Review Category : TPP Trans-Pacific Partnership

There have been recurrent rumors that Hanoi and Washington might agree to explore a bilateral trade pact that would entail many TPP-like trade reforms. To the extent that’s true (official confirmation is lacking on both sides), jump-starting bilateral trade talks will be at the top of Prime Minister Nguyen Xuan Phuc’s agenda when he visits Washington this week.

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Trade ministers from 11 countries which agreed to join the Trans Pacific Partnership (TPP) will meet in Hanoi May 19 – 20, as moves to resurrect the trade deal gather pace.  Japanese Prime Minister Shinzo Abe warned in November 2016 that without the world’s largest economy the TPP “has no meaning”. But Japan’s position appears to have changed. On Thursday Deputy Prime Minister Taro Aso gave a speech in New York confirming trade ministers from the other TPP countries would meet in May to discuss the deal, which he said offered more than bilateral trade negotiations. 

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The U.S. is the world leader in producing new medicines. The country’s strong intellectual-property laws, coupled with a comparatively free-market pricing system, encourage firms to research new treatments. Companies wouldn’t take on the enormous cost of developing a new drug without a solid chance of recouping their investment. On average, a new medicine takes 10 years and costs $2.6 billion to develop, according to the Tufts Center for the Study of Drug Development.

The problem is that rather than promote innovation, many other countries impose price controls on prescription drugs—including new medicines invented in the United States—to make them artificially cheaper for consumers. If American companies refuse to sell their medicines at these steeply discounted dictated prices, foreign countries threaten to break their patents and produce knockoff versions of the medicines.

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President Trump’s USTR nominee, Robert Lighthizer, told the Senate Finance Committee in questions for the record following his confirmation hearing in mid March that “The President has made it very clear that he intends to promote American leadership in the Asia-Pacific through many channels, including by pursuing bilateral FTAs with our key TPP partners. I support that approach.”

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Wendy Cutler, vice president of the Asia Society Policy Institute and a former diplomat and negotiator in the Office of the U.S. Trade Representative, tells us what to expect from the meetings in Chile. As Acting Deputy U.S. Trade Representative, Cutler played a major role in forming TPP — particularly with the bilateral negotiations with Japan.

China said that a meeting in Chile to discuss a possible regional Pacific trade deal is not strictly about the languishing Trans-Pacific Partnership (TPP), as China tries to distance itself from one-time U.S.-led trade pact.

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along the lines of Senate Finance Committee Chairman Hatch’s recommendation.

Senator Hatch said the Trans-Pacific Partnership can be ratified under President Trump even if it begins as a bilateral deal with Japan, emphasizing that his plan would be in accord with Trump’s pledge to pursue fair, bilateral trade deals instead of larger regional ones.

“I think if we could sign up with Japan we’d get a lot of other countries too,” he said. “I mean the real problem here has been Australia and they’ve acted reprehensibly in my eyes, although I’m sure they feel that from their standpoint they’re doing what’s right.”

Asked how he plans to persuade Trump to reconsider his stance on the Asia-Pacific deal, Hatch said, “well, I’m fairly persuasive sometimes.”

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Relief in Japan After Shinzo Abe’s Visit With Trump, NY Times, Feb 13, 2017

in a Kyodo News poll taken after the meeting, 70 percent of the Japanese public said they were satisfied with the talks between the two leaders, and Mr. Abe’s approval ratings rose slightly from a month earlier to close to 62 percent.

“In a basic sense, Prime Minister Abe got almost everything he wanted,” said Fumiaki Kubo, a professor of political science at the University of Tokyo. Mr. Trump’s statements in a joint news conference with Mr. Abe were “totally different from what he has been saying about Japan since the 1980s,” Mr. Kubo said. “That is surprising as well as remarkable. In a sense he showed us, including the American public, that he is capable of changing his position on such an important issue as Japan.”

Mr. Trump, who as a candidate and president-elect assailed Japan as one of the countries that “do not pay us’’ for defense and repeatedly called for an “America First” economy, ended up thanking the people of Japan for hosting United States troops and called for a trading relationship “that is free, fair and reciprocal, benefiting both of our countries.”

Perhaps most significant to the Japanese, Mr. Trump promised that the United States was “committed to the security of Japan and all areas under its administrative control,” a reference to the American guarantee to defend Japan in any confrontation with China over disputed islands, known in Japan as the Senkaku and in China as the Diaoyu, in the East China Sea.

The remarks drew swift criticism from China, where an editorial in the overseas edition of People’s Daily, an official newspaper of the Communist Party, said Mr. Abe had made a “fetish” of Japan’s alliance with the United States.

In Welcoming Shinzo Abe, Trump Affirms U.S. Commitment to Defending Japan, NY Times, Feb 10, 2017

“The bond between our two nations and the friendship between our two peoples runs very, very deep,” Mr. Trump said at a news conference with Mr. Abe, reading from a prepared text. “This administration is committed to bringing those ties even closer. We are committed to the security of Japan and all areas under its administrative control and to further strengthening our very crucial alliance.”

Among the topics of discussion during Mr. Abe’s weekend visit will be whether, and how, to pursue a bilateral trade agreement between the United States and Japan after Mr. Trump’s decision to withdraw from the Trans-Pacific Partnership, a sweeping trade deal between the United States and 11 nations that included Japan.

 

 

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On Jan 23, a Presidential Memorandum directed U.S. Trade Representative (Robert Lighthizer, nominated but not yet confirmed) to “withdraw the United States as a signatory to TPP.” The Memorandum also directed USTR to “begin pursuing … bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.” 

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“Globalization is a force that shapes our lives in profound ways, and we see it plainly in trade. The cost of shipping goods across borders has dropped dramatically. The expanding potential of the Internet has reshaped the way we do business. And automation has changed how we produce almost every good and service and has affected job and wage growth. These forces are not going away, but are in fact accelerating.The fundamental economic question of our time is not whether we can stop globalization, but whether we can use all the tools at our disposal to shape globalization in a way that helps the majority of Americans, and reflects not just our economic interests, but our values.”

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Now, it’s no secret that the future of the Trans Pacific Partnership is uncertain. I can’t predict what the new administration is going to do with respect to trade, but I can tell you that the fundamental reasons for the TPP haven’t changed. The fundamental need of countries to be able to sell their goods to other countries hasn’t changed. And the United States of America cannot grow and get stronger unless we too are able to sell goods to the other 95 percent of the customers in the world.

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