Negotiations on the twelve-nation Trans-Pacific Partnership (TPP) free trade agreement (FTA) are nearing the ‘endgame’ as heads of state plan to meet on the sidelines of the Asia-Pacific Economic Cooperation Leaders Meeting on October 7-8 in Bali, Indonesia. Many policy decisions were left unsettled after the last formal negotiating session on August 22-30. In mid September cattle producer groups from Australia, Canada, New Zealand and the U.S. offered ten core principles for guiding efforts as the talks move toward conclusion.
The four cattle groups are part of the Five Nations Beef Alliance (FNBA) which includes producers from Mexico. The five countries combined account for one-third of global beef production and roughly half of world beef trade. Like virtually all farm groups that fear agriculture being dropped from the talks because every country protects some agricultural production, the group’s number one point calls for a comprehensive agreement covering all goods and services, the second point calls for no industry exclusions, and the last point is that the talks be treated as a ‘single undertaking’ so that nothing is finalized until everything is finalized.
Cattle producers have a particular interest in FTAs because they produce higher valued products that fit with the needs of a growing middle class and upper class of consumers. To the extent that areas of the economy are walled off from import competition, economic growth will be lower and the pool of middle class consumers will be smaller, particularly in middle income developing countries that are part of the TPP, such as Malaysia, and ones that may join in the future.
Some of the concerns of the cattlemen were echoed by Thomas Donohue, president of the U.S. Chamber of Commerce speaking in Japan. He said speed is important in the TPP negotiation, but content is even more important. He called for a comprehensive agreement because excluding one industry or commodity leads to other exclusions and a weaker agreement for everyone.
Next on the cattlemen’s list is that all tariffs and other market access barriers should be eliminated by the end of a transition period and all transition periods should be short and not back-loaded. This is a basic principle of the TPP from when it had only three members Chile, Singapore and New Zealand. Tariff proposals have reportedly not yet been exchanged. The cattlemen are well aware that the Japanese government, a recent addition to the talks, is being lobbied back home to exclude beef and pork from any tariff reductions, much less to be put on a meaningful timetable toward elimination.
The U.S. has bilateral FTAs which have 15-20 year phase-outs with much of them back-loaded. These have often been with developing countries that need economic growth from lower U.S. industrial tariffs before addressing competition in agriculture. Japan is a developed country with which the U.S. has spent years in negotiating market access in agriculture. When Japan joined the talks they promised to not slowdown the process. They have already missed a mid-September timetable for market access offers.
While tariffs are being eliminated, the cattlemen say there should be no quotas or safeguards that restrict trade. This would include the formulation of a plurilateral tariff elimination schedules so current members of TPP and future members can easily understand the tariff rates. No quotas will be hard for countries to accept.
The other four points in the core principles deal with the other set of market access issues – sanitary and phyto-sanitary (SPS) rules and regulations. Principle number six states it simply, “Non-science based SPS measures must not impede trade.”
The solution they offer is risk-based scientific decision making, regulatory convergence and equivalence so that international science-based standards are incorporated in the text of rules and regulations.
At the heart of this effort to strength SPS rules is the ‘WTO plus’ concept that has discussed since the TPP talks began. The WTO agreement on SPS measures that came into effect in 1995 with the creation of the WTO is good as a basic document, but needs to be updated. With the Doha Round of WTO trade policy negotiation dead in the water, other opportunities are being explored to move WTO plus forward. The TPP effort to create a ‘21st century, high standards’ agreement seems like a natural fit. To enhance the WTO SPS agreement in TPP, an enforcement mechanism that goes beyond WTO enforcement must be included.
The U.S. Trade Representative (USTR) has introduced in the negotiations a “Rapid Response Mechanism” to address trade disruptions due to unscientific SPS measures or technical barriers to trade. The cattlemen believe, “Additionally, clear, timely and binding disciplines and consultative mechanisms must be established to deal with on-going non-tariff trade barriers and new issues should they arise.”
Another large round of negotiations is not planned. Individual groups have met since August 30 and many of those groups have problems that need to be addressed. The lead negotiators for the twelve countries met for four days a couple of weeks ago to address issues left open. Progress was reportedly made on SPS issues, but according to Inside U.S. Trade dispute settlement methods were left to be resolved at the ministerial level.
All of this last minute pressure should not be too surprising since this type of negotiations has never been tried before. The lead negotiators will offer in Bali a status report on the negotiations to the TPP Leaders, who have previously called on negotiators to complete the agreement this year. The political leaders should gain information from each other and communicate a course of action back to the lead negotiators. At least a third of the political leaders have a letter from their cattlemen outlining a way forward. USTR Michael Froman will be at the TPP chief negotiators meeting in Bali on Oct 1-2 and the TPP ministers meeting Oct. 3-4.
Getting the contents right is even more important with indications that South Korea and Thailand wish to join the negotiations. The TPP FTA may become the Asia- wide agreement that some participants hoped it would. Also, Tim Groser, Trade Minister of New Zealand and a former WTO negotiator, has pointed out that the TPP outcome will shape the expectations of the TTIP talks between the EU and U.S., and the two agreements together will shape trade talks for the rest of the world.
Ross Korves is a Trade and Economic Policy Analyst with Truth About Trade & Technology (www.truthabouttrade.org). Follow us: @TruthAboutTrade on Twitter | Truth About Trade & Technology on Facebook.