his bio can be held on the aei website, but you will not need to go there to learn about his observations with the tpp. he will gladly share them with us. his analysis of the first one published after the text of the agreement was released, so right out of the gate, he expressed reservations. we will find a way that he has softened his position at all. [laughter] dan ikenson: over the past couple of years, libertarians or others would question why how i could support tpp. it used to be the case i would only get hate mail from the left. i would stake out my policy trade position against angry questions, but libertarians were asking the same things. how can you support a free trade agreement, managed trade agreement that has full corporate giveaways and excessive rules for global governance?

i said, i have not taken a position yet with tpp, but we will is all you waited and get back to you. it is certainly true it is to be the case more about trade barriers, because restrictions were mostly found at the border. with the proliferation of transnational supply chains and cross-border investment, the nature of international petition has changed. now you have four and headquartered companies competing in the united states next to u.s. companies and vice versa. the nature of protectionism has changed. border concern. this can be found in national regulations, performance requirements, local provisions, investment benchmarks, intellectual property laws, on and on and on. agreementsult, trade have also evolved to address these forms of discrimination. tother it is free trade rejoice in his or recoil,

depends. we had this broadening of the scope, it depends on a few things. the whole point of trading is to expand the size of the market, enable greater levels of specialization and economies of scale, and reducing tariffs is a way to do that, the classic way to do that, to facilitate cross-border integration. the integration will also be hindered if enterprise has to deal with two sets of rules, two sets of standards, has to comply with different structures of governance. there is some argument at least that harmonization of product standards or equivalent originations, similarity of regimes, things like that might be important to expanding the size of the market. but this latter form, the newer form of trade liberalization that sort of defines modern trade agreements, 21st century

trade agreements, it is why the tpp is a controversial and contentious. there is a genetic ground to question -- legitimate ground to question the direction and to be vigilant about what it actually does. idea is traders, the free trade. no borders, to regulations or policies to protection or affect, or otherwise bestow privileges on existing firms or products. we don't like superfluous rules that are merely tangentially related, and violations can be invoked to restrict trade. measures against those standards 500 -- 5500its 50 pages of exemptions, shows this. it is a manifestation of all trade agreements.

expecting the tpp to deliver free trade is unrealistic. the outcome is simply unattainable. this would make the perfect enemy of the good. the good to be better than the status quo. the question we ask is, starting the paper is that if the tpp delivers more liberalization and restriction, then can be shown to enhance economic liberties, better approaches are unrealistic, why not support this? we set out to evaluate the deal, and i will show you some of the slides. there is a lot of text, the only one that has text in it. better perhaps to go online and read it yourself. we evaluated the chapters, the rules, the provisions of each chapter, according to these chapters, according to these

questions. the assigned scores from zero to 10, 0 is restrictionist, protectionist, 10 would be free trade, five would be neutral. but we did not assign a zero or 10. we did find something between, no one or nine either. evaluated 22as we of 30 chapters, we assigned three scholars to each chapter, and we discussed each finding. we debated, and we reached consensus. sometimes that was hard. some of us are more stalwart on some issues than others, but we reached consensus on the scoring. and these, this is a table of the chapters. we identified the nature of the chapter. some of the chapters were administrative or suggestive, arts areasir

commitments, ideas for moving forward, hard to measure whether the terms are liberalizing. in some cases maybe -- they may be. we identified market access and rules of governance. this is the presentation in descending order by chapter, it is a little congested, so let me go here. ins sorts our results descending order of score. what you see is, five of the 22 chapters risky -- received a score of age, the highest or any chapter. the lowest scores were three. the mode was six. biz guys are going to talk specifically about some of these things. what we have recognized was important to do was come up with average scores by the nature and the fear.

be identified some chapters we thought are more important than others. significant. year,ht of them are first 14 of them are second-tier. , athis shows the frequency graphic depiction of the table you just saw. receive six, the second-highest was eight, scattered from three to eight. this one breaks it up, the market access for rules. we found the market access chapters to be better on average than the rule chapters. and the final table that you need to see. ,e sorted it by market access and then right here, i don't know if you can see this, these average scores here -- if you can't, i will tell them to you. we have a simple average score, but it doesn't make a lot of

sense. that is to say, the average score expense, every chapter should be weighted to the final the same way. this is not a good way to come up with an average score for the whole agreement, unless you break it down by segments, by nature, by tier. so 5.82 was the average score on a simple average basis. since it is above five, we find the agreement is on the trade liberalized. market access is considerably better, 6.18 versus rules, 5.45. limited a simple average of the first year, the -- first tier, we are not trying to rationalize support. we just figured there are different ways to slice and dice . is ari we did do a waiting. -- weighting.

we have a weighted average score of 6.03. zero scores have twice as much weight as the tier one scores. there was no tens. we would not assign anything free-trade because there is no chapter that was indicative of free-trade. instead of over 10, i converted it to overnight. when you do that, it was 6.7. it was a fixed issue of numbers. it is important is to look at the numbers each chapter, weight it as you see appropriate. in the paper, we go into a lot of detail about the rationale, the summaries of the chapter, rosen cons that will be up soon. -- pros and cons. that will be up soon. and askng to stop there bill to come up and talk more about the market access.

thanks. bill watson: thanks, dan. i have the enviable task of getting to talk about the good things in the tpp and to tell you how good they are. we talk about market access, trade agreements, this is the core of what a free treatment ought to do. we are can talk about new issues, new rules, but there is still a lot of work left to do getting rid of tariffs and quotas. a free-trade agreement like the tpp is the best way we have at the moment of dealing with that. the essential first question we decide ask, we need to to balance the pros and cons of the tpp is, how good are the

pros? how good is the tpp at this poor job of liberalizing trade -- core job of liberalizing trade barriers? informally, the score i would give it is pretty good. me, let me start by going through the general market access tariff cuts, looking at just tariff treatments in tpp. this is the basic stuff. you see from a birdseye view, looking broadly, the tpp's tariff commitments are strong. we are getting roughly on average 90% of tariffs going to zero immediately upon implementation. the remaining 9%, right, there will be a 1% just about 1% of tariffs still sitting around.

but within 15 years, we will have 99% globalization. 15 years is a long time, sounds like a long time to me, and is not going to take 15 years for all of them. some of them five years, others 10 years. it will last a little bit in 15 years. this is certainly not immediate free-trade. it is not even immediate free-trade between the members of the agreement, but it is better. it is better than a lot of past u.s. agreements, and it is better than other agreements that other countries are negotiating. another asian large free-trade agreement, china and india, it is not getting anywhere near 90%. so this is a strong agreement going into the region by getting broad tariff elimination. said, at the basic

level, it is good, there are still some weaknesses. 99% of tariffs are going to be liberalized, there will still be some protectionism. and that 1% that is left is, in essence, the protectionist policies that were so politically unstoppable, that even the tpp could not achieve a reduction or elimination of these policies. that is unfortunate. i was hoping that the tpp, being such a large agreement, could muster the political will, the political will could happen in that agreement to get rid of some of these are grams. what we see is increased trade, but not really liberalization. so one example we will hear a lot about from the u.s. side is auto tariffs, the u.s. imposes a

