Trans-Pacific Trade Talks Kick Off in Australia

17 March 2010

Negotiations toward a deal to open up trade among eight countries along the Pacific Rim got going in Melbourne, Australia on Monday. Expectations are high as some observers predict that the resulting deal, dubbed the Trans-Pacific Partnership Agreement, could be the foundation of a free trade area that eventually spans the entire Pacific region.

In the near term, however, delegates involved in this week's TPP negotiations are hoping to build on the existing ‘P-4' free trade deal, which governs economic relations among four countries in the region: Brunei, Chile, New Zealand and Singapore. This week, those countries are joined by Australia, Peru, the United States and Vietnam, all of which are hoping to sign on to an expanded trade pact. Other countries in the region, including China, Japan, South Korea, and some Southeast Asian nations, may also be looking to join the negotiation soon. Proponents say that a solid TPP deal could help the 21 country members of the Asia Pacific Economic Cooperation (APEC) group achieve their goal of establishing a free trade zone across the entire region.

"The fundamental point is that we all agree that this [is] only intended as a building block for a larger Asia Pacific regional trade agreement," New Zealand Trade Minister Tim Groser said this week, the New Zealand Herald reported. "The way in which the blocks are stacked is totally open for discussion and decision at a later stage."

The process of creating a far-reaching TPP Agreement - even among just the eight countries represented in Melbourne this week - could be thorny, as a number of bilateral trade deals already govern trade relations among several of the countries involved in the talks. How the terms of those existing deals will be incorporated in a broader regional pact remains to be seen.

"The language everyone is using is that it will replace existing negotiations because then you can make an argument that if you replace all these existing, overlapping rules it streamlines trade," Deborah Elms, a trade expert at Nanyang Technological University in Singapore, told Agence France-Presse. "But then, when you follow that up with, ‘Are you willing to give up the concessions or the benefits that you got out of the existing agreements?' the answer has been ‘No'."

The United States is a big newcomer to these talks, in both economic and political terms. The administration of US President Barack Obama has put a strong emphasis on engaging in trade with the Asia-Pacific region, even as some lawmakers in Obama's own Democratic Party continue to voice their concerns about signing onto new trade deals.

But other voices in Washington are calling for the US to become a leading advocate for deeper economic integration across the Pacific. C. Fred Bergsten and Jeffrey Schott of the Peterson Institute for International Economics argued in a letter to US Trade Representative Ron Kirk in January that the US should aim to reach an agreement on a trade deal with "at least a dozen Asia Pacific countries" in time for the APEC summit that US President Barack Obama will host in Hawaii in November 2011. They stressed that the deal should include Japan, South Korea, and at least one major Southeast Asian nation; Canada and perhaps Mexico should also be quickly brought into the fold.

It makes economic sense to join an agreement, the authors argued, noting that US participation could help "offset" the "discrimination against US exports" that has been caused by the recent proliferation of trade pacts among Asian nations. More active US involvement in the Asian economy could also help Washington balance China's growing influence in the region, the authors argue.

Some problems could crop up. The existing P-4 deal on which the TPP talks are based does not include provisions on environment and labour - topics that Obama has vowed not to neglect in any new trade agreements. Moreover, the US will likely be asked to reduce barriers to imports of other countries' agricultural products - a shift that could be difficult to get past lawmakers on Capitol Hill.

Two more TPP negotiating sessions have been scheduled for this year, one in June and another in early December.

ICTSD reporting; "Talks begin on trans-Pacific trade agreement," AFP, 14 March 2010'; "'New generation' free-trade deal talks start today," NEW ZEALAND HERALD, 15 March 2010.

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