Pacific Rim Countries Reach Landmark Trade Deal, U.S. Lawmakers Skeptical


The United States and 11 other Pacific Rim countries have reached a sweeping deal to set up a free-trade zone for 40 percent of the world's economy, but the accord on Monday faced initial skepticism in the U.S. Congress.

The Trans-Pacific Partnership is the most ambitious trade pact in a generation and could reshape industries and influence the cost of products from cheese to cancer treatments, presenting key issues also for drug companies and automakers.

Tired negotiators worked round the clock over the weekend to settle tough issues such as monopoly rights for new biotech drugs. A demand by New Zealand for greater access for its dairy exports was only settled at 5 a.m. EDT (0900 GMT) on Monday.

Details of the pact were emerging in statements by officials after days of marathon talks in Atlanta.

The 12 countries will cut trade barriers and set common standards for a region stretching from Vietnam to Canada. The agreement could be a legacy-defining achievement for Democratic President Barack Obama, if it is ratified by Congress.

Lawmakers in other TPP countries must also approve the deal, which would reduce or eliminate tariffs on almost 18,000 categories of goods like machinery, chemicals and food.

The Obama administration hopes the pact will help the United States increase its influence in East Asia to help counter the rise of China, which is not one of the TPP nations.

Initial reaction from U.S. lawmakers, including Democrats and Republicans, ranged from cautious to skeptical.

Vermont Senator Bernie Sanders, a U.S. Democratic presidential candidate, said he was disappointed and warned the pact would cost U.S. jobs and hurt consumers.

"Wall Street and other big corporations have won again," he said in a statement. Many Democrats and labor groups fear the TPP will mean manufacturing job losses and weaker environmental protections.

Senator Orrin Hatch, a powerful Republican who heads the Senate Finance Committee, was also wary.

"While the details are still emerging, unfortunately I am afraid this deal appears to fall woefully short," said Hatch, who had urged the Obama administration to hold the line on intellectual property protections, including for drugs.

U.S. lawmakers have the power to review the agreement and cast an up-or-down vote, but not amend it.

A firm TPP champion, Obama said it will "level the playing field" for U.S. workers and businesses.

U.S. trade negotiators will begin briefing Congress about the deal as soon as Monday afternoon, but deliberations will take months, said U.S. Trade Representative Michael Froman.

"This is really a 2016 issue for Congress to consider, not a 2015 issue,” he told reporters.


The agreement will include a parallel forum for finance ministers from the participating countries to discuss a basic set of principles on currency policy, ministers said on Monday.

That takes account, in part, of concerns among U.S. manufacturers and critics who have suggested that Japan has unfairly driven the yen lower to the benefit of its car exporters and other companies.

Democratic Representative Debbie Dingell from Michigan, home of the U.S. auto industry, said currency has been inadequately dealt with. "Nothing that we have heard indicates negotiators sufficiently addressed these issues," she said in a statement.

The trade talks had snared earlier on how long a monopoly period should be allowed on next-generation biotech drugs, until the United States and Australia negotiated a compromise.

Negotiating teams had deadlocked over 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.

Negotiators compromised on minimum terms short of what U.S. negotiators had sought. Under the deal, countries would give drugmakers at least five years of exclusive access to the clinical data used to win approval for new drugs.

An additional several years of regulatory review would likely mean pharmaceutical companies would have an effective monopoly for about eight years before facing lower-cost, generic competition, officials said.

The United States, Mexico, Canada and Japan agreed to auto trade rules on how much of a vehicle must be made within the TPP region to qualify for duty-free status.

The North American Free Trade Agreement between Canada, the United States and Mexico mandates vehicles have local content of 62.5 percent. The way that rule is implemented means just over half of a vehicle needs to be made locally. It has been credited with boosting auto-related investment in Mexico.

The TPP would give Japan's automakers, led by Toyota Motor Corp, a freer hand to buy parts from Asia for vehicles sold in the United States, but it sets long phase-out periods for U.S. tariffs on Japanese cars and light trucks.

The deal also provides minimum standards on issues ranging from workers' rights to environmental protection.

Trade ministers said the TPP would be open to other countries in the future, including potentially China.

“There is a real opportunity for China to be a part of this,” Malaysian Trade Minister Mustapa Mohamed said.

(By Krista Hughes and Kevin Krolicki; Writing by Alistair Bell; Additional reporting by Richard Cowan in Washington and Ana Isabel Martinez in Mexico City; Editing by Kevin Drawbaugh and Meredith Mazzilli)