2.5% tariff on cars from japan and a 25% tariff on trucks and japan. those will be phased out between 25 and 30 years from now. that is incredibly long time. it is basically never. when, 20ion from now, nine years from now, all of my colleagues are retired and i will still be talking about trade policy, and i will be telling people about this, the of 2015,ication height talking about, isn't it amazing we used to make cars in the united states? we had these tariffs. my grand children will say, what is a car? [laughter] there is an incredible amount of change that will go on. it might as well be never. issues withlar tariffs, quotas, sugar.

opportunity,n there is a lot of hope there would be major reforms in japan's agricultural market, rice, beef, pork. highly pretentious market, and a lot of benefit could go to japan . japan would benefit immensely from being able to cut out these programs. what we see is a little bit of liberalization, some more access for more imports, but not the that wouldor reform have made the tpp particularly great. if we could have gotten rid of these programs, i would be a peer saying, it is amazing, we get rid of these programs. point where the tpp was not able to overcome. liberalization, and the tariff cuts, liberalization from the tariff cuts has to be weighed against the rules of origin.

all preferential trade agreements have rules of origin. you have to know which product it is we will get zero tariffs. tariffs fore products from japan, what does a product -- how you determine which product is that determination? we look at regional content. how much of the value of the product was added were created within the free-trade zone? if you have particularly strict rules of origin, you can do a lot of damage to the liberalization commitment you already made. if you want to import a product from canada, it has to be 90% of the value comes from canada, what it means is any product that rely on imported cotton products from outside of the region, imported parts, they will not yield to get the tariff treatment.

just they will not be able to get the tariff treatment. specificgo by products rules of origin, the result committee -- there is opportunity to see a particular , gives anompanies advantage over competitors that might have a slightly different bike chain arrangement. you put one of those over the other. the tpp's rules of origin, i am happy to say, are more liberal than the previous u.s. trade agreements. it is about 5%. if you look at previous u.s. free-trade agreements in korea, the fda, columbia, australia, you will see it is not hard and fast rule, but generally the tpp's rules of origin are 5% lower. products theific

subject of a lot of negotiation, that will be different, and in those cases, the tpp is a lot better, because you have 11 countries working on this. sometimes the rules of origin ended up really well. that is the case with auto. it has become a sticking point in the ratification fight that the tpp's rules of origin for auto parts, 30% to 40% depending on the product, are a lot better than nafta's rules of origin for auto parts, which are 60%. nafta was responsible, we give thea credit for integrating north american auto industry, creating a single industry that hands three countries, -- expands three countries -- spans three countries. morepp, if we have these liberal rules of origin, will open up for a lot more competition in that market.

so we have seen hillary clinton has singled out auto parts, rules of origin as a complaint. we are ever going to renegotiate the tpp, if that gets done in the next administration, this may be one of the issues that is on the table. and let me just quickly mention the tpp continues to practice adding special protection for textiles, the textile industry, special rules of origin for textiles and apparel. if you want to import clothing into the united states duty-free, it is to be made from product produced by american textile companies. a form of protectionism through a free-trade agreement. the tpp continues that policy the way past agreements have. forher important area liberalization is government procurement. foreign governments in the

developing world by a lot of stuff -- buy a lot of stuff, and they often do so while privileging domestic companies. they do this in the united american rules. if you do want to do business, you use the rest on it or be a domestic company. there is a wto agreements that seeks to rein in some of that , andice and liberalize the u.s. is a part of that. tpp does not go beyond that. we will not see a lot of new liberalization in the united malaysia, vietnam or they are not members of the wto thinkent -- the tpp i will be a significant inroads for them into legalizing and rationalizing their government procurement policies, which will be a benefit.

and finally, let them talk about services. , sometimes a little awkward to talk about from a trait perspective. ofis very important part global trade, important part of the united states is trading and what we are producing. exporting services around the world. it is not coming to go through customs office, it is hard to quantify. it is hard to liberalize because we cannot just eliminate a border barrier. so what we do, and was done at with the0 years ago gas agreement, is to set up rules of nondiscrimination. you can't discredit against foreigners, and to prohibit a variety of quantity limitations on how many services can be provided, how many companies provide a particular service and how often, how many people they can hire. the big conservation the tpp

is, like manyces other free-trade agreements, it has a negative list for services liberalization. apply wto, the rules only when a country has singled out particular sectors for liberalization. the tpp applies those same rules to all service sectors unless you mentioned them by name. so this is where sensitivities come in again. areae the jones act is an where the u.s. has carved out exceptions for itself, so it doesn't have to liberalize maritime services and commercial shipping and airline services. and the big benefit from services to liberalization in a trade agreement is that you don't have, you don't have the

same kind of preferential or trade diversion problems necessarily, because when you eliminate discrimination in a services market, it is done on a non-preferential basis, not singling out countries. opens up itsy services market, it does it for all commerce, not just tpp members. access is all the market chapters of the tpp. you can see with the exception of textiles and apparel, which is not exist as a separate chapter, we are getting positive scores. all very good, most of them are good. think, that is the general thrust of the tpp for market access. fta's,than most u.s. better than most in the region. not enough to be amazing and

overcome some of the political barriers we have already addressed. thank you. [applause] >> i am going to offer more of the same of what dan and bill have already given you, not too surprising we have chosen to work here together. we agree on these things. as we have emphasized, what we at cato are looking for in a trade agreement is globalization as much as possible. other people might focus on other issues. you talk about foreign policy, how the tpp is important as a pivot to asia and u.s. foreign-policy. president obama has this as the most progressive in the industry workers rights protections. there are protections on intellectual property, but none of these things are important. the next slide i debated whether

or not to show, but i am committed to it, so here it is. three of us scouring the tpp, looking for liberalization. millennials might have to google that reference. in college, didn't grow up with it. so when evaluating a treat agreement, how much liberalization is in there, and how does this balance against the regulatory and governance issues owner bill focused on the good liberalization. i will get on the regulatory side, more critical, and i am glad ambassador from an has left -- ambassador froman has left so he does not have to hear this. let's see what liberalization we can find. so we start off with these slide numbers.

