Peru Meeting Sees Progress in Trans-Pacific Trade Talks

2 November 2011

Negotiators of a proposed Trans-Pacific Partnership (TPP) agreement are pushing to finalise an outline of the nine-country accord in time for next week's Asia-Pacific Economic Cooperation (APEC) Leaders' Meeting. The ninth round of talks for the TPP, held last week in Lima, Peru, reportedly saw progress in various areas; speculation is also growing over whether Japan might join the talks at the upcoming APEC summit.

Despite strides made on "issues of small- and medium sized enterprises, regulatory coherence, competitiveness, and development," according to US Trade Representative (USTR) Ron Kirk, delegates reported that further talks are needed on intellectual property rights and market access.

The intellectual property provisions of the accord have been long-standing points of contention between policymakers and civil society organisations. At the eighth round of talks in Chicago, the US introduced a drug plan that received a cool response from NGOs, which cited qualms over the vagueness of the plan and the potential obstacles it might pose for access to medicines (see Bridges Weekly, 21 September 2011).

Building on bilateral meetings between TPP members in Lima, countries are now preparing revised offers and requests for improvements within specific areas of the deal, the USTR's office reported.

Negotiators are hoping to have an outline of an agreement by the APEC Leaders' meeting 8-13 November. All nine TPP negotiating parties are members of the 21-country APEC group; observers have suggested that a TPP agreement could pave the way for a similar pact among all 21 APEC countries.

The nine countries involved in the TPP talks are Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the US, and Vietnam.

With the APEC meeting drawing closer, Kirk has singled out three issues where negotiators are seeking "concrete and meaningful outcomes": promoting green growth, strengthening regional economic integration, and expanding trade and advancing regulatory co-operation and convergence.

US President Barack Obama has promised that this will be a state-of-the-art trade deal that goes beyond simply addressing tariffs by looking at non-tariff barriers as well, along with considering labour and environmental standards.

US seeks rules on state-owned enterprises

The topic of state-owned enterprises drew substantial discussion at the ninth round of negotiations in Lima, with the US tabling a draft text on the subject before the start of the talks. Kirk told reporters that the "unfair advantages given to state-owned enterprises [is] an issue that has united labour and business groups in the United States."

However, Vietnam publicly pushed back against the US proposal, with trade negotiator Tran Quoc Khanh telling reporters that, "we don't think there is a need for specific provisions for state-owned enterprises." He stated that Vietnam's state-owned enterprises were already compliant with WTO rules, making such a proposal unnecessary.

Malaysia, which also has state-controlled companies, admitted it needed to study the US proposal further before taking a side on the matter.

Japan to join TPP?

Speculation has lately been rife over whether Japan could join the nine countries negotiating the TPP, with Prime Minister Yoshihiko Noda having indicated an interest in joining the talks by the APEC summit. His predecessor, Naoto Kan, had attempted to get involved in the TPP talks, only to face pushback from his cabinet and the ruling Democratic Party.

The Japanese business community has largely supported joining TPP as a counter to the surging yen and to keep up with competitor South Korea, which recently saw its free trade deal with the EU come into force (see Bridges Weekly, 4 May 2011) and is expected to eventually ratify a trade pact with the US (see related article in this issue).

However, the pact's impacts on the competitiveness of the Japanese farming industry have prompted increasing debate in Tokyo. Critics worry that farmers may struggle against losing the present 778 percent import tariff on rice by joining onto the pact.

Making up only four percent of the workforce and contributing only one percent of the country's gross domestic product, the farm lobby still holds political sway in Tokyo. Reports from the agricultural lobby have stated that 350 of the 722 parliamentarians oppose joining TPP talks.

However, the prime minister has cautioned against waiting too long to join the negotiations because "the bar may be higher if we join after the rules are fixed."

Despite facing domestic opposition to Japan joining the pact, the prime minister appears committed to talking with opposition groups and having an answer for TPP negotiators as to whether Japan will join the nine-country talks at the APEC summit.

ICTSD reporting; "US says trans-Pacific trade deal on track," AFP, "Kirk Says U.S. Making Proposals to Curb State-Owned Business," BUSINESSWEEK, 26 October 2011; "Trade talks offer leadership test for Noda," FINANCIAL TIMES, 25 October 2011; "Passage of trade agreements creates momentum for expanded agenda," THE HILL, 26 October 2011; "Reformist Japan farmers urge free trade to spur change," REUTERS, 27 October 2011; "Vietnam rejects US push on state firms in trade talks," REUTERS, 28 October 2011; "In Japan, possible free trade deal comes with an argument," WASHINGTON POST, 30 October 2011; "Noda Pursues Trade Pact Despite Opposition," WALL STREET JOURNAL, 2 November 2011.

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