Bipartisan duo propose plan for TPP reentry

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Dec 12, 2022 View in browser   By Doug Palmer Presented by Quick Fix — First in Morning Trade: A bipartisan pair of trade policy experts have crafted a plan for U.S. reentry into the Trans-Pacific Partnership that they believe could help overcome the "toxic" opposition to rejoining the pact. — Three days of Africa-related events begin Tuesday, culminating in a summit between President Joe Biden and 50 African leaders, including the head of the African Union. — The United Kingdom is pursuing its biggest prize yet as part of its state-by-state approach to building closer trade ties with the United States while the Biden administration continues its moratorium on negotiating new free trade agreements. It's Monday, Dec. 12. Welcome to Morning Trade. Today is a good day to build a barricade around your garbage cans to prevent dogs from knocking them over, according to my 1974 Popular Science Homeowners Almanac. And yes, I can attest that 50 years ago many dogs roamed free in America, sometimes getting into mischief like that. Even today, there's a new dog named Cinnamon in our neighborhood, who is always getting out. So send us your trade news and any blueprints you might have for a trash can barricade: gbade@politico.com , soverly@politico.com and dpalmer@politico.com .   A message from PhRMA: Biopharmaceutical manufacturers have combatted COVID-19 with enough vaccines and treatments to meet global demand. Intellectual property (IP) protections enabled this progress and remain important for innovation in the pipeline to treat emerging variants and conditions like long COVID. Last-mile logistics, weak health care infrastructure and regulatory and trade barriers – not the WTO's TRIPS agreement – are the real barriers to global medicine access. We must work together to tackle these barriers with evidence-based solutions. Learn more.   Want to receive this newsletter every weekday?  Subscribe to POLITICO Pro . You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Driving The Day A PLAN TO REJOIN TPP: A bipartisan pair of former high-ranking U.S. officials have proposed a plan for the United States to reenter the Trans-Pacific Partnership, arguing a significantly revamped agreement would fit current political realities that have pushed national security concerns to the top of the Biden administration's trade priorities. Wendy Cutler, an acting deputy U.S. trade representative in the Obama administration, and Clete Willems, deputy assistant for international economics in the Trump White House, said they crafted the proposal over the past year in consultation with a bipartisan group of experts consisting of five Republicans and five Democrats. Confidential process: "We are not revealing the names of the people that participated out of respect for them and their ability to represent their constituencies in a non-public way," Willems said. "It was really important for us to get their honest feedback without making them feel like they were taking a political risk." A quick summary: The result is a report listing 12 areas where the co-authors believe changes to the pact now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership could muster enough political support in Congress for the U.S. to rejoin. Those include stronger provisions in areas like rules of origins for autos, protections for workers and the environment, currency manipulation and addressing anticompetitive behavior from non-market economies such as China. In another bow to TPP critics, they also propose changes to investment protection rules and government procurement provisions that would make them more flexible than what was included in the original pact. The duo also suggests reinserting certain intellectual property protections dropped by the CPTPP members, crafting a new chapter on supply chain security and resilience, developing a collective response to economic coercion by countries like China and building on the digital trade provisions included in the TPP deal that the United States abandoned. Hangover effect: "We're under no illusion that this is easy," Cutler said, recognizing that the original 12-nation pact that she helped negotiate is still "toxic in Washington." Former President Donald Trump pulled out of the agreement shortly after taking office, a move that many Democrats supported despite the fact it was negotiated by an Democratic administration. The Biden administration's aversion to negotiating traditional free trade agreements where the United States provides tariff concessions is partly driven by concern that the TPP helped Trump defeat Hillary Clinton in 2016. But Willems and Cutler argue that U.S. market access must be on the table to entice other countries to open their own markets and to agree to stronger rules in areas like labor, the environment and currency manipulation. IPEF not enough: Cutler said it was a coincidence that their report is being released as negotiators are in Australia for the first round of