they give us about the amount of gdp or real income increases. it is disappointing to see a small number. and then say all right, let's look at this closely and the if we can find liberalization. and in the report, they divided up the liberalization part into three aspects, the terrorists, -- tariffs, globalization of investment. they still talk about tariffs, global services. we focus now on liberalization of investment. slide shows the breakdown of the goods and services in the investment. i was looking at the investment downsion, the itc breaks what it refers to as regulatory restrictiveness in that. how much restrictiveness in the investor regimes, for each

country in 2014, and then how much after the tpp? what struck me was how new zealand's restrictiveness was quite high, and it went down considerably. this is a good place to look. this table shows up in similar, harder to read. you may be able to see for each sector, new zealand is fairly restrictive. my question is, why? what are they doing restricting investment? what is the tpp doing about it? it turns out there is a simple answer, which is there is an approval process for foreign investors in new zealand. currently, prior to the tpp says that for any investment in new zealand under $100 million, it automatically improves -- approved, and it if it is above, it goes through a screening process where the new zealand government but look at things like the goods character of the

business and the experience. so it raises this current threshold from $100 million to $200 billion. that means it is easier to get investment in new zealand. the pastis up, and years, 87 applications by foreign investors, with investors above 100 million dollars, i think it is 45 between $100 million and $200 million. so after tpp, investors, at this range, and there are many, will have an easier time investing in new zealand. our view would be better if that threshold was higher, but that is what we have. this is good liberalization. we wish it would have gone allher, but you put this together, the tariff, the investment liberalization, we see a lot of this in the gdp. there may be better ways to do

pretrade in an ideal world, but this is the real world, and what tpp has given us is pretty good. on the other hand, this is not all you have in the tpp. what i want to do now is go to the other side and make some critical arguments about some aspects of it. dan earlier in his talk gave a nice breakdown. i don't have the slide showing you all the different tpp chapters, the one we thought were better and worse, it is clear that that we think most highly of the liberalization ones, moderately positive or negative about some of the ones that deal with regulatory or governance issues. i will not go through all of them, but i will go through a couple of them with you and explain my thinking on this. we don't agree with everything here. first issue, technical barriers to trade. i don't want to get too bogged down in the details, those of you who are trade experts know

what i am talking about here. agreements onwto both of these issues, technical barriers says the product regulation cannot be more trade restrictive than necessary. it cannot be discriminatory. food safety measures have to be based on science. food safety measures have to be based on science. samepp has rules on these things. the first one i want to make is because we already have rules at the wto that say something similar, i am skeptical the tpp will do much more than has been done. measures toafety restrict trade -- i would think in the future, they would do the same thing. i'm not sure it adds that much. especially on the issue of technical barriers to trade, there are some rules that cover

issues in more detail. i will show you one of them. it is complicated. there is debate about what this particular measure means related to governors -- governments acquiring company turnover private keys in matters of encryption. it is hard to say these rules are liberalizing. the technical barriers to trade and rules, the question is that's why we gave it the benefit. another measure that has been highly touted his e-commerce. i think the ambassador mentioned a free flow of information.

it also may not be. based on what i have seen in the text how much this chapter will do to promote the free flow of information. it may be there is some restriction and is challenged and there is some litigation and we find out a little more -- in theory, it could do more but i am waiting to see before i buy into it. one is that each party shall adopt mainstream consumer laws and another says these parties shall adopt measures regarding that span. the tpp is requiring more regulation. we have given it a pretty positive seven but there's still some doubt as to what it would mean in practice.

side, in theve libertarian community, there are different values on intellectual property protection. i feel there's a significant group that is skeptical. score ofiven it a four. example, thisus goes too far in terms of its regulatory impact. it requires all parties to have it plus 70 years. seemed fine, maybe even excessive. negatives in the ip chapter of that's why it ended up where it did. i think it is fair to say that it breaks new ground in the labor chapter by requiring a

minimum wage. are people who think minimum wage is good because people get paid more, but many of us look at economic this raisessay unemployment, so we are not all that excited about minimum wage and do not want to see it in a trade agreement. i think everyone would like to see better working conditions in countries like vietnam, but i am skeptical that using one countries economic leverage to run another country how to its economy and adopt to regulations is problematic. environment, we are skeptical of. lastly, let me mention investment. i'm still pretty positive about those but another aspect of the onestment chapter is rules

investment statements. i have written some critical things about it, the idea that foreign investors can host governments when they see regulations they think are treating them badly. i think this is more about litigation than liberalization and i think this is one of those areas where the main beneficiaries are the lawyers. i don't think it is necessary as a matter of policy. just to reiterate, we tried to look at all the liberalization we could find and look at the rules and governance issues and see what we thought of them and evaluate as best we can now before it has gone into effect. and wence, we supported are optimistic the next one will be better and we have given at our endorsement. [applause]

>> i wrote a paper last november right after the tpp text came out. i read it in one sitting and i read it again in case i had gone insane. my paper was quicker and shallower than the cato study and i would say quicker and shallower in washington dc, clearly, i win. my quicker and shallower view is not that different from cato. big point of difference and i will talk about some different things, so maybe this will not be that don't. i agree that it is a positive agreement. i think it's only monitoring -- moderately positive.

think what they do three months later is myopic and we've done this before on trade and we've gotten sorry and we're going to do it again. 10 years from now, we will be unhappy with these terms. we do not disagree on the aggregate scoring. we disagree on the implications and what the of value -- what the value of the agreement is in the long-term. main reasons ihe think that. i would rather be berated in public and private, so i want to take the opportunity for questions. that talk about the things were not brought up by my colleagues because they are not actually in the agreement. there's no binding currency revision. writing a provision would be almost impossible. write the same language for both of them and if you write one that is different, you are going to infuriate the currency crowd here anyway.

write a provision to be the same for the u.s. and for everyone else. u.s.e make claims about jobs and run it through gdp about the relationship with jobs deficits that are false. this is a political game and the fact that it matters but doesn't matter economically. asked es -- who cares? i spent over a decade working with companies in china. you don't take coherent governments that can retaliate across a range of market issues across tribunals because they will screw you. you hope they can get your attention but you don't do it. just not going to have that much of an impact except in small countries.

i frankly don't care about small countries. that's why i study china and india. hatred expenses -- expressed by them of the people in the theye is odd because openly contradicted themselves about brexit. giving up our sovereignty to these international eurocrats -- i can't believe they did not want to leave their sovereignty. there's a lot of hypocrisy and it is difficult to wade at all. is to protecthing the rights of little countries over the big bad united states, then you care about it. they just want to block the agreement. i will talk a little bit about ip because i do care about it. there is a lot of interesting

stuff here. if we could enforce existing rules, that would be a bigger thing than changing them. i'm not that interested in vietnam saying i'm going to be a better protector of ip. the fda just cannot do it. you cannot enforce the rules when you write them. provisions, but the people are right that the proof is in the pudding and there's no way to evaluate it in advance. some are things that people matter yet i don't think tpp can say a lot about it. problems -- mike clash with cato, where does it come from? i think it is a small positive. there are two long-term problems

that are going to make this agreement and mistake. one is the services sector. there's nothing wrong with a services chapter. andnonconforming measures services are literally a foot i've been told i'm mad that i have to read it twice. nonetheless, they are one can stifle the idea there is a negative list mentioned by my colleagues is better than a positive list, i suppose, except when a negative list is a foot high and now you are not in a useful negative list. the way you would get the services chapter and this was said before, the u.s. is the most comprehensive competitive services, this is crucial for us to benefit. block anying measures

way to model this as a big gain for the united states. the way you get a gain is if there's more services liberalization in the future. i don't think adding new countries is going to make things involved -- evolve less than a services exemption. to -- it is a qualitative statement and binds no one and is completely unrealistic. when i say in 10 or 15 years we are going to be sorry, we will have loan this opportunity. everyone, the main goal in my mind will have not been fulfilled and as the next panel will talk about, we will have been a big heavy lift to get squat.

