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WASHINGTON, Oct 22 (Reuters) - U.S. business and agriculture groups have urged Pacific trading partners not to exclude tobacco from investment protection rules in a new free trade deal under negotiation, warning it would set a bad precedent.
The U.S. Chamber of Commerce, American Farm Bureau Federation, National Association of Manufacturers, American Meat Institute and other organizations said they were "highly concerned" that tobacco might be excluded from investor-state dispute settlement, or ISDS, provisions in the Trans-Pacific Partnership.
Dropping tobacco from ISDS would prevent tobacco companies from taking action against any TPP government under those legal protections, for example over health care measures. Sources briefed on the discussions have said the United States has floated such a proposal.
In a letter sent late on Monday to the U.S. Trade Representative's office and the U.S.-based ambassadors of the 11 other countries involved in the TPP talks, the U.S. groups said investment protections had not harmed any government's ability to regulate in the public interest.
"We are, therefore, very troubled that TPP negotiators may consider reversing course and seek to create an unnecessary, but highly damaging, carve-out to these basic and longstanding principles," they said. A copy of the letter was seen by Reuters.
"Arbitrarily denying access to any sector or product in the TPP ... would lead to many unintended consequences by exposing many job-creating sectors to similar calls to deny them the same basic protections that each of our governments respects.
"Such carve-outs undermine the trade and investment rules-based system and its objectives of encouraging investment, trade, innovation, and jobs."
The USTR has said it has not presented any new proposal on tobacco and does not expect to do so at TPP negotiations taking place now in Australia, as it is still consulting with stakeholders.
Marlboro maker Philip Morris International is challenging Australia's plain packaging laws, which ban branded cigarette packs, under the country's investment treaty with Hong Kong, arguing the laws breach intellectual property rights.
The letter was also signed by the Corn Refiners Association, Emergency Committee for American Trade, National Foreign Trade Council, National Oilseed Processors Association, United States Council for International Business, United States Hide, Skin and Leather Association and the US-ASEAN Business Council. (Reporting by Krista Hughes; Editing by Marguerita Choy)