talks on the proposed Indo-Pacific Economic Framework, a Biden administration initiative with 13 other countries that includes many traditional trade areas but not tariff cuts. "IPEF is a great first step and this by no means a proposal to replace IPEF," Cutler said. However, unless the U.S. is willing to offer increased access to its own market, it's unclear that IPEF will be powerful enough to reshape the region's extensive supply chain connections with China, Willems added. "As I'm talking to members, including folks who are involved in the race for Ways and Means [chair], the general perception is that we need to be doing more to combat China in the region, that IPEF is not enough," Willems said. China's expansive trade network: Since Trump has pulled out of the pact, China has finished negotiations on the Regional Comprehensive Economic Partnership with more than dozen other countries in the region, began talks to join the Digital Economic Partnership Agreement with Chile, New Zealand and Singapore and applied to join the CPTPP. Because of those developments, "I think folks are beginning to realize that we're kind of losing our ability to shape the rules in Asia," Cutler said. Reality check: Last year, Sens. Tom Carper (D-Del.) and John Cornyn (R-Texas) urged the Biden administration to negotiate reentry into the CPTPP, in one sign of bipartisan support. But Cutler and Willems said their main goal is to start the conversation about what that could entail and make people realize it's not a simple binary choice between rejoining or staying out. The model should be the U.S.-Canada-Mexico Agreement, where the Trump administration took an unpopular agreement, NAFTA, and refashioned it into a pact that won approval with overwhelming bipartisan support, they said. IPEF NEGOTIATIONS GET UNDERWAY: It's a busy week on many trade fronts this week, including the first round of IPEF negotiations in Brisbane, Australia, that began Saturday. USTR and the Commerce Department are co-chairing the 14-nation talks, which is widely viewed as the Biden administration's less ambitious alternative to rejoining the TPP. USTR has circulated text covering trade facilitation, agriculture, domestic service regulation and good regulatory practices, but will not make its pitch for new standards on more divisive topics like digital trade, the environment or labor until next year. Commerce has distributed the complete text for the supply chain and anti-corruption and tax pillars, as well as a "concept paper" fleshing out a number of the objectives for the clean energy pillar. Morning Trade Pro readers can learn more about the "Five hurdles the U.S. will need to clear" in the negotiations by clicking here to read Steven Overly's scene-setter .   JOIN THURSDAY FOR A CONVERSATION ON FAMILY CARE IN AMERICA : Family caregivers are among our most overlooked and under-supported groups in the United States. The Biden Administration's new national strategy for supporting family caregivers outlines nearly 350 actions the federal government is committed to taking. Who will deliver this strategy? How should different stakeholders divide the work? Join POLITICO on Dec. 15 to explore how federal action can improve the lives of those giving and receiving family care across America. REGISTER HERE .     LET'S MAKE A DEAL, AFRICA EDITION: The U.S.-Africa summit is the first since 2014, when Barack Obama was president. A number of business deals will be announced Wednesday at the U.S.-Africa Business Forum . Not about China: Administration officials also say other new initiatives will be rolled out, including a major policy announcement from Biden. They have noted the power of Africa's large voting bloc in global institutions like the UN, but are downplaying the summit as an attempt to make the continent choose sides in the growing global competition with China. "This summit is really about our relationship with the continent. It's not about other countries and their engagement," a senior administration official told reporters. OK, but: China trades more with Africa than the United States, despite the two-decade-old African Growth and Opportunity Act which waives U.S. duties on most goods from Sub-Saharan Africa. And both China and the United States lag behind the European Union, the biggest foreign player in the region. AGOA is up for renewal in 2025 and U.S. officials say they want to hear from African leaders how the program could be improved. All that and Exim too: U.S. Trade Representative Katherine Tai is hosting a ministerial meeting with AGOA countries on Tuesday. She's also scheduled to speak in the afternoon at the U.S. Export-Import Bank's annual conference , which is taking place the same day. USTR-AFCFTA MOU: Wamkele Mene, secretary general of the African Continental Free Trade Area Secretariat, said earlier this month that he and Tai would sign a Memorandum of Understanding this week on the margins of the summit. WTO PUTS U.S. UNDER THE MICROSCOPE: The World Trade Organization will conduct one of its periodic reviews of U.S. trade