Washington Insider -- Tuesday

TransPacific Partnership Talks Stumble

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

U.N. Climate Change Negotiators 'Streamline' Draft Agreement

With just two negotiating sessions scheduled before the end-of-the-year global climate change summit in Paris, officials are working to remove some of the complexity from the draft document. The team recently released a new streamlined document intended to form the basis for a global agreement to fight climate change. The text reportedly draws a sharper focus on key areas, but still leaves tough decisions on collective commitments to the two remaining U.N. negotiating sessions scheduled for Aug. 31 through Sept. 4 and Oct. 19 through 23, both in Bonn.

Progress on the agreement to date has come primarily in administrative areas, such as guidelines for ratification of the ultimate pact, the short-term decisions that can be taken after the adoption of the Paris text but before it is implemented in 2020 and provisions aimed at guaranteeing greater transparency in the final document.

As has been well-documented, issues relating to climate change –– including whether it exists –– have been politicized in the United States to a point that brings into question the ability of the country to commit to the final international agreement. Meanwhile, however, the president will continue to use the authorities of his office to rein in greenhouse gas emissions. Those can be expected to be similar to yesterday's White House announcement that will require states to meet specific carbon emission reduction standards, based on their individual energy consumption. Congress will, of course, have something to say about this issue over its summer recess and on into the fall.

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Tobacco's Treatment in TTP Could Block U.S. Ratification

Earlier this summer, the Senate approved legislation granting President Obama the Trade Promotion Authority his administration needs to conclude two major free trade deals, the Transatlantic Trade and Investment Partnership (TTIP) agreement with the European Union and the Trans-Pacific Partnership (TTP) deal with 11 other Pacific Rim nations. But support among senators was not overwhelming, as indicated by the chamber's 60-37 vote.

The TPP agreement ran into trouble last week when trade ministers meeting in Hawaii failed to conclude the deal, as had been optimistically hoped prior to the conference (also see item below). Labor, environment and left-leaning organizations are lobbying furiously against the deal and members of Congress will feel considerable political pressure to vote against the eventual TPP. Every vote will be "crucial," which is why a new development regarding tobacco is receiving great attention.

Senators from the two major tobacco-growing states of Kentucky and North Carolina have said that they will vote against the agreement unless U.S. tobacco companies are allowed to use the dispute settlement portion of the TPP to protect their products from being regulated by other countries in the agreement. The three Republican senators who have been most vocal on this subject –– Majority Leader Mitch McConnell of Kentucky, and Richard Burr and Thom Tillis, both of North Carolina –– were among the 60 who previously agreed to grant President Obama Trade Promotion Authority. If they were to defect from the ranks of TPP supporters, it would make the anticipated close vote on that agreement even more difficult.

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Washington Insider: TPP Talks Stumble

There were plenty of accusations to go around as efforts to complete a major Pacific trade agreement ended in Hawaii last Friday without resolution. Officials continued to point to what they said was significant progress. But, despite the assertion by Australia's trade Minister, Andrew Robb, that the deal is "98 percent" concluded, it was widely agree that several agricultural issues remain contentious.

Dairy was one issue that apparently spun out of control as the U.S.-Canada dispute expanded to include three of the other developed economies, Australia, Japan and New Zealand. "We can see clearly that there are one or two really hard issues, and one of them is dairy," New Zealand's trade minister, Tim Groser, said at a news conference Friday.

He may have been optimistic in his appraisal. In addition to dairy, disagreements about trade in automobiles also bubbled up, as did labor rules and the level of intellectual property protection for pharmaceuticals, a priority for Washington.

The key problem, according to backers of free trade, is not whether the dairy and other issues can be solved but whether an impasse over "a few sensitive issues" could drag the talks out indefinitely and sap the political will to conclude the deal.

On the brighter side, press reports indicate that leaders of the two biggest economies in the group, President Obama and Japanese Prime Minister Shinzo Abe, continue to expressed determination to complete the talks and expressing optimism based on progress in several important areas.

Negotiators say they finished the part of the agreement that would raise environmental standards in Vietnam, Malaysia and the other countries in the bloc, a key priority for Democrats and the Obama administration. The ministers also succeeded in narrowing differences on other sensitive parts of the agreement such as intellectual property, including rules for geographically linked food names, said Michael Froman, the U.S. trade representative.

The administration is clearly trying hard to complete the Pacific trade pact as soon as possible, despite the complications of the presidential election season, to maximize the odds of congressional approval during the remainder of the president's term. He narrowly won congressional support in June for fast-track legislation and part of the tension in that debate came from the fact that a number of Democrats and left-leaning groups still oppose the TPP as it stands — and, are calling the current stalemate "good news."

The Wall Street Journal notes that in spite of U.S. pressure on Canadian dairy programs, there are some perceived ambiguities in the U.S. position on dairy. For example, the United States appears committed to keep some of its own protections against an influx of milk products from New Zealand and Australia that could hurt less-competitive dairy farmers in key states.

This posture was not overlooked in the recent talks. "Some of these key countries have a public position, which doesn't make much sense," said Andrew Hoggard, chairman of the Federated Farmers of New Zealand, a farm-industry group. "We would hope that the Americans will show strong leadership and stand with New Zealand and Australia in looking for a comprehensive deal for dairy."

In spite of frictions over dairy policies, U.S. negotiators appear unwilling to threaten Canada with exclusion from a final agreement over the dairy issue. Negotiators told the press that moving ahead without Canada doesn't make much sense, since its economy is deeply entwined with the United States through existing free-trade agreements and because trade negotiators have been relying on Canada to accept milk exports from others in the group.

So, it seems that Froman's negotiating team is working hard to finish a deal that would attract broad support without alienating too many U.S. lawmakers who are already deeply divided on the administration's trade policy. "This is going to be a nail-biter, and we're going to need every single vote," said Tami Overby, senior vice president for Asia at the U.S. Chamber of Commerce.

The recent experience in Hawaii supports her view that deep divisions remain among TPP negotiators; that agricultural issues are prominent in the standoff; and that U.S. leadership is facing significant challenges as it attempts to maintain several highly political protections both for pharmaceuticals and some ag products.

In spite of administration happy talk, the U.S. Chamber's Overby, with her view of a "nail biter" ending, may be closer to reality, Washington Insider believes.


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(GH/CZ)