Obama Pushes TPP Case in Asia, Despite Difficult Landscape at Home

15 September 2016

US President Barack Obama continued to make the case for the Trans-Pacific Partnership (TPP) during a visit to Asia last week, warning of the risk to his country’s leadership prospects abroad should ratification efforts in Washington falter.

“TPP is a core pillar of America’s rebalance to the Asia Pacific. And the trade and the growth it supports will reinforce America’s security alliances and regional partnerships,” said Obama in Vientiane, visiting the Laotian capital to meet with regional leaders.

The US leader acknowledged, however, that the political landscape in Washington is difficult, at best. Indeed, with just months remaining in Obama’s second and final term, congressional lawmakers have essentially ruled out a vote this year on the deal, even after the November elections – putting in jeopardy the major accord upon which the US leader hopes to build his trade legacy.

While some progress was reported last week in discussions between the administration and key US lawmakers, the approval process is still expected to be anything but easy, particularly given public sentiment on trade. The issue has been one of the hottest topics during the presidential election process, with candidates from both the Republican and Democratic parties opposing the pact in its final form.

US Senator Orrin Hatch, the Utah Republican who chairs that chamber’s finance committee, reportedly suggested to Bloomberg late last week that there has been progress in recent discussions with the White House on data exclusivity periods for biopharmaceuticals, also known as biologics. These are used to make vaccines, anti-toxins, and other life-saving drugs derived from a biological background.

The terms govern the protection of data used in deriving such drugs, with proponents of shorter periods arguing that these will make it easier to make “biosimilars” that are substantially cheaper. Hatch and other lawmakers have indicated that a change in these terms could make its passage in Congress go more smoothly, though is not the only problem area in the pact.

The issue of data exclusivity for biologics was one of the most difficult hurdles of the TPP talks in the final stages, given that countries such as Australia had pushed for a much shorter period than the 12 years that is currently part of US law. The final accord set a minimum five-year standard, with the option of additional measures that a country could take domestically to extend the period. (See Bridges Weekly, 8 October 2015)

Whether a binding change to the TPP’s biologics provisions will be possible in practice, however, remains an open question, given the stances of the other players, both in the past talks and currently on whether the final terms are negotiable. Just this week, officials from the 12 signatories to the Pacific Rim pact reportedly confirmed that they will not reopen the trade deal, following a meeting in Tokyo.

Trade legacy

The TPP has been the most high-profile trade project that Obama has pursued during his two terms in office, with the US leader touting the accord as a chance to lead the way in trade rulemaking, particularly in issues such as labour and environment; take a leadership role in the region; and boost the American economy.

The 12-country accord has particularly come under the limelight during Obama’s latter term. While his first term saw Obama push successfully for Congress to approve three pacts negotiated under President George W. Bush – including the partial renegotiation of the US accord with South Korea – his second term has since seen a rapid scale-up in trade negotiating activity.

Along with the completion of the TPP talks, which Obama announced his intention to join in late 2009, this effort has also included the 2013 launch of negotiations for a Transatlantic Trade and Investment Partnership (TTIP) with the European Union. However, three years in the next steps for TTIP similarly remain unclear. Various sensitive issues within the negotiations remain unresolved, while the talks are also facing a political backlash in Europe that is expected to be the key focus during a meeting of EU trade ministers next week in Bratislava, Slovakia. (See Bridges Weekly, 7 September 2016)

The politics of trade in the US have long been difficult, with the approval of new deals – or even the legislation authorising the negotiation of such accords – often requiring difficult legislative manoeuvring and behind-the-scenes discussions. However, the recent rise in anti-globalisation sentiment, coupled with growing concerns over income inequality, have made the landscape even trickier to navigate, and are likely to prove problematic for Obama’s successor – regardless of who wins in November.

Japan, Australia press on

Officials from other TPP signatories have lately pushed the US to resolve its domestic political issues on the trade deal, with some pinning their hopes on an outcome during the “lame duck” session.

“All efforts in the United States around passing the Trans-Pacific Partnership are being directed toward that lame-duck session, so before the new President takes office we'll have a clear idea about whether or not it's going to get up or not,” said Australian Trade Minister Steve Ciobo on Monday during a radio show.

Meanwhile, in Australia the accord has been submitted to the Joint Standing Committee on Treaties, bringing it closer to parliamentary consideration in that country. Indeed, while the US ratification process has been one of the most high-profile, other TPP signatories are also taking steps to advance the approval process in their own legislatures.

Japan is due to hold an “extraordinary session” of its Diet this month, starting on 26 September, which is where the legislature is expected to take up the deal. The Asian economy is the second largest in the TPP, surpassed only by the US, and was the last to join the negotiations. (See Bridges Weekly, 25 July 2013)

Japanese Prime Minister Shinzo Abe has long touted the TPP as being an essential part of his “Abenomics” strategy, specifically as part of its “third arrow” of structural reforms. The pact remains controversial in Japan given the commitments required in sensitive areas such as agriculture and automobiles.

ICTSD reporting; “Extra Diet session set to open Sept. 26, after DP elects new leader,” KYODO, 31 August 2016; “TPP free trade signatories agree not to renegotiate,” KYODO, 12 September 2016; “The case for how TPP, with fixes, could happen,” POLITICO, 8 September 2016; “Sen. Hatch Says Progress Made on TPP Drug Issue,” BLOOMBERG BNA, 7 September 2016.

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