policy on Wednesday and Friday, opening the door for members to criticize what they don't like and praise what they do. The review covers the period from mid-2018 to early 2022, which coincided with former President Donald Trump's decisions to impose tariffs on steel and aluminum imports from around the world and to slap duties on hundreds of billions worth of Chinese goods. More recent developments like congressional approval of massive subsidy programs under the CHIPS and Science Act and the Inflation Reduction Act came later, but members may feel motivated to mention them as well. Big WTO ruling: The United States suffered a major loss at the WTO Friday, when a set of dispute settlement panels ruled that Trump violated global trade rules in 2018 when he imposed tariffs on steel and aluminum imports on national security grounds. The Biden administration strongly criticized the ruling, and vowed it would not remove any remaining duties on the metal products. The United States believes national security actions are self judging and that a WTO panel does not have the right to rule on the matter, USTR spokesperson Adam Hodge said in a statement. Read more here . U.K. SETS SIGHTS ON CALIFORNIA: "The lieutenant governor and I in California agreed to do an MOU between the U.K. and California," U.K. Trade Minister Greg Hands told Morning Trade. That follows a similar agreement signed last week with South Carolina and two other state-level memorandums of understanding- with Indiana and North Carolina. A fourth MOU with Utah is also close to conclusion. "We've only really got less than a handful of things to sort out," Hands said in a phone call from Salt Lake City on Friday. California is the largest state economy in the United States, accounting for about 15 percent of total U.S. gross domestic product. Why bother: Many trade issues, such as tariffs, are outside the jurisdiction of state authorities. But the U.K. believes the state-level MOUs will help expand business ties in areas ranging from tech and renewable energy to financial and professional services. Hands said the North Carolina deal provides an opportunity for U.K. firms to export offshore wind power technology and the Indiana arrangement could create new opportunities in the state's government procurement market, to give two examples of MOU payoffs. FTA dream on hold: The U.K.'s long-term goal still is to negotiate a free trade agreement with the United States, but it knows that is not a priority now for the Biden administration. "We are ready to do a deal whenever the administration is ready," Hands said. Electric vehicle woes: Hands said he hopes the Biden administration can resolve concerns about the discriminatory nature of new U.S. electric vehicle tax credits. The U.K. shares that view with other foreign auto suppliers such as the EU, South Korea and Japan. "We've got a huge automotive sector in the U.K.," Hands said. "We're one of the first movers internationally into electric vehicles and I think it would mean the U.S. missing out on being able to access a lot of the U.K. expertise" if a fix isn't found.   A message from PhRMA:   International Overnight — Mexico says it, Canada prevailed in auto dispute with U.S., Reuters reports . — President Xi Jinping told Gulf Arab leaders on Friday that China would work to buy oil and gas in yuan, Reuters reports . — Chile and the EU sealed a revamp of their trade deal in Brussels on Friday, potentially giving Europe better access to Chile's vast lithium and copper resources, POLITICO reports . — Canada unveils first critical minerals strategy, POLITICO reports . — Buy America dispute boils over in the water sector, POLITICO reports .   POLITICO APP USERS: UPGRADE YOUR APP BY DECEMBER 19! We recently upgraded the POLITICO app with a fresh look and improved features for easier access to POLITICO's scoops and groundbreaking reporting. Starting December 19, users will no longer have access to the previous version of the app. Update your app today to stay on top of essential political news, insights, and analysis from the best journalists in the business. UPDATE iOS APP – UPDATE ANDROID APP .     THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com , gbade@politico.com and soverly@politico.com . Follow us @POLITICOPro and @Morning_Trade .   A message from PhRMA: Facts don't lie: there is more supply of COVID-19 vaccines and treatments than global demand. But challenges at a local level still exist before people everywhere can get the medicines they need. Solutions must support innovation, strengthen trade and protect American intellectual property abroad. As world leaders continue discussing ways to combat COVID-19 and prepare for future pandemics, they should advance a robust trade and health agenda and abandon misguided proposals to waive intellectual property commitments. Learn more here.     Follow us on Twitter John Yearwood @john_yearwood Doug Palmer @tradereporter Gavin Bade @GavinBade Steven Overly @StevenOverly   Follow us

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