other problem was not emphasized by the panel and is peculiar to my background. the only reason i justify bringing up is that it matters politically. it's not a big substantive thing. it's the competitive neutrality chapter and the reference to china. about one senator per week calls me into his or her office and says i don't think i'm going to have a vote. i'm trying to get them not to have detection is arguments. day latch onto is china, china, china. and yet we arele going to criticize them and i'm going to do it right now.

the rules are made for countries that might -- that one to remain to some extent, and thinking about singapore. it's not going to keep singapore and it's notusive that bad. that might be the grade cato assigned to it. the countries that don't want to behave, and there's a big one and there are some smaller ones and tpp fails miserably to restrict them. maybe that is unfair but that is in fact the case. fundamental thing is that soa's are completely unaddressed and they don't they'll, they are set up because the government doesn't want the private sector to engage in this activity. trying to make them act like private firms is exactly the wrong thing to do. the only thing that matters is their scope.

there's some them mentation designs -- it would take me literally a day to get the entire chinese sector out of the regulations on ownership. we have a phenomenal disagreement. expect that to be this and or miss weight and with regard to the tpp parties, it is ok. the defense of this in my mind involvesterm and external factors. we are just judging it on different merits.

the business community likes it because they like anything better than right now. i'm not that far from cato on this but i don't the house free traders can like this deal. they can tolerate it. this is defensive rather than offenses. when i come in as a free trader to a congressional office and the a -- and say can i take the heat for this, i say no. it has some parts that i think are bad and will ultimately make us unhappy but basic the it's just not worth it. [applause] today.are very some dude subdued today. [laughter]

i want to address a point. i would like to call your attention to his chapter 30 of this agreement, the final provisions. this agreement is already working to inspire unilateral reforms in asia. and indonesia are engaging in forums for this agreement. that's good for those countries and good for us. really, there's no other game in town. i don't see why you can't pursue an agreement the terms of which can change as new members exceed why you would choose nothing as

opposed to that. there is liberalization here. you have seen our scores. is anyone else appear -- >> it's very clear some countries are moving toward the changes because they thought tpp would be more liberalizing than it is and they think it is easy to join. i don't think that's an endorsement given the countries involved. exceed towill have to their standards at some point. one of the differences in the analysis is about expectation. surprised, they way the administration was telling it, talking so much about setting rules, so much buyingports that just

into the approach for trade negotiations and doing it with thinking tpp would than it is, sous seeing it as a standard trade agreement involving 12 countries, taking on a few new issues, that to me is a positive. it is not worse than past agreements and is moving in the right direction. expectation of how high of a school -- how high of a scored the need to have? >> we're going to open it up to questions. identify yourself and your affiliations. >> and don't launch into a diatribe. i didn't do that, so you can't do that.

.> a question on market access i understand you graded the the countries. what grade would you assign specifically to the u.s.? littler rosacea and made by the u.s. in a short time, would it be more than two that,ee? and wouldn't which is a testimony to the skill of mike foreman as ustr not be the reason why there is not more liberalization that would satisfy you? >> i will take a quick stab at

that. we're much more interested in seeing u.s. realization here at barriers tomestic trade are very costly. of tariffs on a lot of agricultural audits, the duration of those tariffs, and not even a phaseout on pickup trucks, it is all backloaded to 24/7 or 2048. i think they did what trade negotiators do, and that is to negotiate foreign markets and keep yours close. in that regard, he was successful. i would like to see more liberalization here but why do we continue to protect the textile industry? the benefits that should accrue to vietnamese producers and u.s. retailers and consumers are shifted to those producers. there's a lot of protections

remaining and we will ultimately liberalize. the score would not be that much difference -- not that much different. political holdouts that are problematic. i'mou were leaving me and going to the water and i'm going tariffk some, but the claims are restricted by the fact that u.s. tariffs are not that high. we've delivered -- we've eliminated housings and thousands of tariffs, and i can think of three where i think liberalization is possible. my response when my colleagues say that country would not agree to that, i say cut them out of the negotiation.

there are approaches that are fundamentally different. andnonconforming measures services, a lot of them are in transport and we started it in shipping. have gotten possibly better terms. it depends on which terms are being blocked by which countries and i agree with dan about agriculture. it's not bad. i can see why the farm states like it at the second-most protectionist country after japan is the u.s. we are the most competitive cultural exporter in the world but we are not opening our market as much as others. it may be politically justified. we ought off paul ryan with gary provisions and we still got some opening. it may be a politically good

move but it doesn't show that we were hell-bent for agricultural liberalization. >> other questions? >> thank you. my question is you have final provisions for the future. dimension.emporal how would you grade given your knowledge of past free-trade agreement implementation? >> are you talking about dispute settlement provisions? ofthis is across a bunch specters here and we have an argument that there are exemptions and services.

how effect do you think the u.s. and others will be in the actual implementation of compliance? >> i think that is a great question and there is a lot of uncertainty. of pursuit oflot compliance. there were a couple of disputes under nafta and they didn't work so well. that countriesse are signing these. maybe it means they have reduced all the tariffs and is nothing a littlee, maybe it is different because there are extensive rules and someone needs to bring complaints. will say is if you look at the dispute revisions,

they tried hard to make sure there is not a nafta problem. it is complicated what they have done and it has two work because yet to get the director general established. i think they have done a good creating a process that will work if people will use it. the question is are people going to use it and that depends on future administrations. what is the next administration going to do? it depends on who that person is. one other point is that there are a lot of other provisions. it not going to be enforced because it is not subject to dispute. you have many provisions that are enforceable but we don't know whether anyone will and choose to enforce -- will choose to enforce them. ani don't locate this as enforcement issue.

i think the provisions still would not bring us the again. there's the political danger servicel them as major liberalization and people will act as a you are not in nursing the rules. enforcement is not the issue. that is an opinion. i agree one of the problems with such huge document and all these countries, i would locate the document prior to enforcement. certainly people arguing that they are are setting themselves for this idea that the trade treaty was not enforced. i don't think that is the issue. >> beyond just enforcement and dispute settlement, there's a soft power element to this.

inde agreements are peculiar that the countries will all agree to do something and everyone just believes they are pretending. we assume they are going to violate the rules as soon as we agree to them. text and an agreement creates a framework for future diplomatic pressure and i think we will see that telling themnies how they expect to behave in this provision. what will actually come out of that depends on how much pressure they put on countries to implement those. i think we are going to see years and years of talking about how to implement these provisions.

energydepend on how much is put into that in the future. >> one more after that and then we have to take a break. >> a very interesting discussion. short comment and then a question. softeningd to see a of your criticism from your earlier almost jihad against it. option to having the go to independent expert arbitration as opposed to the national court in vietnam or malaysia is useful. differentstion is a one. do you take the threat that if tpp does not pass and the u.s. does not approve it, asia will go to something else and will have a much lower standard.

