TPP Update

Extending into a fifth day on Sunday, TPP negotiators spent the weekend hashing out final compromises on biologics exclusivity, dairy market access, sensitive products, investor-state dispute settlement, and other last minute issues. The United States and Japan reportedly reached agreement in principle on automobile market access and rules-of-origin in talks that also included Canada and Mexico.  A U.S. official said late Sunday that the negotiators will work through the night in an attempt to secure the final details of an agreement, setting the stage for the Ministers to hold a final press conference sometime this morning.

Last Tuesday in a Senate floor speech, Finance Committee Chairman Orrin Hatch (R-Utah) encouraged the United States to not rush the TPP negotiations. He warned, “If the administration and our negotiating partners do conclude an agreement this week, they can be sure that I will examine it very carefully to ensure it meets these standards. And, as I have stated many times before, if the agreement falls short, I will not support it.” He and Finance Committee Ranking Member Ron Wyden (D-Oregon), together with House Ways and Means Committee Chairman Paul Ryan (R-Michigan) and Ranking Member Sander Levin (D-Michigan), sent a joint letter on Wednesday to U.S. Trade Representative Michael Froman urging him to consult closely with lawmakers and stakeholders as the United States works to resolve the outstanding TPP chapters to ensure that the final deal has sufficient congressional backing. In response the next day, Ambassador Froman’s office released a statement, assuring that both the Administration and Congress have made clear to the TPP negotiating parties that the United States “will not settle for less than the high standard agreement authorized under the trade promotion authority legislation signed into law by President Obama.”

A bipartisan group of 25 dairy state Members of Congress said in a letter to Ambassador Froman last week saying that they have serious concerns about dairy market access negotiations in the proposed TPP deal. They urged Ambassador Froman to ensure balanced market access, noting it should create sufficient new dairy export opportunities in Canada and Japan to create a positive result for U.S. dairy producers if such trade barriers are eased.

The United States reportedly tabled its “5+3” proposal, which would provide an initial five years of biologic data exclusivity with the potential to add an additional three more for a total of eight years. The U.S. pharmaceutical industry had been advocating for 12 years. On Friday, Representative Rosa DeLauro (D-Connecticut) criticized reports that U.S. trade negotiators have agreed to eight years of patent protection for biological pharmaceuticals in the TPP.   She has called on negotiators to ease the way for biosimilar manufacturers to bring their products to market. Congressman Levin also strongly signaled his opposition to the eight-year biologics market exclusivity, claiming it goes beyond the “May 10” agreement that he negotiated with the George W. Bush Administration.

Also on Friday, some Republican Members responded to news that the Obama Administration had agreed to a tobacco carve-out. Senator Thom Tillis (R-North Carolina) said, “By carving out tobacco from the TPP, the Obama Administration is discriminating against an entire agricultural commodity, setting a dangerous precedent for future trade agreements.” He also claimed that he would work to defeat ratification of the final TPP deal if any carve-out is ultimately included. In a letter to Ambassador Michael Froman, House Agriculture Committee Chairman Michael Conaway (R-Texas) and 16 other panel members said, “We – along with America’s farmers and ranchers – have repeatedly stressed our deep concerns with such a slippery slope and the precedents it would set.” A number of Democrats, however, have advocated for the tobacco carve-out.

President Obama’s UNGA Speech

In a speech last Monday before the U.N. General Assembly (UNGA) that was designed to encourage collective leadership for global prosperity, President Obama warned that the world is seeing some major powers assert themselves in ways that contravene international law, that there is an erosion of the democratic principles and human rights that are fundamental to the U.N. mission, and that retrenchment is being argued as a means to beat back disorder, to stamp out terrorism, or to prevent foreign meddling. With respect to trade, he said: “We can promote growth through trade that meets a higher standard. And that’s what we’re doing through the Trans-Pacific Partnership — a trade agreement that encompasses nearly 40 percent of the global economy; an agreement that will open markets, while protecting the rights of workers and protecting the environment that enables development to be sustained.”

Syrian Crisis

At a Senate Foreign Relations Committee hearing last week on Syria, Members raised the ongoing refugee crisis, though there appears to be little appetite in Congress to pass legislation. Democrats continue to call for increased aid to the United Nations and for the United States to accept larger numbers of refugees, but they want the White House to lead the charge. Meanwhile, in the House, Representative Michael McCaul (R-Texas) has introduced a bill (H.R. 3573) that would require Congress to approve the total number of refugees admitted to the country each year. Some warn the bill could impede the country’s ability to take in refugees if passed.

Senate Armed Services Committee (SASC) Chairman John McCain (R-Arizona) and other Republicans have also urged the creation of no-fly zones in Syria to protect civilians from the regime’s barrel-bombs. However, their specific recommendations are typically limited to recommending the deployment of a limited number of U.S. military personnel to Syria to support such efforts.

Washington officials voiced concerns with Russia’s airstrikes in Syria, which started just days after Presidents Obama and Putin met in New York City. SASC Chairman McCain suggested the United States should “consider serious sanctions” against Russia in response to reported strikes against Western-backed moderate Syrian opposition forces. Congressman Ed Royce (R-California), Chairman of the House Foreign Affairs Committee, questioned whether Russian airstrikes would be aimed at the Sunni population or at ISIL. Congressman Adam Schiff (D-California), Ranking Member of the House Intelligence Committee, argued that Russia does not intend to de-conflict with the United States and believes Russia’s real intentions are to target the Syrian moderate opposition in alignment with the Assad regime’s priorities.

