Proposed Pacific trade agreement could bolster Utah exports

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Orrin Hatch by .
Sen. Orrin Hatch, R-Utah, ranking Republican on the Senate Finance Committee, is skeptical of the Trans-Pacific Partnership Agreement’s provisions on pharmaceuticals. (Associated Press)

The debate over the Trans-Pacific Partnership Agreement is a rare moment in U.S. history. The Obama administration and congressional Republicans have successfully closed negotiations on the trade agreement though the future of this agreement remains uncertain.

The Trans-Pacific Partnership is a multilateral trade agreement involving 12 Pacific Rim countries: the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The countries have a combined gross domestic product of more than $28 trillion, representing nearly 40 percent of global GDP, according to the Office of the United States Trade Representative.

Utah in particular will be affected by the agreement as one of the few states with a trade surplus and where exports accounted for $12.3 billion of GDP in 2014, according to a report by the International Trade Administration.

The expansive treaty sets trade standards on everything from removing tariffs on agricultural and automotive products to intellectual property and copyright laws. It also includes provisions on labor rights and environmental standards. Some of the most controversial sections of the agreement directly affect Utah’s key exports.

“It’s a big deal for Utah because it’s a big export state,” said Derek Miller, president and CEO of World Trade Center Utah. “Even though we are a small state in the Rocky Mountains, we export a lot.”

One section that has drawn significant controversy is on health and pharmaceutical exports, which Miller said will greatly impact Utah’s economy. Specifically, the Trans-Pacific Partnership requires countries to grant drug manufacturers at least eight years of data exclusivity, which means new name-brand drugs are not allowed to be copied by other manufacturers in that time period. In other words, no generic drugs for eight years.

Because the U.S. has a 12-year data exclusivity period, not much is expected to change. However, there may be less intellectual property protection in other countries. For example, there is no data exclusivity period in Colombia.

Some organizations, such as Doctors Without Borders and Public Citizen, oppose these standards because they make medicine less affordable in developing countries by restricting access to generic drugs.

Supporters argue that the policy will help strengthen domestic pharmaceutical companies by protecting their intellectual property abroad.

Sen. Orrin Hatch, R-Utah, who had previously been a strong proponent of the deal, recently expressed concerns that the protection period is too short compared to similar protections in the U.S.

“While I understand that parties have deemed the negotiations close, the agreement cannot enter into force if Congress doesn’t agree to it,” Hatch said, during a speech in the U.S. Chamber of Commerce. “At the end of the day, the alternative to renegotiation may very well be no TPP at all.”

According to Miller, Utah’s top value-added export is information technology, 99.6 percent of which, under the Trans-Pacific Partnership, will become duty-free, meaning it will reach its foreign consumers without any additional taxes.

Other top value-added exports from Utah that will be affected include chemicals, 97 percent of which will be duty-free, and transportation equipment, 98 percent of which will be duty-free.

Food and agriculture in Utah will also be greatly impacted by the agreement, if it is passed. In Japan, where the tariff rate for beef products is 38.5 percent, it is difficult for foreign producers to compete with the local beef industry.

According to a recent report by the Department of Agriculture, Utah exported $37 million of beef and veal in 2013. The report states that the agreement will “increase farm income… generate more rural economic activity” and create more jobs.

Labor unions, on the other hand, oppose the Trans-Pacific Partnership, stating it will lead to less jobs and lower wages. The American Federation of Labor and Congress of Industrial Organizations, one of the largest labor unions in the country, has been particularly vocal in its criticism of the agreement.

Democratic leaders also appear to be against the Trans-Pacific Partnership for similar reasons. Former Secretary of State Hillary Clinton recently announced her opposition to it during a Democratic presidential debate in October. Likewise, Sen. Bernie Sanders, D-VT, has been consistently against the agreement.

“The TPP is just a new, easy way for corporations to shut down in America and send jobs abroad,” Sanders said on the Senate floor earlier this year.

The agreement, completed in October, is now being reviewed by each country’s legislative body. However, while its success in Congress is unclear and renegotiation may be necessary, others remain hopeful that the deal will go through eventually.

“This is one of those once-in-a-lifetime trade deals and if you can get it done and get all the details worked out then it’s a great thing,” Miller said. “And if you have to wait a year to do that then so be it, it’s certainly worth it to get a good trade deal worked out.”

 

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