TPP Ministerial Set for Australia, Robb Suggests "Basic Elements" of Deal by Year-End
Members of the 12-country Trans-Pacific Partnership (TPP) talks appear to be ramping up their negotiating efforts in the hopes of reaching the main elements of an agreement by the end of this year, with Australia confirming last week that it would be hosting a ministerial-level meeting in Sydney later this month.
“After more than four years of intense negotiations the conclusion of the world’s largest regional trade agreement is within reach,” said Australian trade minister Andrew Robb in a statement announcing the 25-27 October meeting.
The goal of the event, the trade minister’s office said, was to advance the talks “with an eye to concluding the basic elements of the agreement before the end of the year.”
Robb had previously been one of the officials suggesting that a completed TPP would be unlikely this year, and was more likely for early 2015. (See Bridges Weekly, 26 June 2014)
The announcement has also prompted speculation that a basic TPP deal could be ready in time for US President Barack Obama’s trip to Asia next month for the Asia-Pacific Economic Cooperation (APEC) leaders’ meetings, despite earlier scepticism over the feasibility of this goal.
All 12 TPP members are part of the 21-country regional group, which will be having its annual gathering in China this November. The US executive has said that he would like to see some sort of document that Congress and the public could look at by that time.
Eyes on US, Japan
Whether the US and Japan will be able to resolve their differences on agricultural and automobile trade in time for the Sydney meeting is unclear, particularly given that ministerial-level meetings last month between US Trade Representative (USTR) Michael Froman and Japanese Trade and Economy Minister Akira Amari failed to yield any significant breakthroughs.
In the lead up to last month’s meetings, US Trade Representative Michael Froman spoke encouragingly about working “hand-in-hand” with Japan, and Japanese Prime Minister Shinzo Abe promised that his country would “boldly contribute to reaching an agreement.”
However, in a press release issued following the meetings, the Office of the US Trade Representative (USTR) suggested that those discussions had yielded no movement on “key outstanding issues.” Amari similarly told media that a “gap” between the sides had impeded any further progress.
The breakdown of the September session led to media reports that implied growing frustration on both sides, prompting many to question whether any resolution would be possible.
After receiving an unsatisfactory offer on the reduction of beef tariffs, with Japan suggesting that a safeguard mechanism be put in place should imports exceed a certain level, US officials reportedly threatened to retract a previous offer to eliminate a 2.5 percent tariff on auto parts.
On 26 September, US Vice President Joe Biden and Abe attempted to ease tensions during a short meeting in New York. According to the White House, Abe and Biden agreed on “the need to resolve outstanding bilateral issues in TPP negotiations, including on agriculture and automobiles, as soon as possible.”
Since Japan joined the TPP negotiations in July 2013, the two sides have been at loggerheads over these specific trade issues, with the disagreements being blamed for slowing down the rest of the group’s negotiations.
Acting Deputy USTR Wendy Cutler is now set to meet with Japanese officials from 10 October in an effort to “lay the groundwork” for resuming the bilateral talks, according to a press schedule released by the Office of the USTR earlier this week.
Since announcing his support of the TPP in early 2013, Abe has made the negotiations a priority within his three-pronged economic plan of structural, fiscal policy, and monetary policy reforms, jointly dubbed “Abenomics.”
But Japanese public support for the TPP is tempered by an overall uncertainty on the benefits of enhanced international trade. According to a recent Pew Research poll, only fifteen percent of the Japanese population believes that increased foreign trade leads to job creation.
Meanwhile, the powerful Japanese farming lobby, which strongly opposes agricultural tariff cuts, has presented another challenge to Abe’s TPP agenda.
During an address to the Council on Foreign Relations last month, Abe suggested that overcoming “resistance from the people who have been protected by vested interests” within the country’s political system is an “enormous task.”
Unlike their counterparts in Japanese agriculture, American agribusiness has been strongly advocating for deep tariff cuts, and even tariff elimination, on farm products in the TPP. In a recent press statement, the National Pork Producers Council (NPPC) suggested that “[t]he tail is wagging the dog in Japan” because a small group of “protectionist farmers” is preventing Japan and eleven other countries from signing the trade deal.
If Japan is unwilling to meet the tariff reductions agreed to by the other TPP partners, the NPPC argued, a deal should be concluded independently.
Despite the year-end suggestion for a basic deal, there is no formal deadline for the TPP talks. However, pressure to conclude a deal is growing, with Singaporean Prime Minister Lee Hsien Loong recently suggesting that a deal must be struck this year to avoid “further delays of an indefinite nature,” given the upcoming 2016 American presidential elections.
Meanwhile, other open questions include whether a completed TPP deal will be able to make its way through the US Congress, given that the US legislative branch has been slow to advance the renewal of Trade Promotion Authority (TPA), which allows negotiated trade deals to be submitted for a straight up-or-down vote, without amendments.
The Obama Administration has said that an ambitious TPP agreement could help make a case for passing TPA renewal. However, some lawmakers have said that they would not approve a TPP deal unless TPA is approved first.
ICTSD reporting; “TPP talks fail, again, as Tokyo and Washington continue to disagree on autos and food,” KYODO NEW, 25 September 2014; “This year is last chance to conclude TPP negotiations: Singapore PM,” XINHUA, 20 September 2014; “Despite Bold Japan Trade Pledges, U.S. Still Wonders: ‘Where’s the Beef?’,” WALL STREET JOURNAL, 27 September 2014; “Glum outlook for reaching TPP agreement in Nov,” ASIA ONE, 27 September 2014; “Japan, U.S. blame each other for snag in TPP talks,” REUTERS, 28 September 2014; “GOP Senate no slam dunk on trade for Obama,” POLITICO, 15 September 2014.