Tag: trade

TPP Ends Up with Pleasantly Mild Rules on Biologic Drug Monopolies

The Trans-Pacific Partnership will reportedly include an obligation for every country to provide at least 5 years of market exclusivity for new biologic drugs.  Technically, this counts as a loss for U.S. negotiators, who started with a demand for 12, lowered that to 8, reconfigured 8 into “5+3”, and at the VERY last minute—despite direct calls from President Obama to foreign leaders—were forced to acquiesce to 5 years.  The U.S. pharmaceutical industry says it’s very disappointed, but the outcome is good for the TPP and for consumers around the world.

It’s important to recognize that the exclusivity we’re talking about here has nothing to do with patent protection.  It is not a form of intellectual property.  Exclusivity is a regulatory policy that instructs the Food and Drug Administration not to approve generic, unpatented drugs they know are safe so that name-brand pharmaceutical companies can make more money. 

Those companies say that without a secured return on investment, they wouldn’t be able to invent new treatments.  But that’s what patents are for.  Regulatory exclusivity is a way to bypass the balances and limitations of patent law, which only protects new inventions not all expensive investments.  

They complain that it’s unfair for generic competitors to piggyback on all the expensive research and testing they did to secure FDA approval.  But that’s a problem with the expense of FDA approval.  Either lobby to make FDA approval cheaper or find a way to share costs.  Pharmaceutical companies are not entitled to the benefits they gain from regulatory inefficiency.

Biologics protection was a peculiar issue for U.S. negotiators to be spending so much effort on in the first place.  They spent a lot of negotiating capital trying to secure foreign regulations favorable to one part of one U.S. industry.  That doesn’t further the goal of free trade; in fact, it impedes that goal by diverting energy away from universally valuable efforts to open up Canada and Japan’s markets in agriculture.

The U.S. government may have wasted effort on biologic exclusivity, but at least they failed to hobble foreign countries with excessive drug regulation.  As a bonus, Congress is now free (if they wish—and they should) to roll back the 12 years of protection under U.S. law to something more reasonable.

Could Airlander Be the Future of Freight?

The airship is making a comeback. Take the British Airlander10, which uses 20 percent of fuel burned by conventional aircraft and can be fitted with solar panels. Airlander can stay airborne for five days while carrying a maximum payload of 20,000 pounds. It is much safer than its 1930’s cousin and can operate in adverse weather. Combined with GPS navigation and tracking, an unmanned Airlander could stay airborne for up to two weeks, carrying cargo vast distances, including hard-to-reach places. The British manufacturer is already working on an airship that could carry up to 100,000 pounds of cargo – roughly equivalent to the payload of two 20 foot containers. A vast fleet of Airlanders moving silently through the air 24/7 could dramatically decrease the cost of transport (they are faster than ships and much more cost effective than aircraft), while connecting places without ports or runways. Find out more about the declining cost of air travel at www.humanprogress.org



A Case for Making TTIP Better for Workers

In today’s Cato Online Forum essay, George Washington University Professor of Foreign Affairs Susan Ariel Aaronson argues that the “TTIP provides an opportunity to think differently about how policymakers in advanced industrialized economies can protect labor rights, encourage job creation, and empower workers.”  After describing some of the concerns workers have about the TTIP and explaining why certain parts of the agreement could serve to undermine labor rights, Susan provides some fresh recommendations for making the TTIP more appealing to workers.

Read it. Provide feedback.  And register for Cato’s October 12 TTIP conference.


A Skeptical View of the Need for Special Investor Protections in the TTIP

The Transatlantic Trade and Investment Partnership has generated quite a lot of opposition – or at least pockets of very loud opposition – especially in Europe. Among the major points of contention is the matter of investment protection and, specifically, the investor-state dispute settlement mechanism, which gives foreign investors the option to bypass the domestic legal regimes of host governments and go straight to third party arbitration panels with claims concerning domestic policies, laws, regulations, or actions that have a discrimintory effect and adversely affect the value of their investments.

Like my colleague Simon Lester and I, Axel Berger of the German Development Institute is skeptical of the need and propriety of ISDS provisions.  In today’s Cato Online Forum essay, Axel raises some important points and makes a good case for excluding ISDS provisions from the TTIP.  Read it. Provide feedback.  And register for Cato’s October 12 TTIP conference.

Trans-Pacific Partnership Deal Reached! Now What?

