President’s State of the Union Speech Spotlights NAED-Related Issues

This was sent to NAED Tuesday, January 12 by Palmer Schoening, NAED’s Government Affairs liaison in Washington, D.C.

President Obama will deliver his final State of the Union Address to Congress and to the American people at 9 PM EST tonight. The New York Times, citing White House Chief of Staff Dennis McDonough, said Mr. Obama will strike an inspirational tone, reminiscent of his 2008 campaign, and urge the American people to reengage in the political process. In an effort to attract more attention, Mr. Obama opened a Snapchat account yesterday. South Carolina Governor Nikki Haley will give the Republican response following Mr. Obama’s address.

North Korea sanctions bill to pass the House today. Late this afternoon, the House is expected to easily pass H.R.757 to tighten sanctions against North Korea. The bill was held over from last night’s Suspension Calendar votes.

Iran terror finance bill drew a veto threat. Yesterday, in this Statement of Administration Policy, President Obama’s Office of Management and Budget threatened to veto the Iran Terror Finance Transparency Act, H.R.3662, because it “would prevent the United States from implementing the Joint Comprehensive Plan of Action (JCPOA) [the Iran nuclear agreement] by tying the Administration’s ability to fulfill U.S. commitments under the deal to unrelated, non-nuclear issues.” The House is likely to pass it tomorrow anyway.

Dividend repatriation expected to pass House Ways and Means this year, but broad reform won’t until 2017. At yesterday’s Politico Morning Money event, House Ways and Means Chair Kevin Brady (R-TX) said, “I think having a system that lowers the gate, allows those profits to flow back to the United States is critical,” but broad tax reform will have to wait until 2017. “If you take it step by step, it can actually get us pretty close.” “If I had my druthers, we would dedicate any revenue to lower rates in a comprehensive tax bill … [and the top rate] “needs to be under 20 percent.” Brady concluded, “I’m actually optimistic about this. Tax reform’s tough. No question about it.” Schoening states, “Don’t get your hopes up. In my opinion, getting the top corporate and individual tax rates down to 30% would be difficult, and lower would be politically impossible because it would require wholesale elimination of major and very popular tax deductions. If Brady tries to lower the top corporate rate below the top individual rate, pass-through business entities would oppose the bill, killing any chance for passage.”

Expiring tax provisions listed. Friday, the Joint Committee on Taxation listed expiring tax provisions in this 16-page pamphlet. Thirty-two of them expire at the end of this year, so look for another extenders bill during next December’s lame duck session of Congress.

Trade: Transpacific Partnership “difficult, but doable.” That from House Ways and Means Chair Kevin Brady (R-TX) at yesterday’s Politico Morning Money event. Afterward, he told reporters that USTR is meeting with members on a range of concerns, listed below from today’s Bloomberg BNA. Look for U.S. Trade Representative Michael Froman to testify before the House Ways and Means Committee next month.

Pharmaceuticals: The biggest single obstacle to TPP approval may be the level of data protection it forces other countries to grant for patented biologic drugs, the most advanced medicines. Senate Finance Committee Chairman Orrin Hatch (R-Utah) has raised red flags about this and could put the brakes on TPP approval until his concerns are addressed. Gilead Sciences Inc., Amgen Inc. and Biogen Inc., along with branded drugmakers such as AbbVie Inc., Pfizer Inc., GlaxoSmithKline Plc and Eli Lilly & Co., are among companies that reported lobbying on issues related to trade and cross-border intellectual property protection, according to Bloomberg Intelligence.

Tobacco: The TPP doesn’t let tobacco companies use arbitration outside the courts to contest cigarette regulations. The exclusion from investor-state dispute settlement has been flagged as a problem by McConnell, who represents the tobacco-growing state of Kentucky. Critics say this provision opens the door to a proliferation of exemptions for sectors in future agreements. In the future, food processors could be unable to challenge requirements that no trademarks be used on products like baby food, for example.

Labor: Some Republicans are grumbling that the deal prioritizes enforcement of labor standards, such as in Vietnam, while making enforcement of other trade disputes such as those over intellectual property or state-owned enterprises, less vigorous. TPP made labor protections a priority over other rights by allowing the U.S. to retaliate against Vietnam for failing to allow union rights without the U.S. Trade Representative first going through a dispute settlement hearing. If any TPP member violates an intellectual property or props up a state industry against the rules, by contrast, the USTR would have to go to trade court.

Agriculture: The dairy industry isn’t happy about the level of access it is getting to Canada’s subsidized market, and rice exporters feel let down by the tariff reductions on rice going to Japan. Pork producers are concerned about Japan being able to continue providing subsidies to its domestic produces.

Financial Services: The TPP contains rules to stop countries from requiring foreign firms to house their data servers in that country. However, a carve-out from the requirement was made for financial services. The U.S. Treasury has been seen as reluctant to have that requirement applied to the U.S., while financial services firms worry about data becoming vulnerable to espionage. Malaysia also got a carve-out that could allow it to exclude foreign investment in its financial sector.


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