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July 27th, 2015:

Toughest issues left in Trans-Pacific trade talks

WASHINGTON, July 27 — Trade ministers from 12 Pacific Rim nations head to Hawaii this week to tackle the tough decisions needed to finalise a trade deal that will free up global commerce and set common standards for nearly half of the world’s economy.

The trickiest issues, requiring high-level political buy-in and painful compromises, have been left until the end of the Trans-Pacific Partnership negotiations and range from market access to monopoly periods for medicines.

Canadian dairy

The United States, New Zealand and Australia are pushing hard for Canada to open up its protected dairy market and allow more imports, complaining that the country has not given its trade partners a sign it is ready to talk and even mulling a TPP without Canada.

With a national election scheduled for October, Canada’s Conservative government is wary of angering farmers by altering the supply management system, which keeps dairy and poultry prices artificially high by restricting supply. Canada’s dairy industry says it supports 215,000 jobs and contributes C$18.9 billion (RM55.2 billion) to the local economy.

Australian sugar

Australia, which exports more than 80 per cent of its sugar, is determined to win more access to the US sugar market, with the support of some US refiners and sugar users who say US protections for local canegrowers artificially inflate prices.

Sugar refiner Imperial Sugar Co, part of Louis Dreyfus Commodities , says Australia should be allowed to ship up to half the amount allocated to Mexico under a recent deal allowing the United States’ southern neighbour to make up the bulk of any US supply shortfall.

But US sugar growers are opposed, noting Australia already is America’s fifth largest foreign sugar supplier. Australia can ship 87,402 metric tons of raw sugar to the United States next fiscal year, eight per cent of total reduced-tariff imports.

Intellectual property

The United States wants TPP countries to agree to protect the data used to develop next-generation biologic drugs for 12 years, in a boon for companies like Pfizer Inc and Japan’s Takeda Pharmaceutical Co.

Although such a move would push up the cost of state-subsidised medical programmes in Australia and New Zealand, the pharmaceutical industry argues it would accelerate the introduction of cheaper, generic drugs by giving developers more certainty.

The United States has said it will balance the needs of developing countries to access affordable medicines. Countries also have to agree on the length of copyright periods for published works.

State-owned enterprises

State-owned enterprises or controlled businesses play a significant role in the economies of Vietnam, Malaysia and Singapore, which are under pressure to cut back on their support for such firms and offer foreign competitors equal levels of access to secure government contracts, for example. The definition of a SOE, exceptions for specific industries or firms, and transition periods are not yet settled.


US textile firms such as synthetic yarn maker Unifi are insisting on strict rules to stop Vietnam from flooding the US market with cheap clothing made from Chinese fabric once tariffs are removed under the TPP.

A list of fabrics allowed to be sourced from outside the region is largely complete, according to one textile industry official, but there are still intense discussions over the timeline for cutting tariffs on sensitive clothing items.

US clothing companies and retailers want a minimum 50 per cent duty cut for sensitive products and for at least 75 per cent of garments to be duty-free immediately.

Malaysia’s government procurement

Malaysia offers preferential treatment in business, housing and education, including greater access to government contracts, to ethnic Malays and other indigenous people, known as bumiputra. The TPP would seek to put foreign suppliers on an equal footing in terms of government procurement.

The country also is under pressure over human trafficking, with some US lawmakers pressing to prevent the TPP from benefiting from a fast track through Congress if the country remains on the State Department’s black list in a report due out today.


A bilateral agreement between the United States and Japan on agricultural and auto trade, long a sticking point in the broader TPP talks, is largely complete.

But the partners still have to get buy-in from other countries on a formula for how to decide a vehicle has enough local content to qualify for duty-free access, which Japan wants to be on more liberal terms than the current North American standard, for example.

Investor-state dispute settlement

A draft text released by whistle-blowing website WikiLeaks in March showed countries were seeking exceptions from proposed investment protection rules, which would allow companies to sue foreign governments. Australia, whose plain cigarette packaging law is being challenged by Marlboro maker Philip Morris’ Asian arm, was ready to opt out completely, the draft showed.

The United States has floated an exception to the rules for tobacco, sources briefed on the talks said.

More broadly, TPP countries have not yet determined how to address tobacco public health issues in the agreement. Malaysia and anti-smoking groups want to completely exclude tobacco from the deal and keep tariffs on US tobacco products.

— Reuters

Critics fear Pacific trade deal favours big business over states

By Glenda Kwek | AFP

With the end game in sight to what could be the world’s most ambitious trade deal, critics fear a controversial mechanism to protect investors will strengthen the hand of big business while eroding national sovereignty.

The Trans-Pacific Partnership (TPP) — a wide-ranging accord that would encompass 40 percent of the world’s trade — could be sealed in Hawaii this week after more than five years of talks.

