The United States and 11 other Pacific Rim countries have reached a deal on the most sweeping trade liberalization pact in a generation but the accord on Monday faced initial skepticism in the U.S. Congress.
In a deal that could reshape industries and influence everything from the price of cheese to the cost of cancer treatments, the 12 countries will cut trade barriers and set common standards. Details of the pact were emerging in statements by officials after days of marathon negotiations in Atlanta.
The Trans-Pacific Partnership would affect 40% of the world economy and would stand as a legacy-defining achievement for U.S. President Barack Obama, if it is ratified by Congress.
Lawmakers in other countries that are part of the accord must also approve the deal.
The White House, State Department and Treasury all lauded the deal’s benefits for the American economy.
“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. 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,” President Barack Obama said in a statement. “It promotes a free and open Internet. It strengthens our strategic relationships with our partners and allies in a region that will be vital to the 21st century. It’s an agreement that puts American workers first and will help middle-class families get ahead.”
On the Hill, Senate Majority Leader Mitch McConnell sounded a similarly optimistic note while vowing to pay close attention to the accord’s details.
“This deal demands intense scrutiny by Congress and the legislation we passed earlier this year provides us the opportunity to give this agreement that scrutiny,” McConnell said in a statement. “In the months ahead, the Senate will review this agreement to determine if it meets the high standards Congress and the American people have demanded.”
U.S. Democratic Presidential candidate Bernie Sanders, a Vermont senator long critical of the effort, said the accord represented a “trade agreement that will hurt consumers and cost American jobs.”
“Wall Street and other big corporations have won again,” Sanders said in a statement. “It is time for the rest of us to stop letting multinational corporations rig the system to pad their profits at our expense.
Senate Finance Committee Chairman Orrin Hatch, a Republican, said he feared the trade deal could fail to break down trade barriers for American-made products.
“While the details are still emerging, unfortunately I am afraid this deal appears to fall woefully short,” Hatch said.
The final round of negotiations on the accord in Atlanta, which began on Wednesday, had snared on the question of how long a monopoly period should be allowed on next-generation biotech drugs, until the United States and Australia negotiated a compromise.
The Trans-Pacific Partnership deal has been controversial because of the secrecy of the negotiations that have shaped it over the past five years and the perceived threat to an array of interest groups from Mexican auto workers to Canadian dairy farmers.
Although the complex deal sets tariff reduction schedules on hundreds of imported items from pork and beef in Japan to pickup trucks in the United States, one issue had threatened to derail talks until the end - the length of the monopolies awarded to the developers of new biological drugs.
Negotiating teams had been deadlocked over the question of the minimum period of protection to the rights for data used to make biologic drugs, made by companies including Pfizer Inc, Roche Group’s Genentech and Japan’s Takeda Pharmaceutical Co.
The United States had sought 12 years of protection to encourage pharmaceutical companies to invest in expensive biological treatments like Genentech’s cancer treatment Avastin. Australia, New Zealand and public health groups had sought a period of five years to bring down drug costs and the burden on state-subsidized medical programs.
Negotiators agreed on a compromise on minimum terms that was short of what U.S. negotiators had sought and that would effectively grant biologic drugs a period of about years free from the threat of competition from generic versions, people involved in the closed-door talks said.
The Washington, D.C.-based Biotechnology Industry Association said it was “very disappointed” by reports that U.S. negotiators had not been able to convince Australia and other nations involves in the deal to adopt the 12-year standard approved by Congress.
“We will carefully review the entire TPP agreement once the text is released by the ministers,” the industry lobby said in a statement.
DAIRY AND AUTOS
A politically charged set of issues surrounding protections for dairy farmers was also addressed in the final hours of talks, officials said. New Zealand, home to the world’s biggest dairy exporter, Fonterra, wanted increased access to U.S., Canadian and Japanese markets.
Separately, the United States, Mexico, Canada and Japan also agreed rules governing the auto trade that dictate how much of a vehicle must be made within the region covered by the accord in order to qualify for duty-free status.
The North American Free Trade Agreement between Canada, the United States and Mexico mandates that vehicles have a local content of 62.5%. The way that rule is implemented means that just over half of a vehicle needs to be manufactured locally. It has been credited with driving a boom in auto-related in investment in Mexico.
The trade deal would give Japan’s automakers, led by Toyota MotorCorp, a freer hand to buy parts from Asia for vehicles sold in the United States but sets long phase-out periods for U.S. tariffs on Japanese cars and light trucks.
The deal being readied for expected announcement on Monday also sets minimum standards on issues ranging from workers’ rights to environmental protection. It also sets up dispute settlement guidelines between governments and foreign investors separate from national courts.