Washington Insider -- Wednesday

By DTN's Washington Insider

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

Likelihood of Government Shutdown in October Grows

Prior to the divisive fight over federal funding for Planned Parenthood, there was about a 50-50 chance that Congress would fail to agree to appropriations bills covering fiscal 2016 and that a government shutdown of unknown duration would result after Oct. 1. Now that the Planned Parenthood fight has become a major political battle, the odds of a shutdown have grown significantly.

Conservatives in both the Senate and the House are calling for Congress to defund Planned Parenthood following the release of videos that a group recorded with a hidden camera showing organization officials discussing the transfer of fetal organs and tissue for medical research. In the Senate, the expectation is that the four senators vying to become the Republican candidate for president in 2016 will compete among themselves to see who will lead the expected filibuster aimed at preventing a vote on any Planned Parenthood funding bill.

The four ––Ted Cruz of Texas, Lindsey Graham of South Carolina, Rand Paul of Kentucky and Marco Rubio of Florida (R-Fla.) –– also can be expected to work the subject of Planned Parenthood into their remarks during tomorrow night's Republican candidates' debate.

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WTO Schedules Arbitration Hearings Regarding U.S. COOL Law

The World Trade Organization has scheduled a pair of arbitration hearings in mid-September to review requests by Canada and Mexico to impose a total of $3.2 billion in retaliatory trade measures against the United States for its failure to comply with a recent dispute ruling on its country-of-origin labeling requirements for meat. The arbitration panel will consider the U.S. objection to the $2.5 billion and $713 million non-compliance retaliation requests sought by Canada and Mexico, respectively. The U.S. counters that Canada and Mexico suffered only about $91 million in annual impact from COOL.

Republican Sen. John Hoeven of North Dakota and a bipartisan group of 13 co-sponsors have introduced legislation that would rescind mandatory COOL for beef, pork, chicken and ground meat products and establish a voluntary labeling program for producers. However, Canadian Agriculture Minister Gerry Ritz has dismissed a voluntary COOL program, saying that the effect of that approach would be the same as mandatory labeling in that U.S. meatpackers would continue to incur additional costs in segregating products made from live Canadian cattle and hogs, thus putting his country's livestock producers at a competitive disadvantage.

The mid-September schedule for the WTO arbitration hearings will give the Senate an opportunity to repeal the COOL law when senators return from their summer recess on Sept. 8. The House already has passed COOL repeal legislation. Whether the Senate will go along, or try to keep COOL alive remains an open question, although outright repeal currently is thought to be the more likely choice.

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Washington Insider: Intellectual Property Challenge in TPP Talks

In the many reviews of what happened to the Trans-Pacific Partnership (TPP) talks in Hawaii last week, it is clear that there were a number of issues that were important, rather than just one or two. For example, Australia's Trade Minister Andrew Robb observed that "To get one set of rules across 40% of world GDP, 33% of world trade, 12 disparate countries from Brunei all the way through the United States" was never going to be easy. Still, key U.S. and Japanese leaders among others said they were optimistic about the outcome.

It also is true that talk in Hawaii that the deal was "98% complete" is now increasingly seen as overly simplistic.

TPP is "still central to President Obama's policy in Asia and the Asia Pacific," said Jeffrey J. Schott, a trade expert at the Peterson Institute for International Economics. "It is the centerpiece of his economic legacy." Still, the questions seem to be getting tougher.

For example, Mexico's secretary of the economy, Ildefonso Guajardo, continues to take a particularly hard line against Japan's automotive industry, a position that some negotiators said seriously undercuts hopes of completing the deal.

New Zealand and Canada are at loggerheads over dairy, along with others including the United States. While tiny New Zealand produces just 3% of the world's dairy products, it is the world's largest dairy exporter. Canada's government, facing tough parliamentary elections in October, showed little inclination to let New Zealand's cheese and eggs be pushed onto Canadian markets.

Even with numerous countries angered by Canada's closed-door stand on dairy, Ed Fast, Ottawa's minister of international trade, punched back by noting that "Canada came to Maui ready to conclude a TPP. We were active, constructive partners at the table."

As a result, ongoing reviews of "What happened in Hawaii" are beginning to conclude that the biggest negotiating hurdle may well have been "intractable differences over intellectual property protections," according to the New York Times. These focused especially on pharmaceutical companies developing the next generation of medicines known as biologics.

The Times reported that it had seen a copy of the still-incomplete intellectual property chapter that seemed to show just how isolated the United States' position is. In one section, for example, the United States and Japan want language saying a lack of IP enforcement resources is no excuse for failure to ensure compliance — a position opposed by New Zealand, Vietnam, Mexico, Peru, Australia, Malaysia and Brunei.

In another section, 11 negotiating nations propose language to ensure judicial authorities have the power to force a company that "abuses enforcement procedures" to compensate a party "wrongfully enjoined or restrained" if a case is lost. Only the United States opposes that.

Much of the intellectual property dispute revolves around the protection of major pharmaceutical companies, which want the United States' 12 years of data protection on new drugs expanded to the other 11 TPP countries. Republicans in Congress, especially Sen. Orrin Hatch of Utah, chairman of the Senate Finance Committee and a key ally of the president's on trade, demand that the White House hold firm.

But most of the other countries — and most international health groups — oppose that position strenuously. They say it would keep drug prices too high, drain government coffers and put new biologic medicines out of reach for the developing world.

So, evidence of deeper structural faults in the TPP talks seems to be emerging, along with the likelihood that the United States faces more severe region-wide challenges to its leadership than previously thought.

Dairy may be a nasty, lingering problem but intellectual property issues may well test the president's team's negotiating skills to new limits, Washington Insider believes.

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(GH/CZ)

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