TPP Countries Eye Potential Chief Negotiators' Meeting as Elections Loom

24 September 2015

The 12 countries negotiating the Trans-Pacific Partnership (TPP) Agreement are reportedly considering holding high-level talks next week in the US city of Atlanta, as the impending elections in some key players threaten to complicate the long-term timeline for the trade deal.

If held, the Atlanta gathering would come two months after an effort to broker a final TPP accord among ministers in Hawaii fell short, with the key divides being over rules of origin for automobiles, dairy and sugar market access, and data exclusivity for biologic drugs. (See Bridges Weekly, 9 August 2015)

Whether these negotiators’ meetings in Atlanta will be followed by a ministerial has yet to be confirmed publicly, though many reports suggest that it is likely to occur. If so, that would fit a timeline hinted at by officials throughout the past month.

Japanese Economy Minister Akira Amari recently suggested that another TPP ministers’ meeting could be scheduled within the coming weeks – assuming a deal seems within reach – a suggestion that has been echoed by officials and leaders from other TPP countries, including US President Barack Obama.

“I am confident that we can get it done, and I believe we can get it done this year. The trade ministers should be meeting again sometime in the next several weeks. They have the opportunity to close the deal,” Obama said in Washington on 16 September.

Old versus new issues

If completed, the TPP would include 12 countries that together encompass approximately 40 percent of global GDP. The deal would have approximately 30 chapters, according to a recent list provided by the Office of the US Trade Representative (USTR) to Knowledge Ecology International, with areas ranging from e-commerce and state-owned enterprises to labour and the environment.

Proponents of the trade deal have long touted its disciplines in “new” trade areas, such as those mentioned above, as ground-breaking developments that will refashion the international trade landscape, with USTR Michael Froman telling a Washington audience this week that it would be “the first trade agreement to take on a number of issues that are shaping the 21st century economy.”

However, some of the major difficulties that have emerged come from far more familiar trade areas, such as agricultural market access and rules of origin. The latter issue, specifically with regards to automobile trade between Japan and the three countries in the North American Free Trade Agreement (NAFTA), has become the latest hurdle for TPP countries to overcome in a difficult negotiating process.

Meetings were held earlier this month in Washington between the US, Canada, Japan, and Mexico aimed at bridging their automotive trade differences. While those talks did not yield a solution, officials said at the time, subsequent meetings between these same trading powers were held in San Francisco this week in a bid to make additional progress.

Leaders from automobile industry groups from all NAFTA member countries have, for their part, publicly urged their countries’ trade negotiators to insist on a minimum 50 percent regional value-content for both automobiles and their component parts.

In a joint letter, heads of Canada’s Automotive Parts Manufacturers’ Association, the US’ Motor & Equipment Manufacturers Association, and Mexico’s Industria Nacional de Autopartes reportedly warned that setting the threshold too low could “dramatically impact” their domestic manufacturing, with the automotive trade making up one-fifth of all trade among the NAFTA countries.

The request for better terms came in response to reports that the US and Japan, in their bilateral negotiations on automobile trade, had earlier reached a deal permitting a lower threshold for both automobiles and automobile parts than what is currently in place under NAFTA.

The North American Free Trade Agreement specifies that the regional value-content for automobiles and light vehicles, as well as their engines and transmissions, be set at 62.5 percent. The percentage for other vehicles such as tractors and trucks, as well as their engines, transmissions, and other auto parts is at 60 percent.  

With the Canadian general election less than a month away, the timing for reaching a TPP deal has grown increasingly difficult, particularly given domestic concerns in Canada over lost manufacturing jobs. Officials have warned that, should the negotiating process run too close to the election, it may be near impossible to make some of the more politically contentious concessions needed for a deal.

However, Canadian Prime Minister Stephen Harper suggested last week that his government would likely make some concessions in the automobile trade talks under TPP, warning that Canada “cannot afford to have our auto sector out of global supply chains.”

Should the talks go beyond the 19 October Canadian election, the timeline could be affected by a range of factors, including whether a new government will need to transition in and what the political landscape is looking like in the US, which is already in the midst of heated election debate despite its own polls not scheduled until November 2016.

Meanwhile, last week’s ousting of Australian Prime Minister Tony Abbott also prompted some brief speculation over what effect this may have on international negotiations, such as the TPP. However, Andrew Robb, who served as trade minister under Abbott, is set to keep his post under the cabinet announced by new premier Malcolm Turnbull, in a move that many analysts say indicates likely continuity for Canberra in this particular area. (See Bridges Weekly, 17 September 2015)

Some officials have suggested, however, that the lack of an official timetable is not an insurmountable problem for the trade talks. New Zealand Trade Minister Tim Groser this month also stressed that the trade deal is near completion, telling business leaders this month that besides cars, dairy, and pharmaceuticals, “everything else is pretty clear where the landing zone is.”

“There is no formal timetable, but as I have now been arguing for a long time, the absence of a formal timetable is essentially irrelevant,” said Groser, according to the New Zealand Herald.

Even with the talks in an uncertain phase, officials have been publicly making the case for the merits of such a deal, ahead of the difficult ratification process that will ensue if and when an agreement is signed.

“The reason is that the politics around trade are tough,” Obama told a business audience in Washington last week. “And I said this even in the run-up to getting [Trade Promotion Authority].”

“A lot of Americans, when they think of trade, think of plants in their hometown or nearby shutting down and moving to Mexico or China, and American manufacturing and good-paying jobs being lost. That’s the image of trade,” the US President said.

However, he noted, one way to correct the mistake of past trade deals is to “raise the bar” in new ones, an argument that he says he is making with legislators on both sides of the aisle.

Speaking at the CSIS Asian Architecture Conference on Tuesday, USTR Froman warned that not completing and approving TPP is essential for ensuring that the post-war trading system is updated – and is done so in a way that follows the models that its proponents want.

“It’s not the only game in town. There are alternatives: state capitalist, mercantilist models based on forced technology transfer, localisation, state champions, and generalised protectionism,” he noted, warning against models that do not recognise linkages between trade and labour, environment, and other concerns.

ICTSD reporting; “Amari says Japan-U.S. auto trade talks ‘very severe’,” REUTERS, 12 September 2015; “NAFTA auto parts makers mount drive to sweeten terms of TPP deal,” THE GLOBE AND MAIL, 9 September 2015; “Japan, U.S., Canada, Mexico to restart TPP talks Monday,” JIJI PRESS, 20 September 2015; “TPP nations to tackle sticking points at month’s end,” NIKKEI ASIAN REVIEW, 18 September 2015; “Stephen Harper Says Concessions Likely for Auto Industry in Pacific Trade Pact,” THE WALL STREET JOURNAL, 18 September 2015; “Groser ’90 percent certain of TPP success,” NEW ZEALAND HERALD, 15 September 2015.

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