The United States, the chief architect of the ambitious pact which takes in 11 other Pacific Rim countries, says it would loosen trade restrictions, drive jobs growth and encourage investment by strengthening legal protection for companies.

But critics say it favours multinational corporations over state interests and individual consumers, pointing in particular to a proposed investor-state dispute settlement (ISDS) mechanism that would allow foreign companies to sue governments, likely through international tribunals.

They warn ISDS cases might expose states to potentially huge liability claims — a bigger risk for developing countries that do not have deep pockets — and may also threaten their ability to introduce health and environmental laws.

That is a particular issue because there are several developing countries among the prospective members, which are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.

“There are risks for all governments involved in the TPP in relation to the investor-state dispute settlement,” Matthew Rimmer, an intellectual property expert at the Queensland University of Technology, told AFP.

“Under the regime, investors — particularly multinational companies — can bring actions against governments, but governments cannot bring actions against corporations.

“So it’s a very one-sided regime and it can provide special rights to foreign investors that are not present for domestic investors.”

– Cases on the rise –

The issue has become a particularly hot topic in Australia, which was sued by tobacco giant Philip Morris after it became the first country to introduce plain packaging laws for cigarettes in 2012.

Canberra refused to reveal its legal bill for defending the claim from Philip Morris, which argued the legislation breached a bilateral investment treaty.

The case, and broader concerns about ISDS processes, saw Australia’s top judge Chief Justice Robert French warn last year that claims tribunals could undermine domestic legal jurisdictions.

Philip Morris’ suing of Uruguay after the country ordered that the health warnings be larger on cigarette packets helped prompt billionaires Bill Gates and Michael Bloomberg to launch a fund to support developing states in their legal battles with tobacco giants.

On a global scale, the number of cases brought by companies against governments has been on the rise in recent years, according to figures from the United Nations Conference on Trade and Development (UNCTAD).

Out of 608 known cases brought between 1987 and 2014, more than a quarter of them were over the past three years, UNCTAD said, adding that confidentiality agreements meant there were likely more.

Of particular concern to ISDS opponents, less developed economies have faced a larger proportion of such suits, although the relative share of cases against developed countries is on the rise.

Meanwhile, most litigation was started by investors from developed countries — particularly from the US, Canada and several European Union nations — accounting for more than 80 percent of all claims.

– ‘Blunt instrument’ –

Tim Harcourt, former chief economist at Australia’s trade promotion body Austrade, said the ISDS was a “blunt instrument” to protect companies’ interests.

“Giving international companies the right to sue countries left, right and centre is probably not the way to build those (free trade) institutions,” he told AFP.

“The way to protect investors is by building local institutions so they’re transparent, and ultimately countries that don’t have transparent institutions like Venezuela, people won’t invest there.”

Concerns have also been raised in the United States, including by influential Democratic Senator Elizabeth Warren.

“ISDS would allow foreign companies to challenge US laws — and potentially to pick up huge payouts from taxpayers — without ever stepping foot in a US court,” she said.

But Alan Oxley, the first Australian to chair the General Agreement on Tariffs and Trade (GATT), the World Trade Organization’s predecessor, said fears that the ISDS favours international business over governments were overblown.

He said an international arbitration tribunal would be an effective way to settle claims as it gave foreign investors an automatic right to appeal without government approval.

Australia’s foreign affairs department has released a “myth versus realities” TPP document that stresses an ISDS tribunal “could not overturn domestic court decisions nor force Australia to change its laws”.

“If you talk to anybody in business, they’ll say that’s a good idea, whereas the opposition is coming from quite a small fringe group,” Oxley, who heads up the Australian APEC Study Centre at RMIT University, told AFP.

Unexpected nicotine in Do-it-Yourself electronic cigarette flavourings

Electronic cigarette (EC) users often create their own refill fluids by blending bottled nicotine/propylene glycol/glycerol mixtures with Do-it-Yourself (DIY) flavourings.1 Although a complete refill fluid usually contains nicotine, the flavouring solutions themselves are an additive and are presumed to be free of nicotine, which is a known addictive chemical and toxicant.2 To determine if DIY flavourings are nicotine free, we evaluated 30 products from one vendor, using high performance liquid chromatography (HPLC) (figure 1B–D), and confirmed the presence of nicotine via gas chromatography and mass spectrometry (GC-MS) (figure 1E, F). HPLC analysis was performed as previously described in detail.3 Nicotine was extracted from DIY flavorings4 and GC-MS analysis of the extracts was performed using a Hewlett-Packard 5890 Series II gas chromatograph equipped with a Restek Rtx-1MS, 30 m, 0.25 mm column and a Hewlett-Packard 5971A mass selective detector