Trans-Pacific Partnership Trade Deal Is Reached

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OCT. 5, 2015

ATLANTA — The United States and 11 other Pacific Rim nations on Monday agreed to the largest regional trade accord in history, a potentially precedent-setting model for global commerce and worker standards that would tie together 40 percent of the world’s economy, from Canada and Chile to Japan and Australia.

The Trans-Pacific Partnership still faces months of debate in Congress and will inject a new flash point into both parties’ presidential contests.

But the accord — a product of nearly eight years of negotiations, including five days of round-the-clock sessions here — is a potentially legacy-making achievement for President Obama, and the capstone for his foreign policy “pivot” toward closer relations with fast-growing eastern Asia, after years of American preoccupation with the Middle East and North Africa.

Mr. Obama spent recent days contacting world leaders to seal the deal. Administration officials have repeatedly pressed their contention that the partnership would build a bulwark against China’s economic influence, and allow the United States and its allies — not Beijing — to set the standards for Pacific commerce.

The Pacific accord would phase out thousands of import tariffs as well as other barriers to international trade. It also would establish uniform rules on corporations’ intellectual property, open the Internet even in communist Vietnam and crack down on wildlife trafficking and environmental abuses.

Several potentially deal-breaking disputes kept the ministers talking through the weekend and forced them repeatedly to reschedule the promised Sunday announcement of the deal into the evening and beyond. Final compromises covered commercial protections for drug makers’ advanced medicines, more open markets for dairy products and sugar, and a slow phaseout — over two to three decades — of the tariffs on Japan’s autos sold in North America.

Yet the trade agreement almost certainly will encounter stiff opposition.

Its full 30-chapter text will not be available for perhaps a month, but labor unions, environmentalists and liberal activists are poised to argue that the agreement favors big business over workers and environmental protection. Donald Trump has repeatedly castigated the Pacific trade accord as “a bad deal,” injecting conservative populism into the debate and emboldening some congressional Republicans who fear for local interests like sugar and rice, and many conservatives who oppose Mr. Obama at every turn.

Long before an accord was reached, it was being condemned by both Mr. Trump, the Republican presidential front-runner, and Senator Bernie Sanders of Vermont, who is challenging Hillary Rodham Clinton for the Democrats’ nomination. Other candidates also have been critical. Mrs. Clinton, who as secretary of state promoted the trade talks, has expressed enough wariness as she has campaigned among unions and other audiences on the left that her support is now in doubt.

Still, in Congress the outcome for ratifying the agreement “will be affected by what’s in it, and that’s the way it should be,” said Representative Sander Levin of Michigan, in an interview here before the deal came together. He was the one lawmaker to come to Atlanta to monitor final talks.

Mr. Levin, the ranking Democrat on the House Ways and Means Committee, which has jurisdiction for trade, has supported some trade pacts but was skeptical of this one. He is concerned about unfair competition from Japan for his state’s automakers and union workers. In particular, Mr. Levin objected that language addressing Japan’s devaluation of its currency, which reduces the cost of its auto exports, would not be in the trade agreement but rather in a side agreement that would be hard to enforce against currency scofflaws.

The Office of the United States Trade Representative said the partnership eventually would end more than 18,000 tariffs that the participating countries have placed on United States exports, including autos, machinery, information technology and consumer goods, chemicals and agricultural products ranging from avocados in California to wheat, pork and beef from the Plains states.

Japan’s other barriers, like regulations and design criteria that effectively keep out American-made cars and light trucks, would come down.

While many opponents object that the trade pact will kill jobs or send them overseas, the administration contends that the United States has more to gain from freer trade with the Pacific nations. Eighty percent of those nations’ exports to the United States are already duty-free, officials say, while American products face assorted barriers in those countries that would end.

Also, the administration contends that increased United States sales abroad would create jobs in export industries, which generally pay more than jobs in domestic-only businesses.

The parties to the accord also include New Zealand, Mexico, Peru, Malaysia, Singapore and Brunei.

The accord for the first time would require state-owned businesses like those in Vietnam and Malaysia to comply with commercial trade rules and labor and environmental standards. Michael B. Froman, the United States trade representative, called the labor and environmental rules the strongest ever in a trade agreement and a model for future pacts, although some environmental groups and most unions remained implacably opposed. The worker standards commit all parties to the International Labor Organization’s principles for collective bargaining, a minimum wage and safe workplaces, and against child labor, forced labor and excessive hours.

Unions and human rights groups have been skeptical at best that Vietnam, Malaysia and Brunei will improve labor conditions, or that Malaysia will stop human trafficking of poor workers from Myanmar and Southeast Asia. The United States reached separate agreements with the three nations on enforcing labor standards, which would allow American tariffs to be restored if a nation is found in violation after a dispute-settlement process.

On the environment, the accord has provisions against wildlife trafficking, illegal or unsustainable logging and fishing, and protections for a range of marine species and animals including elephants and rhinoceroses.

For the first time in a trade agreement there are provisions to help small businesses without the resources of big corporations to deal with trade barriers and red tape. A committee would be created to assist smaller companies.

The agreement also would overhaul special tribunals that handle trade disputes between businesses and participating nations. The changes, which also are expected to set a precedent for future trade pacts, respond to widespread criticisms that the Investor-State Dispute Settlement panels favor businesses and interfere with nations’ efforts to pass rules safeguarding public health and safety.

Among new provisions, a code of conduct would govern lawyers selected for arbitration panels. And tobacco companies would be excluded, to end the practice of using the panels to sue countries that pass antismoking laws. On Sunday, Matthew Myers, president of the Campaign for Tobacco-Free Kids, hailed the provision as “historic.”

In a concession likely to be problematic with leading Republicans, the United States agreed that brand-name pharmaceutical companies would have a period shorter than the current 12 years to keep secret their data on producing so-called biologics, which are advanced medicines made from living organisms. Senator Orrin G. Hatch of Utah, chairman of the Senate Finance Committee, which has jurisdiction over trade, has threatened to withdraw his support for the accord if United States negotiators agree to loosening pharmaceutical industry protections against American law.

But arrayed against the United States, which said the protection was a necessary incentive for drug makers to innovate, were virtually every other country at the table, led by Australia. The generic drug industry and nonprofit health groups also strenuously opposed the United States’ position, pressing for access to the data within five years to speed lower priced “biosimilars” to market. The compromise is a hybrid that protects companies’ data for five years to eight years.

Only once that intellectual property issue was settled did several nations, including Canada, New Zealand and the United States, turn to the arcane details of further opening their dairy markets.

Months of final drafting, analyses and debate lie ahead. Mr. Obama cannot sign the accord until Congress has its 90 days to review the pact’s details.

The difficulty the president confronts was foreshadowed earlier this year by his narrow victory in winning “fast track” trade promotion authority from Congress. That authority guarantees that trade pacts will get expedited consideration in Congress — a yes-or-no vote without amendments or filibusters.

Passage of fast-track power eased Mr. Obama’s ability to conclude the Pacific accord as well as to continue negotiating a separate, more difficult trade pact with Europe. Other nations might balk at making a trade deal with the United States, the argument goes, if the terms could be effectively rewritten in Congress.

http://www.nytimes.com/2015/10/06/business/trans-pacific-partnership-trade-deal-is-reached.html?emc=edit_na_20151005&nlid=42724716&ref=cta&_r=0