Washington Insider-- Thursday

New Administration Soft on Trade

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

EU Regulators Push Back Decision on ChemChina/Syngenta Merger

European Union antitrust regulators have extended the deadline for a decision on ChemChina's proposed purchase of Syngenta by 10 working days, now setting the decision for April 12.

Syngenta said in a statement the two companies had asked for the extension to allow "sufficient time for the discussion of remedy proposals."

The European Commission opened an in-depth review of the $43 billion by ChemChina in October, saying the two firms had not yet addressed concerns over the deal.

"ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure," Syngenta said.


Exits by Obama Administration Officials Begin

Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad today announced he has tendered his resignation as Chairman of the futures market regulatory agency effective January 20, 2017.

He noted the agency has made "significant progress" in several areas, having "largely finished implementing the regulatory framework for swaps, and have concentrated on the areas posing the greatest risk to the financial system."

Massad was sworn in as Chairman on June 5, 2014 and will remain a Commissioner for a few weeks in order to close out his office and handle administrative matters.

His is the first of what will be many exits by various administration officials ahead of the January 20 inauguration of President-elect Donald Trump.


Washington Insider: New Administration Soft on Trade

Well, one thing is increasingly clear just now: the trade issue has become increasingly complex since the 2016 campaign and the UK Brexit and the Washington Post seems to think it may get even more complicated.

A Post opinion piece written by Greg Sargent this week argued that while it is an article of faith that, if the Trump administration does rip up our trade deals, it may seek to re-negotiate them in a manner that helps American workers. Sargent says that while Trump is seen as a "populist" who vows to remake the GOP as a "workers party," so surely any renegotiated deals on trade is expected to follow suit.

Maybe not, Sargent says; there's another plausible outcome. Whatever provisions on trade Trump does pursue on behalf of workers, such as tariffs, may well also be re-crafted in ways that favor corporations. And, the best evidence for this idea is that that "business groups themselves believe this is an actual possibility."

It cites Politico as reporting that "business lobbies, such as the U.S. Chamber of Commerce, are privately gearing up for a campaign to persuade Trump that, if he does seek to renegotiate the North American Free Trade Agreement, he should do so in ways that help them," but details of the policy are not yet clear.

Still, the Post says that these groups are hoping they can persuade him to "steal" ideas from the Trans-Pacific Partnership (TPP) as they seek to upgrade NAFTA. That should be possible, since both Canada and Mexico are part of the 12-nation deal that Trump is vowing to jettison on his first day in office, Sargent says.

The article cites "economists" who worry about one particular aspect of this: The battle over the proper length of patent protections for pharmaceutical products, which was at the center of the fight over the TPP. They point out that it's perfectly plausible that Trump may side with Big Pharma in the push for longer patent protections, which could have untold consequences for the world's poor.

During the negotiations over the TPP, the pharmaceutical industry pushed hard for 12 years of copyright protection for drugs that could treat cancer and other deadly diseases, as part of a broader corporate push for longer patent protections on a range of products, including in the fields of entertainment and software. The argument in favor of longer patent protections is that it fosters innovation and helps the industry at home, thus helping US workers, an argument that convinced some Democrats in Congress with major pharmaceutical presences in their states.

On the other side were health groups like Doctors Without Borders, which argued that the long protection period would require other countries participating in the TPP to "limit generic competition and therefore increase the cost of medicine." The AIDS research group amfAR has argued that these provisions could drive up drug prices in the developing world and hamper the global battle against the disease.

Given the new administration's announced appointees, Sargent says it seems very likely that it will prioritize the demands that serve corporate interests, not U.S. workers. In particular, it is likely to continue the push of prior administrations for longer and stronger patent protections on prescription drugs, policies that make drugs expensive. He argues that the industry has placed a priority of making people in developing countries pay more for their drugs.

This blocks off a potential source of cheap drugs to people in the United States but also would prevent the sort of dramatic contrasts that we see today between the list price of brand name drugs and their generic version. Sargent thinks that it is likely that Trump will adopt the pharmaceutical industry's agenda in this area, which he sees as "bad news for workers in the U.S., and obviously very bad news for people in the developing world."

And Sargent is concerned that if and when the new administration makes good on its vows to renegotiate our trade deals, the very same corporate elites who fought over the TPP will have just as good a seat once again, a possibility he says business groups now think is very real.

So, we will see. Right now, not many people think that Sargent's scenario is real, given the intensity demonstrated by the president-elect's trade policy managers announced so far. But, trade policy fights have a way of reappearing after being left for dead, so while progressives' worries about the longer-term impacts of changes that are still undefined seem at least premature, they may have more substance at a later time and should be watch closely if they do emerge Washington Insider believes.


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