TPP-11 Negotiators Examine Options for Advancing Deal Without US
The chief negotiators from the 11 remaining Trans-Pacific Partnership (TPP) nations debated options last week for advancing the trade pact without the US' participation, meeting in Hakone, Japan.
“For the pact to come into effect with 11 countries, we need a new international agreement,” Japan’s chief negotiator Kazuyoshi Umemoto said after the talks, according to comments reported by the New York Times. “We now have an image of how that agreement will be shaped.”
Over the course of the two-day meeting, divisions in country positions reportedly re-emerged, with some nations favouring a re-write of certain terms in light of the US’ absence, and others preferring not to re-open substantive negotiations. Reports suggest that countries are in favour, however, of keeping the high ambition regarding the rules set out in the original TPP.
Following Washington’s withdrawal in January, officials in the other participating countries have grappled with next steps for the pact, which would have covered almost 40 percent of global GDP and over a quarter of world trade when considered with the US. The North American nation was the largest economy of the group by far, followed by Japan. (See Bridges Weekly, 9 February 2017)
The mandate for this meeting between senior trade officials was given at the Asia-Pacific Economic Cooperation forum (APEC) trade ministers’ summit in Hanoi in May. At the time, ministers agreed to “launch a process to assess options to bring…the agreement into force expeditiously,” and set a November deadline for the work to be completed, on the occasion of the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting in Da Nang, Vietnam. (See Bridges Weekly, 24 May 2017)
Negotiations for the TPP were concluded in late 2015 following several years of negotiations among 12 nations in the Asia-Pacific, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the United States, and Vietnam. (See Bridges Weekly, 8 October 2015)
Negotiating positions at play
Australia, Japan, and New Zealand have been among those reportedly advocating for the TPP-11 to advance the current version of the agreement, keeping its substance mainly intact except for a few small changes to facilitate its enactment. Tokyo and Wellington have already ratified the accord in its current form under their domestic legislatures. (See Bridges Weekly, 4 May 2017)
The withdrawal of the pact’s largest economy meant that the ratification threshold required for entry into force could not be met, where a minimum of six countries accounting for at least 85 percent of the total GDP of the original 12 signatories are required to approve the agreement domestically.
Malaysia and Vietnam, however, have reportedly suggested that certain rules may need to be revisited, suggesting that the US withdrawal has changed the balance of the final deal on multiple fronts, ranging from goods market access to labour rules.
Negotiators are reportedly planning to re-convene in Australia by early September to finalise their preparatory work in time for submitting the required set of options to leaders in November.
Japan’s reported scepticism on re-working the content of the agreement has been credited partly to a hesitation to revisit some of the areas that had proven challenging to resolve in the original negotiations and later defend domestically.
In Japan, the accord has fuelled significant public debate, particularly in terms of agriculture, with farmers raising concern that the agriculture concessions agreed in TPP could put them at risk of losing out to foreign competition on rice, pork, and other sensitive agricultural products.
In addition, some officials warn that larger scale changes could make it harder for the US to re-enter the agreement, should it later choose to do so.
“Although TPP-11 is acceptable, Asian countries are aiming for the US market in the end,” Nobuteru Ishihara, an economic minister in Japanese Prime Minister Shinzo Abe’s cabinet, told the Kyodo news agency.
The joint statement from the APEC ministerial meeting noted that the scope of the discussions will include “how to facilitate membership for the original signatories,” as well as leaving the door open for additional countries to join later on.
Japan has already moved forward on another major trade pact this year, having announced with the EU a political agreement on a planned free trade agreement (FTA), also known as an economic partnership agreement. While certain thorny topics must still be resolved before the full negotiations can be completed, proponents have touted the planned agreement as a signal that both parties are committed to trade liberalisation and to bucking inward-focused policy approaches. (See Bridges Weekly, 29 June 2017)
ICTSD reporting; “Japan wants a massive trade deal without the US — but these countries stand in its way,” CNBC, 13 July 2017; “TPP chief negotiators meet to hash out deal with or without U.S.,” KYODO, 12 July 2017; “11 TPP members remain divided over approach to put deal into force,” XINHUA, 13 July 2017; “Chief Negotiators From 11 TPP Nations Begin Talks In Japan,” MALAYSIAN DIGEST, 13 July 2017; “TPP, the Trade Deal Trump Killed, Is Back in Talks Without U.S.,” THE NEW YORK TIMES, 14 July 2017; “TPP states agree new framework needed to implement pact without U.S.” KYODO, 13 July 2017; “TPP to stay largely as is minus US, members agree,” NIKKEI, 14 July 2017.