UPDATE 1-Push grows to target tobacco, health in Pacific trade rules

(Adds comments from Australia's Robb, lobby group, background,
Democrats)
By Krista Hughes
ATLANTA, Sept 30 (Reuters) - Pressure is mounting on Pacific
trading partners over potential steps to block foreign investors
from suing governments over anti-smoking measures, under a free
trade pact that is nearing completion.
Trade ministers from 12 countries are discussing possible
exemptions from rules letting foreign companies sue governments
over damage to investments as they try to wrap up talks on the
Trans-Pacific Partnership (TPP).
No final consensus has been reached on whether any exclusion
would target only tobacco companies or shield a wider range of
government regulations from legal action, but Australia's Andrew
Robb is optimistic about his country's push for a broad
carve-out for both health and environmental regulations.
"I think we're on track, but there's not a final decision
yet," he told Reuters on the sidelines of the Atlanta meetings.
Similar rules in a separate trade treaty allowed Marlboro
maker Philip Morris PM.N to sue Australia over tobacco
plain-packaging laws banning branded cigarette packs.
Excluding an industry such as tobacco from protections for
foreign investors would cheer anti-smoking groups and many of
the U.S. Democratic lawmakers who have bucked union pressure to
support President Barack Obama's trade agenda.
A group of 11 pro-trade Democrats, who helped pass key trade
legislation earlier this year, wrote to U.S. Trade
Representative Michael Froman on Wednesday, urging him to make
sure tobacco disputes are excluded from TPP rules.
"It is essential that effective safeguards are put into
place to explicitly protect the ability of countries to
implement public health measures," said the letter, organized by
congressmen Ami Bera of California and Jared Polis of Colorado.
But the prospect of such a move is ringing alarm bells in
the U.S. business community, otherwise a strong supporter of the
deal to cut tariffs and set common standards for 40 percent of
the global economy.
U.S. business groups, including the American Farm Bureau
Federation, U.S. Chamber of Commerce and National Association of
Manufacturers, also wrote to TPP officials this week, warning
against singling out specific sectors or industries.
ID:nL1N1200JR
"Such exclusions are unnecessary and would be highly
damaging to the international rules based trading system and the
prospects for the TPP," said the letter,
Targeting tobacco could erode support in the U.S. Congress
from Republicans from tobacco-producing states such as Kentucky
and North Carolina. Congress must approve the trade deal before
it can come into effect, and every vote will count.
U.S. negotiators must balance local sensitivities against
the need to get trading partners to back a deal which will
impose higher, and potentially unpopular, standards in areas
like copyright and pharmaceutical patents for some.
"There seems to be broad support for inserting language to
ensure that tobacco companies cannot continue to abuse the
trading system," Campaign for Tobacco-Free Kids President
Matthew Myers said.
Malaysia, where domestic support for the TPP is shaky, wants
to completely exclude tobacco from the TPP. Excluding tobacco
would allow countries to keep tariffs on U.S. tobacco products.