U.S., 11 countries along Pacific Rim agree to trade deal

On it, Obama faces test in Congress

U.S. President Barack Obama (center) is shown in this November photo during his meeting with leaders of the Trans-Pacifi c Partnership countries in Beijing.
U.S. President Barack Obama (center) is shown in this November photo during his meeting with leaders of the Trans-Pacifi c Partnership countries in Beijing.

WASHINGTON -- The United States and 11 other Pacific Rim countries have agreed to a trade pact designed to cut trade barriers, set labor and environmental standards and protect multinational corporations' intellectual property.

The agreement on the Trans-Pacific Partnership was reached Monday after marathon negotiating sessions over the weekend in Atlanta.

The road ahead may be even tougher: The agreement must get through a skeptical U.S. Congress.

The pact is designed to encourage trade among the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Together, the countries account for 40 percent of world economic output.

"We think it helps define the rules of the road for the Asia-Pacific region," said U.S. Trade Representative Michael Froman.

Japanese Prime Minister Shinzo Abe welcomed the basic agreement as "a farsighted policy for all participating countries that share the values and try to build a free and fair economic zone."

The White House said the agreement will eliminate tariffs on all made-in-America manufactured goods exported to trade pact countries.

"This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products," President Barack Obama said in a statement. "It includes the strongest commitments on labor and the environment of any trade agreement in history, and those commitments are enforceable, unlike in past agreements."

Randy Veach, president of the Arkansas Farm Bureau, said said the deal "offers a rare opportunity to open markets around the Pacific Rim that have been previously restricted."

"Almost all of the commodities we raise in Arkansas could experience some additional opportunities from this agreement," Veach said. "Until we have had the opportunity to review [the agreement's] details for how it might impact Arkansas farmers and ranchers and the commodities we raise, though, it is premature to express support or opposition to the Trans-Pacific Partnership."

Dan Hendrix, president and chief executive officer of the Arkansas World Trade Center in Rogers, noted he hadn't yet read the final agreement but said "billions of dollars of trade" are at stake.

"Arkansas certainly stands to reap a share of these trade dollars by increased exports to the other eleven countries in the TPP," Hendrix said. "With Arkansas export trade reaching close to $8 billion, it is logical we have products which will benefit from this agreement by several million [dollars] when implemented. There is a key provision in the agreement which directly impacts small-business concerns and will make the process of exporting much easier for these businesses by removing high tariffs and cutting red tape into these countries."

Obama has pursued the pact against the objections of many lawmakers in his own Democratic Party and instead forged rare consensus with Republicans. He's cast the agreement as good for Americans workers and crucial to countering China and expanding U.S. influence in the Pacific Asia, a fast-growing region he says should be a bigger focus of the nation's foreign policy.

The president has to wait 90 days before signing the pact, and only then will Congress begin the process of voting on it.

In a sign of the tough fight ahead to win final ratification from Congress next year, lawmakers from both parties lambasted the pact as falling short, raising the prospect that the White House could lose support from allies who had backed the president's trade push earlier this year.

"Closing a deal is an achievement for our nation only if it works for the American people and can pass Congress by meeting the high-standard objectives laid out" by lawmakers in the spring, said Sen. Orrin G. Hatch, R-Utah, chairman of the Senate Finance Committee. "While the details are still emerging, unfortunately, I am afraid this deal appears to fall woefully short."

A vote on the trade pact likely will not happen until well into 2016, when it is likely to get tangled in the politics of a presidential election year. Congress can only give the deal an up-or-down vote. It can't amend the agreement.

Many of the tariff reductions and other changes will be phased in over several years, so benefits to the U.S. economy could take time to materialize.

Rice was one of Japan's top-priority agricultural commodities heading into the trade pact negotiations, along with other grains, pork, beef, dairy and sugar. Japan is establishing a new quota of 50,000 tons of imported U.S. rice, which will rise to 70,000 over 13 years, along with potential new opportunities for increased U.S. sales within quotas already created through the World Trade Organization.

The quota was less than that hoped for by rice exporters in the U.S., the fifth-leading shipper of the grain after Thailand, India, Vietnam and Pakistan.

Japan, where rice has been culturally and economically important for millenniums, imports almost none of its supply thanks to high tariffs supported by JA-Zenchu, the nation's union of farmer cooperatives.

While not as important culturally as rice to Japan, U.S. sugar access was another obstacle, with Australia wanting the United States to loosen both a quota system that protects its own industry and protections that date to the Great Depression.

Peter Petri, a professor of international finance at Brandeis University, says he doesn't expect the deal to lead to any U.S. job gains. But he forecasts it will add $77 billion a year to U.S. incomes by 2025, mostly by creating export-oriented jobs that will pay more, even as other jobs are lost.

Trade unions and other critics say the deal will expose American workers to foreign competition and cost jobs.

"Past trade deals have been a disaster for American workers," Rep. Mark Pocan, D-Wis., said in a statement. "So it is imperative Congress rigorously reviews this deal to ensure the American people are not being taken for a ride yet again."

Another target for opponents was drug companies' efforts to protect their pharmaceutical patents.

U.S. drugmakers wanted 12 years of protection from competitors for biologics -- ultraexpensive medicines produced in living cells. That is longer than in any country but the United States. Critics say blocking competition from near copies drives up drug prices and makes them too expensive for people in poor countries.

Drug companies didn't get the dozen years they wanted; they got about eight years of protection.

Judit Rius Sanjuan, legal policy adviser to Doctors Without Borders, said in a statement that "TPP will still go down in history as the worst trade agreement for access to medicines in developing countries, which will be forced to change their laws to incorporate abusive intellectual property protections for pharmaceutical companies."

Critics also worried that the deal would allow multinational companies to challenge different countries' laws and regulations in private tribunals on the grounds they inhibit trade, undermining local laws on public health and the environment. But in a statement Monday, the trade ministers in Atlanta said the trade pact has safeguards that prevent "abusive and frivolous claims and ensure the right of governments to regulate in the public interest, including on health, safety, and environmental protection."

Late last month, 160 members of Congress wrote Obama urging that the trade pact include measures to stop countries from manipulating their currencies to give their exporters a price advantage. The final pact, however, doesn't include provisions on currency.

The U.S. Treasury Department said Monday that the countries will continue to separately work together "strengthen macroeconomic cooperation, including on exchange rate issues."

Information for this article was contributed by Paul Wiseman, Christopher S. Rugaber, Mari Yamaguchi, Linda A. Johnson, Julie Pace, Martin Crutsinger and Matthew Perrone of The Associated Press, Scott Morris of the Arkansas Democrat-Gazette, David Nakamura of The Washington Post and Alan Bjerga of Bloomberg News.

Business on 10/06/2015

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