WASHINGTON -- Senate Republicans on Tuesday offered to help President Barack Obama pass a sweeping trade package, while pressing for measures to deregulate finance and raise the price of prescription drugs.
Sens. Orrin Hatch (R-Utah), John Cornyn (R-Texas), Rob Portman (R-Ohio) and others repeatedly praised the top Obama trade official, Amb. Michael Froman, at a Senate Finance Committee hearing that opened with vocal protests from liberal demonstrators.
"Ambassador Froman, you're not telling the truth!" one protester shouted, while another one declared that his job had been "shipped overseas."
Hatch, who chairs the committee, had the demonstrators removed. "If any signs go up again, we're gonna throw you out too," Hatch said. "So let's just stop the cheap politics."
The contrast between the Republican praise -- Hatch called Froman one of the best U.S. trade representatives the country has ever had -- and the liberal unrest reflected a dynamic on trade policy that has persisted for years. Labor unions, environmental groups, open Internet advocates and public health experts have steadfastly opposed Obama's trade priorities out of concern they will exacerbate income inequality and undermine important regulations. Republican leaders in Congress and lobbyists with the U.S. Chamber of Commerce, meanwhile, have said the policies will boost corporate profits and economic growth.
On Tuesday, lawmakers pressed Froman for details about the Trans-Pacific Partnership -- a major free trade pact that the administration has been negotiating for years with 11 other Pacific nations. To secure the deal, Obama hopes to be granted Trade Promotion Authority, otherwise known as "fast-track," which would strip Congress of the power to filibuster or amend any agreement the administration reaches. Fast-track authority is widely considered essential to securing a deal.
While Republicans generally backed Froman on Tuesday, Sen. Chuck Grassley (R-Iowa) suggested that Obama currently doesn't have the votes to clear a fast-track bill through the Senate. "He's going to have to work the telephones one-on-one with the senators" in order to overcome a Democratic filibuster, Grassley said.
And indeed, most of the policy criticism came from Democrats, although many gave Froman points for his responsiveness -- a shift from prior criticism over limited transparency. One source of bipartisan consternation, however, came from Grassley and Sens. Debbie Stabenow (D-Mich.) and Rob Portman (D-Ohio), who pressed Froman on the issue of currency manipulation -- an economic strategy in which a nation devalues its own currency in order to attract jobs from abroad without reducing its workers' standard of living. Although most closely associated with China, Japan -- the world's third-largest economy and by far the most economically significant country in the TPP talks outside of the U.S. -- has pursued the strategy in the past.
Grassley asked Froman twice if currency manipulation had been raised in the TPP talks, without getting an answer. Although Congress has been pushing Froman to bring up currency provisions in the negotiations for years, doing so would significantly alter, and perhaps torpedo, the deal with Japan. Shortly after Grassley's questioning, Sen. Chuck Schumer (D-N.Y.) threw Obama a lifeline on the issue by floating a plan to address the currency manipulation in separate legislation.
"I can't support a TPP agreement if we do not at the same time enact new statutory law that includes objective criteria to define and enforce against currency manipulation," Schumer said.
Of course, currency manipulation is difficult to combat with a domestic law -- since unlike trade pacts, domestic laws are not agreements with other nations that include internationally binding enforcement mechanisms. The bill would require the Department of Commerce to include currency manipulation subsidies in its calculations of unfair trade practices prohibited under other trade pacts, making it easier for the U.S. government to win trade cases against other countries, and to secure heftier judgments.
Throughout the hearing, both Republicans and Froman stressed that they were seeking a "high-standards" agreement that would counter the power of China to weaken global regulations. But Sen. Ben Cardin (D-Md.) said that three of the countries involved in the talks -- Malaysia, Brunei and Vietnam -- are serial human rights abusers, adding that they simply do not have the institutional infrastructure in place to enforce strong protections.
In some cases, what Froman and Republicans consider to be a "high standard" is exactly what many humanitarian and open Internet groups object to. Froman repeatedly boasted of "stronger" intellectual property terms included in TPP. Those copyright, patent and other provisions, however, are the subject of hot debate, with many tech experts warning they will crimp the development of new digital applications.
By granting pharmaceutical companies long-term monopolies on prescription drugs, moreover, those policies dramatically inflate the cost of medicine. The Indian government, for instance, recently authorized a generic version of a patented cancer medicine for $157 a month. By relying on aggressive IP rules, Bayer had been charging $5,000 a month for the same drug, according to data from the Indian government.
Doctors Without Borders, a humanitarian group that won the Nobel Peace Prize in 1999, has been particularly vocal about the human cost of these provisions.
Froman made his case for the terms by claiming that 40 million U.S. jobs were in intellectual property-intensive industries -- a number based on a study that has been debunked for years.
A fast-track bill would not only apply to TPP talks, but also to another pending deal with the European Union and any other future trade pacts covered by the timeframe of the bill. And Hatch -- whose top campaign contributors are dominated by financial firms -- insisted that any EU deal must include a financial services chapter. European negotiators have pressed U.S. regulators to loosen financial regulations for years in other international forums. Meanwhile, Republicans seeking to roll back the 2010 Dodd-Frank bank reform law have crafted bills to help banks dodge U.S. oversight by substituting weaker European rules and overseers.
Froman, who worked at Citigroup before joining the Obama administration in 2009, pushed back against Hatch on that issue, saying USTR did not support a bank regulatory chapter in the EU deal.