that a realistic alternative? don't think the deals are mutually exclusive at all. significant is more is that business wants to move on and supply change will be established and ossify and it's going to be harder to change those around. of failure exceeds the benefits in the short term and manifest in these markets. if we are not thing attention, i think it is very important that this gets done for that reason. >> i read people who seem to know more about it and they are skeptical whether there's going to be one anytime soon.

i have not softened on that by the way. be -- ite -- there may will not be a liberalization. we will either get no real change in the status quo, so i consider it a o-matic issue and not an economic issue. one -- >> this gentleman and then we have to take a break. >> this is a question for mr. watson. you brought up some numbers earlier and so did the ambassador for i wonder if you

can speak specifically about the going tovels that are come down in the tpp versus the levels that will remain in china assuming it passes. >> you mean what are the tariffs china is imposing on imports from the united states? they are not going to be lowering tariffs in the tpp. i guess i don't understand your western. >> allow me to clarify. overall levels in trade that will be affected by the tpp is the direction i'm going in. if we import a significant amount from china but you are met with trade barriers in china and when we them toward a ,ignificant amount from japan

we face the same issues. much are we importing to japan -- exporting to japan that will be positively affected by ?his will thisn total affect our overall trade with asia? >> that's a very practical question. i don't have those numbers off the top of my head. say from liberalization, those numbers would change. one of the things about preferential trade agreements is while they increase trade, they

diverge trade. a lot of that will go to particular countries. that will impact our trade relations with china vote what those numbers are at the end of the day, i don't have that. trend is there. i don't know what the amount is. >> it will certainly affect supply chains and people to change the composition of where things are produced, but it is hard to tell. break now.take a for coming and for your attention. we have another panel at 11:00. we hope you can come back. thank you very much. [applause]

[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> requires banking data to be stored locally, the banking provided to from a lot -- to pharmaceuticals and from the i.s. ds requirements. upon seeingction

u.s. gr musts was have made the unusual political calculation that it would you sharphing to do to take a stick and polka senator mcconnell and senator hatch. certainly, the provisions as they came out did nothing to strengthen support. problem stems from the administration decision to's to -- to wrap things up last october. financial services pitted the united states against the united states. ustr placed a high priority on a requirement for the sectors in the treasury wished to maintain the ability

for the bank regulatory agencies to have u.s. access to data. treasury one that dispute and they were left in the uncomfortable position of coming back with an agreement that accomplished some things regarding data flows and not others. and thently, treasury regulatory agencies have thought about this issue more. they now have a paradigm for going forward that appears to address these concerns. it would have been nice if the administration had done that in advance. the biological pharmaceuticals have received 12 years of data .xclusivity since 2010 the agreement ends up providing

between five years and eight years and i'm not going to go into all the details of how that might sort out, but it is understandable how other countries might for to have the united states bear most of the cost for biologic research development and regulatory approval. versionsan get generic more quickly, looks good to them. once theindustry broader global community to help fund the r&d cost. this issue is important to senator hatch. he is a copyright holder himself and feel strongly about intellectual property issues. annual budget submissions have repeatedly proposed shortening the 12 year time frame to seven. this has reiterated in february

2016 when their budget proposal for 2017 once again shortened it to seven years. theight the challenging for pharmaceutical industry that negotiators had been working really hard to get 12 years. then the tobacco carveout will be addressed in detail, but my colleagues and i have written anut it that it is not essential component or trade agreement because fundamentally, it does nothing to realize trade. we could see through the past year or more that there was widespread opposition among various nongovernmental organizations and this was given a hint that this might help with the passage of. what is clear is that by turning around and excluding tobacco,

the administration has lost several republican votes in congress and it appears to have gained a total of none. is the president it sets for other products in future trade negotiations that might be politically unpopular. i'm concerned about what people in the european union might wish to do with genetically modified organisms. why not discriminate against them and carve them out? that's enough of my background comments. thew me to introduce panelists in alphabetical order. philip levy is senior fellow at the chicago council on global affairs. envious of philip because he has the luxury of working on trade policy issues from 700 miles of side the capital beltway. since i used to do the same thing, i know how much better the world looks as you get away

from the day-to-day machinations of what is going on. but he is here with us today. he has lengthy of inside the beltway experience. he is served as an american scholar at the enterprise -- , councilenterprise to of economic advisers for george w. bush and went to the department of state. he has taught at academic to shins including columbia and yale and holds undergraduate degrees from the university of michigan and a phd from stanford. an international trade lawyer working on jt international in geneva. that means he has a out of the beltway perspective, perhaps conditioned by close proximity to the wto.

prior to joining j ti, worked for the secretary in a geneva where he provided technical assistance. he's a norwegian national who holds a law degree from the university of organ. a beautiful but somewhat rainy city on the west coast of that country. this senior advisor for a law firm -- is only fair to admit he has had an influence on me. i served -- he served in several 70's beforea in the i knew him but in the early 1980's, i was working in these and it and it was not hard to with himquainted because he was the ceo of the chicago mercantile change and the agricultural committees were trying to prioritize the trading

commission and had clear views and he articulated them. thatext thing i knew is old rock decided to retire as u.s. trade representative. president reagan turned to him for some help in the trade arena. when he became ambassador in july of 1985, the u.s. dollar was very strong relative to other currencies and u.s. exports were suffering. in the midst of that doom and message to those seeking protection from imports .as basically cheer up this large volume of imports is not the and of the world. rather it gives us leverage about the need to liberalize. he did negotiate a lot of negotiations in other country.

concluded the -- then he shifted to the department of agriculture where he served two years as secretary for george h.w. bush and moved on to the chair of the republican national committee. i am a bit younger than clayton but have been involved in many of the team issues and i have to admit i have been much impressed. suppose i should not have been surprised that a conversation i ago at full a few years an oktoberfest barbecue grilling rottweilers -- grilling bratwurst in my neighborhood. yes me what do i do for a living -- trade policy, most. he said you might know my mother-in-law. and i did.

have a hard time escaping his influence. degrees in agricultural economics as well as a law degree, from one of his true love, the university of nebraska for two other noteworthy items -- one that he serves as a anded member here at cato he was honored by the washing international trade association with its lifetime achievement award in 24 team. his acceptance speech with this exhortation -- never give up working toward trade liberalization. never give up. perhaps none of us will completely escaped his influence. mr. ambassador, the floor is yours. [applause]