After six years of negotiations, a final Trans-Pacific Partnership agreement has been reached in Atlanta.  Check your pacemakers, trade policy wonks. This is about as exciting as it gets in our world.

First, congratulations are in order for the TPP negotiators, who worked extremely hard over the past several years in an environment of profound public skepticism – much of it driven by pervasive scaremongering – to arrive at this moment. Reaching accord on a broad array of subjects between 12 countries at different levels of economic development with disparate policy objectives is not a task for the faint of heart.

Second, there is still quite a bit of work to be done on the domestic front. Even with the deal “concluded,” the president cannot sign the agreement until 90 days after he officially announces his intention to do so.  During that period, there will be intensive consultations between the administration and Congress over the details; the legal text of the agreement will be made available to the public on the internet; the USTR advisory committees will submit their assessments of the deal to Congress; and there will be ample opportunity for informed, robust domestic debate about the deal’s pros and cons.

After the 90-day consultation period, the president can return to the TPP partners with input from Congress, which may or may not warrant modifications to the deal to improve its chances of ratification. Once the deal is signed, the administration then has a maximum of 60 days to prepare a list of all U.S. laws that will need to be changed on account of TPP; the U.S. International Trade Commission will have a maximum of 105 days to do an analysis of the likely impact of the TPP on the U.S. economy; the congressional trade committees will perform mock markups of the implementing legislation; and, then, the final TPP implementing legislation will be introduced in both chambers.  After the legislation is introduced, the House will have 60 days and the Senate will have 30 days to hold votes.

These requirements stem from the Trade Promotion Authority legislation enacted over the summer. If the TPP is going to be ratified by this Congress under this president, the timelines suggest that there isn’t much room for delay. Although it has become an article of faith that trade bills don’t move during election years, there is simply no avoiding the TPP landing in Congress’s lap and animating the presidential debates and primary elections. Expect a vote anytime after July 2016, including, possibly, during the lame duck. (And watch to see whether and how Hillary Clinton contorts her position to come back around to supporting the deal she helped launch as Sectretary of State.)

As to substance, I’m not offering any endorsements until I have a chance to review the text.  In fact, my trade center colleagues and I intend to do a chapter-by-chapter assessment of the deal, rating each on a scale of 0 (protectionist) to 10 (free trade), and providing an aggregate TPP grade.  We expect the scores for some chapters will be pulled down by certain terms that amount to baked-in protectionism.  For example, apparently the United States “secured” a 25 year phase-out period for our 2.5% auto import tariffs and a 30 year phase-out for our 25% pick-up truck tariff.  Gee, thanks for that shot glass of economic freedom.

Like most legislation that comes before Congress, there will be both good and bad terms in the TPP.  If the agreement is net liberalizing, I will likely offer my endorsement.  And, as I like to say about these trade deals, don’t make the perfect the enemy of the good.

U.S.–China Relations Hurt by American Antidumping Abuse

As expected, Chinese President Xi Jinping raised the issue of antidumping abuse during his recent visit to Washington.  Specifically, he called on the United States to stop using “nonmarket economy” methodology when imposing antidumping duties on imports from China.  The issue is going to become more and more pressing as a diplomatic problem over the next year, because the United States is required under WTO rules to end NME treatment by December 2016. 

NME methodology is one of many ways the United States inflates the protectionist impact of U.S. antidumping law.  My colleague Dan Ikenson has thoroughly documented the senselessness of NME treatment.  Last year, I wrote a Cato Policy Analysis looking at how U.S. officials and policymakers might respond to the December 2016 deadline.

That deadline coincides closely with the end of President Obama’s term in office.  The president can choose to leave his successor years of trade conflict and WTO litigation by refusing to act.  Or he can do the right thing for the American economy and U.S.–China relations by ending NME treatment as soon as possible. 

Europe Must Abide TTIP’s Geopolitical and Security Implications

In today’s Cato Online Forum essay, Judy Dempsey of Carnegie Europe argues that the geopolitical and security implications of TTIP are immense, and that the EU and its member states need to wake up, smell the coffee, and acknowledge reality. This is the third essay focused on the geopolitical implications of the TTIP published in conjunction with the Cato Institute conference taking place October 12.  Previous essays – to compare and contrast – were written by Phil Levy and Peter Rashish

Read them. Provide feedback.  And please register to attend the conference.