April 13, 2018

Trump: The US should reconsider joining TPP

Daily Briefing

    President Trump on Thursday ordered his top economic advisers to examine whether the United States should re-enter the Trans-Pacific Partnership (TPP)—a multi-country trade deal with sweeping economic provisions that affect the health care industry.

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    Trump in January 2017 signed a presidential memorandum notifying the Office of the U.S. Trade Representative that the United States would withdraw from TPP, which he characterized as a "horrible deal."

    Background: TPP and health care

    In October 2015, the United States and eleven other reached the TPP deal after about eight years of negotiations. One of the negotiation's most contentious points came over the length of market protections for biologics, advanced medicines made from living organisms. The United States had fought to preserve a 12-year exclusivity period for the drugs, arguing that it is needed to promote innovation. However, almost all of the other countries involved in the deal wanted to reduce that exclusivity period to allow lower-priced "biosimilars" to be brought to the market.

    To resolve the disagreement, the parties to the TPP reached a "complicated compromise" that would protect biologic manufacturers' exclusivity for at least five and up to eight years.

    The TPP also has implications for the medical device industry. The Advanced Medical Technology Association last year said the deal could help to curb "corrupt business practices" and create global "codes of conduct" for the market.

    The TPP also prohibits tobacco companies from using arbitration panels to sue countries that pass anti-smoking legislation. Matthew Myers, president of the Campaign for Tobacco-Free Kids, at the time called the tobacco provision "historic." However, several Republican senators at the time said the tobacco provision made them less likely to support the TPP.

    Trump says US might rejoin TPP if it gets a better deal

    Trump in a tweet posted Thursday wrote that he would consider rejoining TPP "if the deal were substantially better than the deal offered to [former President Barack] Obama." Trump wrote that the United States has reached bilateral trade deals with six of the 11 nations involved in TPP and is working on reaching a deal with Japan.

    According to the Times, Trump—after speaking with Sen. John Thune (R-S.D.) about TPP during a meeting with several lawmakers—asked his top economic adviser, Larry Kudlow, and his trade negotiator, Robert Lighthizer, to review re-entering TPP. Trump told the advisers to "take a look at getting [the United States] back into that agreement, on [the United States'] terms, of course," the Post reports.

    According to the New York Times, Thune had asked Trump about rejoining TPP, saying it would create an opportunity for the United States to put pressure on China. The Trump administration last week proposed 25% tariffs on thousands of Chinese-manufactured products, including a slew of raw ingredients U.S. pharmaceutical companies use to make prescription drugs, in response to trade tactics China has used to bolster its global market power in the technology sector. Some businesses and Republican lawmakers have criticized the proposals, the Times reports.

    According to the Wall Street Journal, Trump also had expressed interest in the United States rejoining TPP during at a January meeting of the World Economic Forum, but the administration has not released any documents on where it stands regarding the deal. Kudlow referred to Trump's most recent move as somewhat spontaneous, saying, "This whole trade thing has exploded." Kudlow said he would "pull a team together" to assess the TPP, but added that there is currently "no deadline" to complete the assessment.

    Re-joining TPP could be difficult for US

    According to the Washington Post, it might not be easy for the United States to re-enter TPP because the 11 countries currently involved in the agreement reached their own terms for the deal this year, making it unclear what conditions would be needed for the countries to restart negotiations with the United States. The countries likely would benefit from having the United States join TPP because the United States has the world's largest economy, but several of the countries involved in TPP are wary of Trump's wavering stance on trade, the Post reports.

    Yoshihide Suga, Japan's chief cabinet secretary, on Friday said the 11 nations had negotiated a "well-balanced pact" designed to address their needs and cautioned against any efforts to amend the deal to accommodate the United States, according to the Times.

    Steven Ciobo, Australia's trade minister, said, "We've got a deal," adding, "I can't see that all being thrown open to appease the United States."

    Reaction

    Several Republican lawmakers and observers applauded Trump's move to consider rejoining TPP.

    Sen. Ben Sasse (R-Neb.) said, "The best thing the United States can do to push back against Chinese cheating now is to lead the other 11 Pacific nations that believe in free trade and the rule of law."

    Wendy Cutler, who according to the Post was among those involved in negotiating the original TPP deal, said, "This is another encouraging signal from the administration."

    However, some raised concerns over the United States re-joining TPP.

    Richard Trumka, president of the union group AFL-CIO, in a tweet posted Thursday wrote, "TPP was killed because it failed America's workers and it should remain dead." He continued, "There is no conceivable way to revive it without totally betraying working people" (Swanson, New York Times, 4/12; Werner et al., Washington Post, 4/12; Bender, Wall Street Journal, 4/13; Bradsher, New York Times, 4/13).

    Just updated: Your cheat sheets for understanding health care's legal landscape

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