>> thank you so very much. that was a wonderful introduction. inviting me to come participate in this program i'm going to try to do my part really quickly to stay on schedule and not take time away from my colleagues appear. -- colleagues up here. i would like to say a few things in response to what has been said already this morning and then move on to what i am does tppbout here for justify congressional approval? you will discover my answer is a resounding yes. -- with moresiasm enthusiasm than projected by some of the people thus far this morning. i say that not with thinning the

fact we have two presidential candidates taking the opposite view, including one who is the presumed leader of my republican party today. all i would say to that is first of all, the candidates are both dead wrong and second, to the members of the press who are here, i wish you would begin to do your jobs and ask the questions that have not thus far. if you do not like the tpp agreement, tell me why. just what is it about tpp you don't like? do you just want to tear it up without understanding the consequences? if so, you better defend that. there have been very few hard questions like that from the press with either candidate thus far and i think that is most

unfortunate. with respect to the cato i would have shaded it a little differently. i was a little disappointed in the market access provision. i would not have graded them as high as you all did. inhought we were lacking ambitions in market access. i watched the agricultural parts of that where we could have done and better with japan canada. same thing is true with other market access. that areal demands in on leaving that negotiating team would have then a whole lot

higher and ambitious than it was. nevertheless, i will always come to the point president reagan made during my tenure, which is just as applicable here and derek missed this morning. better moving forward band standing still, better moving forward then moving back words. moves market liberalization award in the way president get allsed to put it -- that you can, but at the end of the day, remember half a loaf is better than no low-fat all. you evaluate tpp as half a low, and i think most of us probably would, maybe some of us would make it two thirds and some of it one third, nevertheless, that is better

than nothing at all. i firmly believe it would be a big mistake to have nothing at all. point that i think was a underestimated was the sanitary light for sanitary provisions. it is true on these food safety issues that one can take these cases to the wto because they have excellent sanitary provisions we put in. u.s. insistence of the those provisions move slowly. they are a lot faster than they it is abe but relatively slow proposition. i don't know how fast it will be in tpp, but i hope faster than

the wto. countrieskely to see using these provisions in the tpp rather than going to the wto. finally, i wanted to make two other quick points here. advantage of tpp that got no mention at all until the tail end of the last panel discussion is the advantage of being on the inside of a trade agreement rather than on the out side. of preferential treatment. with tpp, the u.s. is going to be on the inside and that's a lot utter them being on the out side looking in. we should not underestimate that. naftat the benefits in which is another agreement people supposedly one tooth

throw out now. but what people have done to develop north american is this enterprises. u.s., canada or mexico, but north american enterprises that have a huge advantage in competition in the rest of the world because they are on the inside rather than the outside of nafta. u.s. leadership -- we have not talked about that a lot, but that is important. there's only one country that can lead will we call the western world and that is the u.s. is an opportunity to exercise leadership in asia and these kinds of opportunities to come around very often. it.eed to take advantage of we have been sitting on our hands for a number of years now in terms of demonstrating the ability to lead internationally. we have asked off instead of

asserting ourselves and that to change and it needs to change badly and we need to get that done. to the politics and i will go weekly. is to beall, if there any chance of doing this done between now and the election which would contribute to the or our president's eight years in government, there are going to have to be some tpp as an absolute necessity. my two colleagues are going to talk about the tweaks and i in terms oft here the tobacco carveout and what we might do on warm-up provisions and biologic, but those have to be resolved. administration in negotiating tpp insisted on some provisions in these areas that

trouble a lot of us and trouble too many people in congress for tpp to be approved in my judgment. be torst imperative would make those changes. i don't know whether the votes would be there even if those changes were made, but in the absence of fixing those pictures -- they are going to have to work them harder or there is no chance whatsoever that this agreement will be approved between now and the election. i think the chances are between nevertheless,but the administration, they need to get off of their derriere's and get these changes done. that, thee move jan

next question is can you get approval of tpp in the lame-duck session mark -- lame-duck session? .hat's an interesting question it may depend on the election outcome not only in the presidential race that in the senate and house races between now and then. say therei would would be little chance at all of approving tpp or any other trade agreement in a lame-duck session because it is short. how do you take a tough, complicated issue in a session that short? congress had just gone through tough election cycles and they are tired. they want to go home and do their chris was shopping and spend christmas with their families and they don't want to talk about tpp in the

postelection time. but they might and the reason there may is because be some shifts in control, not just in the executive ranch, but maybe in the legislative ranch as well and then you have to say irrespective of how those come out, whether members of congress and the administration might say is this a good time for a little bipartisanship to get a real tough issue off the agenda and start the next year rush? slaten't we have a clean going into 2017 and wouldn't it be nice to get this issue off our backs and 20 teen and the only opportunity left to do that is in a lame-duck session. completely off because there may be some interesting bipartisan politics that could emerge in a lame-duck session and get it done then.

that doesn't happen, and i think the chances are well over a fit the/50 that nothing will happen until after the first half of the year and you have a new government, then what do you do? 28 teens all the way to or dies on the vine. get tired of waiting and other countries in particular get frustrated with the united states and say what kind of leadership is this? you asked us to get approval of our government politically and we have had to bite the bullet in a have not been always tasty. you don't even want to do that in the u.s. and therefore, you need to suffer the consequences in terms of leadership. i think there will be a lot of that argument made if things spill into 2017 and beyond. it's going to be difficult for

andincoming administration the negotiating team for normally, takes an incoming president close to a year to get his whole team in place and functioning effectively which means if the spills into 2017, a hands villain to 2018, which is not a happy situation. that has to come from the people who would benefit most from this agreement and that's the commercial entities, agricultural and nonagricultural who have a considerable amount to gain from this and next january would say we cannot wait until 28 team. this has got to get done now. give you support to get the votes in congress to have it happen for -- for it to happen.

if thet will only happen business community and agricultural community weigh-in and a big way and make it happen. and i will stop right there. [applause] >> thank you. it is a pleasure to be here. i find myself in agreement with him on a lot of rings, including i would like to see tpp happen. i don't even need to do this because he gave an excellent description as to why this is important. i might be even more skeptical than him about the prospect for passage but i agree with the challenges he identified top i would note we have had repeated statements in the discussion about either that it is really important that it passes and i agree with that, but that is not

a plan for getting it passed. it,ou want to visualize imagine we are run one mountain peak in we the another nearby and say we should be over how do you get there and what do you do? i want to come back to the points the ambassador sketched and say, what are these steps, how would these happen, and use it to justify some additional skepticism. the steps are laid out in trade promotion authority. we know how you pass an agreement like this. it starts in the ways and means committee, the house, then goes to the house floor, senate finance, the senate floor, you get everybody approving government and then you have protections. in the senate, you do not need to worry about a filibuster.

you get your ratified trade agreement. it is a of a challenge to analyze the timing on these lays outcause the tpa often restrictions on the executive more than congress. it will save here is the maximum time that the house ways and means committee can take to examine the agreement. we have already blown way passed those things. the committee could take up to 45 legislative days, and there are not 45 days left in the year, and that is just the house ways and means committee. the other challenge in analyzing these things is there is a improbablebetween and impossible, that when it comes to congress, if there is a will, if you have a majority who is eager to do something with some protections included in tpa, blocking things like filibuster summit there is little limit on what they could do should take it together. here is why this is problematic.

