The chief negotiators for the 12 countries creating the Trans-Pacific Partnership (TPP) free trade agreement (FTA) are expected to hold their next meeting in Hanoi, Vietnam on September 1-10. This follows-up on meetings in Ottawa, Canada in July and in Ho Chi Minh City, Vietnam last May. Issues are being resolved, but more big issues are still on the table. The talks are on track to finish sometime in 2015, but there are efforts to meet a November 2014 deadline.
About this time every year since the talks began in earnest in 2010, someone has tried to set an artificial deadline in November. During that month, several large Heads of Government meetings occur that include most of the 12 countries negotiating the TPP FTA. The Asia-Pacific Economic Cooperation (APEC) meeting is in China November 10-11; the East Asia Summit in Myanmar meets the week of November 9; and the G20 leaders’ meeting is in Australia November 15-16. To have a TPP Heads of Government meeting in that timeframe with a completed agreement would require many technical meetings in August, September and October and a ministerial meeting in October. That does not appear to be realistic.
The biggest outstanding set of issues is the U.S. and Japan market access talks. They need to give the other ten TPP countries a sense of what concessions they have agreed upon. Negotiators continue to meet on agricultural market access, including a just completed set of two-day talks, and claim progress, but no agreement has been reached. Technical experts will continue to meet, but not again in August. In mid-July the U.S. and Japan committed to disclosing details on market access in October. This is a particularly contentious issue for U.S. agriculture because the Japanese want to exclude rice, wheat, beef and pork, dairy products and sugar from the agreement.
Congress has weighed in on the issue. Almost one-third of the members of the House told President Obama that they would not support a final TPP agreement if Japan and other countries do not improve their market access offers. The letter reminded President Obama that the Japanese government had committed to uphold the foundational principle that the agreement should eliminate all tariffs. The letter was signed by 23 of the 39 members on the Ways & Means Committee, which handles trade issues, including Chairman Camp (MI-R) and the chairman and ranking members of the trade subcommittee, Reps. Nunes (CA-R) and Rangel (NY-D), respectively. Thirty-three signers are on the House Agriculture Committee. The National Pork Producers Council (NPPC), the American Farm Bureau Federation (AFBF) and National Cattlemen’s Beef Association (NCBA) supported the letter.
The NPPC continues to point to the U.S.-Korea (KORUS) FTA as the template for resolution of the pork issue. The Korean government was under intense political pressure by Korean pork producers to resist marketing opening policies. In testimony to the U.S. Senate Finance Subcommittee on International Trade, Customs and Global Competitiveness, the NPPC said, “South Korean import duties on most U.S. pork cuts of commercial significance were lowered to zero on January 1, 2014. Import duties on all U.S. pork products are eliminated over a short period of time. Safeguards are applied to a very small number of commercially insignificant pork tariff lines, and where they exist, they are phased out over a short time period.”
The way forward is made murkier by Republicans in the House of Representatives demanding that the Obama Administration commit to passing Trade Promotion Authority (TPA) before concluding talks on the TPP. TPA is usually passed before talks begin and commits the Administration to specific negotiating objectives and commits the House and Senate to up or down votes without amendments on the final agreement. TPA could be debated in the ‘lame-duck’ Congressional session after the election. According to Inside U.S. Trade, Canada and other TPP countries are reluctant to make concessions on sensitive issues without TPA to minimize the extent of renegotiation.
There was some movement on sanitary and phytosanitary (SPS) issues by the chief negotiators at the Ottawa meeting in July according to reports by Inside U.S. Trade. The “consultative mechanism” proposed by the U.S. government last May would be the first avenue to resolve SPS disputes. The chief negotiators were undecided on what type of dispute settlement mechanism would be available if the technical discussions failed to resolve the dispute. The U.S. government had opposed applying full dispute settlement to the SPS chapter, but subsequently indicated it would be willing to accept dispute settlement for some obligations. Australia and some other countries are concerned about going beyond the WTO SPS Agreement.
Despite the political pressure in the U.S. and some other countries to make a quick deal in coming months, Japan and other countries, including the U.S., have at least one more political crises to go through during the remainder of 2014. In addition to agriculture, Japan has to face critical changes on auto exports and imports of industrial products. The U.S. has to struggle over TPA to move a final agreement through the House and Senate. Canada has to deal with dairy and poultry imports. Other countries have their own unique concerns. Japan will likely threaten at some point to pull out of the talks. Others may too. As the calendar turns over to 2015, all 12 countries will conclude that their best hope is to move ahead with the agreement and face whatever political heat comes with it. Another month or two of intense negotiations will then be needed to resolve the final issues.
A few minor issues are causing distractions. Brunei (population 425,000, 79 percent Muslim) in April announced it was implementing a penal code based on Muslim Shariah law. Critics warn it would criminalize homosexuality, adultery and apostasy and allow for brutal punishments like stoning. Efforts are being made to remove Brunei from the TPP group. Also, some of the Malaysian opposition party members want to suspend TPP talks because of the Gaza-Israel conflict.
Despite the challenges in reaching an agreement, the South Korean government continues to work on implementation issues in the KORUS FTA in preparation for joining the TPP FTA. South Korea has not formally asked to join, but has expressed interest in joining. The U.S. government has said it first wants to conclude the agreement among the 12 countries before adding more.