December 2016 TOE

Rick's December 016 issue of the Oriental Economist covers following topics, Rust Belt voters won’t like the consequences of trade war - Be careful what you wish for, Putin ‘flips the table’ -Trepidation over Trump, NAFTA and Commerce Secretary Wilbur Ross - Can Ross restrain Trump? Japan auto parts firm relies on NAFTA, Proposals to increase electoral power of the young - ‘Silver democracy’.

TPP on the Ropes, Part 5

Key points: - TPP, like other FTAs, is copied and pasted from past FTAs - More text from past American FTAs was copied verbatim into TPP than text from any other country; Japan came in eighth - US share was even higher in chapters where it had a high priority, e.g. nearly 80% of text on investment in past US FDI’s was lifted into TPP’s investment chapter ​- Since TPP is intended to be the template for future FTAs and to incorporate more and more Pacific countries, including China, this gives US big leg up on others

Orrin Hatch and the TPP Rorschach Test

Key points covered in this report are, - The Hill headline—Hatch: TPP deal will get done in lame-duck session—goes too far - What Hatch said was “I think we’re going to get it done in the lame duck” providing that the Administration meets his conditions, including 12 years of data exclusivity for biologics; informed observers tell us hatch has not changed his position - Hatch said other mechanisms beside “side letters” could be used, but he has said that before as well

TPP on the Ropes, Part 4

Key points included in this report are, - Ryan tells GOP members of House Obama has run out of legal time to force TPP ratification vote this year - Froman hosts breakfast of TPP Ambassadors and says US will not reopen settled issues - US gave up little in market-opening in return for the concessions it demanded of others; ITC says TPP will boost America’s global exports by just 0.2% of GDP - US could have lifted imports five times as much if it further opened government procurement, but it could not do so because Congress would have rejected the pact - Imagine the resentment of others at both the way the US negotiated and now the notion that it will talk away from a pact it virtually wrote - American state losing ability to corral special interests to compromise for the broader national interest

TPP on the Ropes, Part 3

Key points included in this part three of the report are, - Hatch says “progress” in talks with White House on 12 years for biologics, but he said something similar in the spring and it went nowhere - Hatch claims some TPP countries will to go to 12, but informed sources call this “unrealistic” - Not clear whether Obama Administration is even asking anyone for 12 years - Number two and three GOP leaders in Senate (Cornyn and Thune) seem unaware of any WH-Hatch talks, and say concessions on tobacco also needed; Thune says “odds are not good” - Hatch says, even with biologics solution, hard to get ratification - How could Froman ask other countries to make new concessions if he cannot reassure them it will lead to ratification?

TPP on the Ropes, Part 2

Key points included in this report are, - We were cautioned by some pro-TPP players “never say never,” so let’s put odds of TPP ratification in lame duck at 10-15% ​- Many normally pro-trade members of Congress on both sides of the aisle are deserting the TPP, either opposing it outright or saying they are “studying” it

TPP on the Ropes, Part 1

Key points including in this report are, - TPP will not be voted on in lame duck session of Congress in November-December - If Clinton is elected, she is unlikely to revisit TPP in any form during first year or two in office, if ever - Without US ratification, TPP will die; TPP rules require ratification by at least six of the eleven TPP countries, representing at least 85% of TPP-wide GDP; that 85% target cannot be reached without ratification by both the US and Japan - Other countries are unwilling to reopen negotiations with the US, even in the form of so‑called “side-letters,” because, even then, no President can assure them Congress will not come back with even more demands

TPP: More ON GOP & Hillary; Japanese Growth

Despite the claimed economic gains for Japan from TPP (more on that in another Alert), many in the Liberal Democratic Party (LDP) fear it could be a political loss: particularly in the 32 mostly rural single-seat districts that have tipped the balance in the last three Upper House elections.

TPP: Ball is in GOP Court

In a surprising development, it is Congressional Republicans and a few of their business allies who now pose the biggest threat to the Trans-Pacific Partnership (TPP), a trade agreement among 12 countries with 40% of the world’s GDP.

TOE Alert: Time Running out for TPP; Auto Talks in DC Make Little or No Headway

Automotive TPP talks last week in DC failed to resolve—or even narrow substantially—the gap among the US, Japan, Canada and Mexico. Another round of talks is expected next week.