one reason we need to focus on the lame-duck, when we try to imagine scenarios, is if you look at the house calendar, it is available online, see they thatot around that much, they meet and talk about mid july and then you start having conventions and elections, they come back for a little bit in september, and at the moment our and at the moment are scheduled for two weeks in november. my understanding of getting trade things past, if you look at the last decade, what is the quickest one of these have got done, they will point to less controversial agreements, say that one. that we managed to do in 3 1/2 weeks. that is if it is uncontroversial. we are assuming this would be the major focus of what they do.

you may have frequently in a lame-duck session there are budgetary issues that people kick down the road, that need to be doubt with, just as there might be a reconsideration of you should address the trade agreement, if you are looking at upcoming change, you get a reconsideration of whether you put forward and pass the supreme court nominee, depending on what happens, occupying the same legislative body. will congress being around for it isime, and of the time around, will it have enough to devote to trade agreements? additional issues. it is worth remembering the narrowness of the coalition support of trade, and the last measure we had was the tpa passage a year ago. 218 votes,e, you had just what you needed for passage, and of those, hundred

90 republican votes and 28 democratic vote. republican votes and 28 democratic votes. those are two of the things i would note as obstacles. one, that you really have not had great congressional support from the democratic side. when you a time, actually did have a centrist coalition on both sides of the aisle that supported these things and came together to do important and necessary work. we have not had that for a wild. we have had a partisan split and the president has not been able to rally his party for these votes. on the republican side, as the ambassador pointed out very well, you had a series of injections. when they voted for tpa they said we, see the potential for

having an agreement that would do good things, and then they -- it was by no -- in terms of building and maintaining a coalition. was negotiated, there was an urgency to get it wrapped that, and that is perhaps what motivated things, there will be more eagerness to proclaim that most progressive trade agreement ever than to solidify a narrow coalition of support. you can losen, people off, you have no room to lose people, but you can lose some because of the back and -- because of tobacco or biologics. you can lose in a lame-duck to a principal objection, saying it is not right for congress to move legislation like this in the aftermath of an election. to lose room

essentially non-. these are some of the major concerns, on top of the question, as the administration done what it needed to do to win back key members like chairman hatch? i wanted to move on to say i have real skepticism. i do not see this as a path to get done as a lame-duck. has anybody been watching on how happening in the republicans in congress, like the honored i speaker? it has not been a group that has fallen into line and done what is necessary. this is what comes to mind for me when people talk about how we will get past the election and everybody will do what they are supposed to do and realize what is necessary and they will support this. it has been a fairly fractious group. would be large numbers of republicans who would feel that way.

i do not think there are 218 of them. that is a challenge. let's suppose we move beyond, and here is where i'm notably more pessimistic than the ambassador. that more than just the presidential election matters, but let's start there. donald trump this week was talking about trade, and to my mind, a very misguided passion. the ambassador is right, saying we should press on details of saying something better is insufficient. he did not see inclined to be advancing this in rapid order. secretary clinton, who had previously supported the tpp, will find herself in a tough position if we stop the conversation now, and i fear the situation is going to get worse as the campaign progresses. she finds herself in a tough situation now because she has said she does not support the and some ofands, the criteria she has set for

improving it are exceedingly difficult. identifying things such as currency manipulation. this is manipulation, highly problematic. probably the best you could possibly hope for in terms of getting a restriction is getting to the core of what countries do with monetary policy, the best you could hope for is a side that states good intentions on everybody's part and moves for transparency. that is what ambassador froman delivered. she declares that insufficient and says i need more. she has set herself a much higher hurdle that include bill clinton faced when he was going himself on his nafta obligation. she has ruled that out. addressing things such as rules of origin on autos, that was a big thing that japan got out of this agreement. that involved opening things up completely. this was not a minor addendum.

yet the real problem -- to problems that secretary clinton would have were she to ascend to the presidency, one of them is that she would likely be told even had she emerged unscathed for the rest of the campaign, that, madam president, you essentially have 18 months to think things done that you want to get done in office, focus on that. does she want to make one of those things a tpp which would alienate labor support, and it to say it splits democratic party right now. a feif united democratic party in that opposition. that is a challenge. the final challenge i will note along,he campaign goes you are going to see donald trump -- we have already seen it this week -- pressing her on

this is of her opposition and trying to pin her down. the concern is we will move toward a read my lips no tpp kind of commitment as they fight this across -- battleground states in the u.s.. that will pose real challenges. i will close here. what is the best historical example we have? when president obama was elected in 2008, a number of his pro-trade who were and multilateralist had visions that three pending trade agreements, colombia, panama, and korea, with the ushered through the lame-duck situation. you would not have to do with these things. the argument sounded extraordinarily familiar to me, these weres 2008 supposed to split three. they were ultimately passed in the fall of 2011 after a great

deal of arm twisting that came later. to me, that is probably and most optimistic model we have. i will stop there. thank you. [applause] mr. ulle: good morning, everyone. thank you very much for the introduction earlier, and the opportunity to speak your today. there have been several tions of tobacco. i will give background as to what this is about. what does it mean, and why is this so important? jp coming from international, it will not surprise you why i tell you this is a bad policy. the tobacco industry is abusing its system, and that we are

stifling government's ability to introduce tobacco control policies. it is alleged that some governments do not have enough toey to pay for legal ease defend themselves against claims from the tobacco industry. therefore, we are viewed as a big user, or rather, of user, of the isdf system. what is the reality? tobacco is one of the most regulated products in the world, but in real life of the tobacco industry has not used the ics system very much, actually, just in two cases. against whates are could be described as very extreme regulations against any other sector, but passes down the line for tobacco.

we see that these regulations are in general not based on which ared evidence hallmarks for good regulatory practice. since the commencement of these disputes, one of them had been dropped on procedural grounds. this was the case between pmi and australia. there is only one tobacco-related case. the remaining 694 cases are against countries by other industry groups. 0.3% of the case load is tobacco related, and abuse of the ics system? i do not think so. they claim that some countries do not have enough money to defend themselves against the tobacco industry claim -- is that really true? let me give some background. the tobacco industry pays $15

excise a year in taxes, taxes, and the vat, to the tpp countries only, $15 billion. in the tpp, there is a little bit of money coming from the tobacco industry itself that could be used for anything they want to you do, for instance, protecting themselves against numerous cases. have set upd gates a fund that has several million dollars which allows governments access in case they were challenged by the tobacco industry. on that basis, it is safe to to mountthere is money a legal case against the tobacco industry if a country would like to defend extreme regulatory proposals.

gain -- by the supported of the tobacco tax users is public health. let's play a game of where's waldo portrayed experts. i challenge you to look on the slide where you have the tobacco exclusion in the background, i would like you to find the words, public health, or just health, mentioned in the tobacco exclusion. they are not there. so the drafters of the tpp tobacco exclusion have gone to great length in order to this all possible activities that tobacco companies are enrolled in the such as inspection, record-keeping, reporting requirements all these activities are apparently of such a threat to public health that they should not be protected by ics. really, it is obvious the goal has not been to bring about any public health benefits, but to

introduce a measure that gives a lot of headline and and a lower that the government is regulating for the greater good, but in reality this does not achieve anything except for excluding one industry from ics. what does this mean? mean that thell tobacco industry does not exercise -- there are a number of theections in the tpp, chapter which gives companies the possibility to challenge government erected. we have heard from members of cata that are not happy about -- members of cato that are not happy about this. fair and equitable treatment says industry can't defend themselves against discriminatory regulations, and tobacco might be controversial.