House Majority Leader Kevin McCarthy (R-California), the presumed next Speaker of the House, criticized the Obama Administration for being caught “flat-footed” in Syria and for failing to recognize and stop Russia’s military buildup. Leader McCarthy stated that Russia’s intentions are “far more nefarious” than simply propping up Assad, and suggested that Russia can and will use its buildup in Syria to assert increased influence in the Middle East. He argued that the United States should not stand by as Russia attempts to undermine U.S. interests yet again and needs to be more proactive in responding to President Putin’s actions. Leader McCarthy issued a series of statements last Wednesday on his foreign policy platform, a further assertion of his positions ahead of Republican leadership elections – expected soon.

Department of Defense Spokesperson Peter Cook confirmed last Thursday that U.S. and Russian defense officials held a secure video conference to coordinate safe air operations over Syria. This meeting was an initial step, as agreed to by President Obama and President Putin, to ensure no unintended events occur as a result of Russia’s increased involvement in Syria. Cook noted the dialogue includes encouraging Russia to target ISIL, but he emphasized the United States does not have any plans to share intelligence with the Russians.

Russia/Ukraine Crisis

Russia’s increased role in the Syrian conflict has some – particularly Ukrainian officials – wondering whether the crisis in eastern Ukraine is being overshadowed by Russia’s military flexing in the Middle East. U.S. Government officials have sought to ensure that the U.S. policy toward Russia for its activities in Ukraine remains unchanged. White House Spokesperson Josh Earnest characterized the situation in Ukraine as “cut and dried,” noting the United States continues to perceive Russia as interfering and the imposed sanctions appropriate. Ernest reiterated that the United States would like to see Russia implement its side of the Minsk agreements, which would allow it to start reintegrating into the international community.

Presidents Obama and Vladimir Putin met on the sidelines of the United Nations General Assembly last Monday, their first in-person encounter in two years. The reportedly business-like meeting lasted 90 minutes, and focused on both Ukraine and Syria. An Administration official said President Obama reiterated U.S. support for the sovereignty and territorial integrity of Ukraine’s government and stressed that a positive opportunity to implement the Minsk accord in the next few months exists.

Vice President Joe Biden met last Tuesday with Ukrainian President Petro Poroshenko. The two leaders discussed the implementation of the Minsk agreements and called on Russia to press the separatists to cancel their planned elections in parts of the Donbas, which they argued would be in direct contravention of the Minsk Implementation Plan. At a Friday press conference Treasury Secretary Lew said that after numerous meetings with his European counterparts he does not believe that Europe is stepping back from sanctions imposed against Russia for its activities in Ukraine.

Iran Nuclear Deal

During his UNGA speech last Monday, President Obama reminded that for two years, the United States and its partners – including Russia and China – worked together in complex negotiations with Iran. The result, he stated, is a lasting, comprehensive deal that prevents Iran from obtaining a nuclear weapon, while allowing it to access peaceful energy. If this deal is fully implemented, President Obama said that the prohibition on nuclear weapons is strengthened, a potential war is averted, and the world is safer.

NDAA Update

Last Thursday, the House passed a compromise version of the Fiscal Year 2016 National Defense Authorization Act (NDAA) by a vote of 270 in favor to 156 against. The bill did not secure enough support to override an expected veto by the President. Congressional and White House staff are reportedly beginning to negotiate a budget deal that would lift the spending caps underlying President Obama’s objection to the defense authorizing bill. Republicans, meanwhile, are criticizing the President for even threatening a veto given ongoing security crises around the world. The Senate is expected to consider the compromise NDAA measure on Tuesday.

Ex-Im Bank Update

Supporters of the U.S. Export-Import (“Ex-Im”) Bank have reportedly secured enough Republican support to bring an extension of the agency’s charter to the House floor later this month.  So far, more than 30 Republicans have signed on to a discharge petition to force a vote on reauthorizing Ex-Im’s charter.  With more Republicans and all Democrats expected to sign, it appears there may be enough signatories to allow the discharge petition – a rarely-used congressional maneuver – to circumvent the GOP leadership and bring a reauthorization bill directly to the floor for a vote.  A vote on Ex-Im reauthorization could occur after 21 October.   Congressman Stephen Fincher (R-Tennessee), a longtime supporter of Ex-Im, is leading the discharge petition effort.  House Speaker John Boehner (R-Ohio) supports renewing the bank, while House Majority Leader McCarthy, House Financial Services Chairman Jeb Hensarling (R-Texas) and House Majority Whip Steve Scalise (R-Louisiana) all oppose doing so.

TTIP Update

Last Tuesday, the European Union’s Ambassador to Washington, David O’Sullivan, expressed hope that the TPP countries will wrap up their trade talks this week in Atlanta so that the United States can turn its focus to concluding the Transatlantic Trade & Investment Partnership (TTIP) before the Obama Administration leaves office in January 2017. His remarks echo worries from the European Commission and business supporters that the delay in concluding TPP will mean TTIP will remain less of a priority. The next round of TTIP negotiations will be held on 19-23 October in Miami, Florida.

Looking Ahead

Washington will likely focus on the following upcoming matters:

  • 7 October: President Obama hosts German President Joachim Gauck
  • 16 October: President Obama hosts South Korean President Park Geun-hye
  • 19-23 October: 11th Round of TTIP Negotiations to be held in Miami, Florida
  • 25 October: Ukraine local elections
  • 16-77 November: APEC Ministerial Meeting in Manila, Philippines
  • [TBD] November: President Obama hosts Israeli Prime Minister Benjamin Netanyahu
  • 30 November-11 December: U.N. Global Climate Conference in Paris
  • 15-18 December: 10th WTO Ministerial Conference in Nairobi, Kenya