters and other ways.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Froman said earlier this month that Congress is seeking assurances that marketing exclusivity for biologics be eight years, which would clarify the TPP text that allows members to extend exclusivity for five years and take other measures to protect them longer. The other option on biologics is extending marketing exclusivity for eight years.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Froman also said last week that biologics is the only outstanding issue on TPP, a view that disregards that congressional complaints have also focused on the fact that anti-tobacco regulations are carved out of the investor-state dispute settlement system. The prevailing view at this time is that the administration will not change its stance and will try to offset the votes it will lose as a result with other supporters.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">But even TPP sources who expressed doubts over a biologics compromise said that one thing has improved in this area -- with <a href="http://insidetrade.com/node/154730" style="color: purple;" class="">a call by President Obama to Hatch</a>last week, it is clear the administration has decided it needs to deal with him, rather than try to go around him or wait him out.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Another question that contributes to the uncertainty of a TPP vote this year is whether there will be a lame-duck session, which remains unanswerable for some time. Some sources said this week that the likelihood of such a session is diminishing in light of strong opposition from the more conservative slice of the Republican conference and the fact that must-pass legislation is limited to a bill funding the government beyond Sept. 30 and the reauthorization of the Federal Aviation Administration. The latter has to be done by mid-July, a congressional aide said.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">In addition, the atmosphere in the House has become so intensely partisan -- with House Democratics engaging in a sit-in demanding a vote on gun control this week, for example -- that the Republican leadership may not wish to extend the session to a lame-duck, sources speculated.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The third set of issues relates to what some TPP supporters describe as business lobbying that lacks energy, and has little buy-in at the chief executive officer level of companies. Congressional aides have put out the message that they need more grassroots efforts to back members supporting free trade instead of letters to Congress pronouncing the benefits of TPP and seeking a vote this year.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">In a related development, the U.S. Coalition for TPP today (June 23) <a href="http://insidetrade.com/node/154831" style="color: purple;" class="">sent to Congress letters</a> touting the benefits of TPP for 20 states and signed by more than 400 business and agriculture organizations and companies. They urged the respective congressional delegations to pass the TPP as soon as possible.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The letters were sent to state delegations from Alabama, Arizona, Colorado, Hawaii, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, North Dakota, Pennsylvania, South Dakota, Vermont, West Virginia, and Wisconsin.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">In light of these uncertainties, it is difficult to gauge the vote count for TPP among members of either party, sources said. Members do not want to deal with TPP at the moment given the political dynamics surrounding the trade issue, and are not tipping their hand on where they stand, one source said.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">TPP lobbyists said they are not aware of any Democrats having come out in favor of TPP beyond the 28 votes they count as solid from the Democrats who supported passage of fast-track last year.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">At the same time, one source said, members on both sides of the aisle understand the geopolitical risks of not ratifying TPP -- which he described as the loss of U.S. credibility in the Asia-Pacific and the potential for the Obama Administration's Asia pivot to be seen as a failure. The strategic arguments related to China and U.S. leadership are well-received and generally understood by members of Congress, sources said.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Sources said previously that the administration may have to rely on the strategic argument more than it has with other trade agreements since the economic benefits as assessed by the International Trade Commission are relatively small.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><strong class="">Froman, Treasury Secretary Jack Lew and President Obama this week strongly advocated for a TPP vote this year. “</strong>We can pass TPP or be remembered as a generation that imposed a self-inflicted wound on American influence in Asia and American leadership around the world,” Froman said at a June 21 RAND Corporation event. “And that doesn't strike me as a difficult choice. For all these reasons it's imperative we make TPP a reality and soon."<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Lew at this year's SelectUSA summit said on June 20 that the president “remains firm in his commitment to TPP, and is intent on seeing it approved as soon as possible this year.” He said the sooner the U.S. passes TPP, the sooner it can deliver the benefits of TPP for American business and workers. “The Asia-Pacific region is looking to the U.S. to act -- not just because this agreement cannot come into force unless the U.S. ratifies it, but also as a tangible demonstration of American leadership and commitment to the region.”<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">On June 20, Obama made a brief pitch for the TPP in a speech to the SelectUSA summit seeking to address foreign direct investment. “When complete, when we've gotten it done, the Trans-Pacific Partnership will do even more to lower the cost of exporting, eliminating taxes and custom duties, and raising intellectual property standards that protect data and ideas and jobs,” he said.<o:p class=""></o:p></p><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></div></div></div></body></html>