legitimatestill a industry, bringing about revenue, and a significant amount of investment, especially to developing countries. why should the tobacco industry not be able to defend themselves against biased and discriminatory regulations? i do not know. i am not sure if you are aware of this, but in certain countries, tobacco company representatives are facing jail and and or must, astronomical fines because they are challenging governments' introductions of someone not very evenhanded customs valuations procedures. these procedures have even been found to be in compliance with challengeut the legal goes on against tobacco executives.

now, why should not we be able to protect people working for the tobacco industry just like any other industry, and open a door for this? who is next? food, alcohol, mining? another protection in the tpp is about transfers. the tpp investment transfer insures private companies like transferld be able to capital back to the country where the investment came from, part of normal business practice, right? it is beyond us why it to the lis -- what a legitimate industry like tobacco should not be encouraged to generate a profit for its shareholders? performance requirement, it has a practical side. performance requirements could be a policy whereby a government

says that all cigarettes should be made by domestically grown tobacco. this is not how cigarettes are generally made. they are made from a hodgepodge of tobaccos from around the room. you can imagine that a government would say a confection industry is only allowed to make chocolate from domestically grown cocoa. under the tpp, is such a government measure would be introduced from the confectionery industry would be able to challenge the the tobaccowhere is industry would not. this is really not fair. ofn the ultimate form government intervention, expropriation. if you own something, let's say, a cigarette factory, you do not really want it to vanish at the whim of a government at any point in time. if you produce cars come ice cream, toys, you had this protection under tpp.

if you happen to produce cigarettes, you do not. why would government expropriation be more laudable for a tobacco factory than a car factory without compensation? talking about other industries, who is next? your guess is as good as my. a lot of industries are controversial, and you see some of them on the screen here. some of these industries are big door to -- an opening a havede a company from ics ramifications that cannot be imagined. what if other governments look at the tpp and take examples and say this is a great pre cedent? now we can start excluding any industry. next? where does it end?

i do not know. e by saying, to quot i am glad tobacco laws are protected by ics, but what about other laws? just to conclude, i would like to remind you the tobacco industry is not a user of ics. the numbers speak for themselves. is is badly drafted policy. exclusion removes all activities that tobacco companies are involved in, but includes not one reference to public health. appropriate tobacco industry property -- this does not do anything to prevent itty-bitty from picking up the habit of smoking or helping anyone to

quit smoking. removing any effective ability to address foreign investors opens the door for measures that are discriminatory and protectionist by government. this is a goal that free-trade wants to promote, and someone will be next. tobacco is always at the forefront of extreme regulation, and it is heated to score some cheap points by introducing policies that get a lot of publicity. tobacco exclusion really does not address the issue that it is supposed remedy. the tobacco industry is a legitimate industry, and the tpp exclusion leaves us as the only industry with no protection. this is not fair. the tpp tobacco exclusions would not achieve any public health habits. this exclusion is entirely unnecessary. as the last thing, let your car -- when it agreed to

this exclusion. the congress explicitly directed the ust to protect the rights of investorsr abroad without product discrimination while ensuring all u.s. investors assist them in effective state disputes. this is in the senate finance report.e tpa how about that for democratic control of the process? thank you. mr. froman: when i call for you, please wait for the microphone to arrive, and identify yourself and if you would, and let's focus on questions and avoid detailed commentary. i will take the prerogative and asked the first question. eir's issue, and

using -- and realizing the us t would take out the car record with the u.s. business community support tpp in that case? >> i do not speak for the business community. my question is they would have a serious problem. one of the key agreements is they build on each other, you would get a lot of pushback to removing isds altogether. mr. pearson: even though the committee supported the australia requirement. >> there is good reason to have because i think there are times when an american companies need that kind of protection internationally.

but i fully agree that we should not have any discriminatory activity in there. the tobacco exclusion was wrong. i have no grief for the tobacco industry. i have been a non-smoker my entire life. but i do not want anybody discriminating against them any more than discriminating against anyone else. mr. pearson: questions? right here. >> yes, hello. i am with the progressive policy institute. fork you very much mentioning the fact that our friends in the press need to press candidates much more strictly on the implications of their trade position. oute is a lot of rhetoric there that people do not seem to get challenged on. i would like to ask you a question from your experience as a trade and agricultural

negotiator along that line. one of our candidates said in a speech in kansas, that the day after he was elected, he would make sure we slashed japanese duties on american beef -- beef. can you tell us about the practicality about that statement? certainly.: there has been a lot of commentary about caring up the nafta agreement and starting all over. all of this rhetoric is just really troubling to me. i think most of it is shameful, and it is coming from both sides. some of it from the candidates, some of it from the staffers for the candidates. there is a lot of loose language, and unfortunately, it is getting worse rather than better -- or at least it has in the last few days, and i think that is just saying.

-- just shameful. the rest of the world things we are crazy entree policy issues, and i understand how they come to that conclusion. to be specific, you cannot do that. tariffsinly can raise the following day on japan or anybody else if we want to. pay a would price. there is no free lunch. if we do that, japan will have the right to retaliate against us, and they would and they should. we need to honor our obligations. we are a signatory to the world trade organization. we are a signatory to nafta. we have a lot of trade agreements in the world. we ought to honor them all. and when we start talking about --ring them off, that is tearing them off, that is just nonsense. we could end up -- i was thinking about this last night andf that really happened

we went through all of this i might not witnessed much of it in my lifetime at my age, i worry about the carnage that would affect my kids, my grandkids, and my great-grandkids. and i am just uphold with this is language that is being your -- i am just appalled with this language that is being thrown around today. sure ifson: i am anybody interview the candidates, there would be a detailed elaboration of trade policy issues. another question, please. >> hello. i am with the cato institute. issue from ae tpp foreign policy perspective for a wild. when we talk about how the

administration is going to sell this congress, it seems within the last year or so, that the u.s. needs to be this strategic player in asia, it is not explicitly talking about but everybody knows about east asia, says, this is meant to serve as some counterweight to chinese economic influence. is this a strategy that you believe will be successful, or should it be the way to go for -- it would play well with commerce and have a greater chance of succeeding in focusing on the economic instead of the strategic benefit? it is a really good question. personally, i may be showing some of my political biases here, but this administration does not have much credibility

on foreign-policy issues. there have not been many success stories. i think tpp may be the most successful of all. nevertheless, as i pointed out earlier, we need to demonstrate becausership in asia, to some degree we are in competition with china for that leadership role. i do not see china as an adversary in trade policy. i never have. i do not now, and i do not believe that i should in the future. but i also believe that if they are in the leadership role in have you will not principles and rules of asernational trade that are effective as they would be if we are in a leadership role. in other words, they are going to be looser and will not have the