Talks between 12 nations drafting a Pacific-region trade agreement made progress on rules regulating state-owned enterprises, with differences over tariffs remaining one of the obstacles to a final deal, the top U.S. negotiator said in an interview.
“There has been important progress made this week,” Barbara Weisel said yesterday in Hanoi, where representatives from the dozen Trans-Pacific Partnership countries wrapped up 10 days of talks today. “We have spent successive rounds trying to narrow the gaps. There was very good progress on SOEs here.”
The TPP would create a free-trade zone from Australia to Peru with $28 trillion in economic output, or 39 percent of the global total. The deal is a major part of President Barack Obama’s effort to bolster U.S. influence in Asia as China flexes its economic and military muscle across the region. Talks around the agreement are entering a critical phase as the Obama presidency nears its final two years and the looming presidential campaign threatens to slow its passage.
“They are under pressure and I think that most of the delegations understand that,” Deborah Elms, executive director of the Asian Trade Centre in Singapore, said in an interview at the Hanoi TPP negotiations. “They have been talking in general terms. No one wants to concede anything until the last 48 hours.”
The pact, which doesn’t include China, would be the biggest trade deal in U.S. history. The TPP goes beyond typical trade agreements that focus on reducing tariffs, and highlights issues such as protection for companies that compete against government-backed businesses and stricter safeguards for patents and copyrights.
“We are not done and further work is needed, but we have made a significant step forward on some of the most challenging provisions in the SOE text,” Weisel said. “We want to negotiate this chapter in a way that addresses the real sensitivities that countries have without undermining the obligations that we are seeking to negotiate.”
Another area of progress was on sanitary standards in the agricultural sector, she said. Other tough areas of negotiations remain around intellectual property protection, the environment, and various specific market access issues, including agriculture.
Some of the biggest remaining sticking points concern Japan’s efforts to safeguard protections for its farmers. Japan has demanded special exemptions for its agricultural sector, with tariffs on rice, wheat, sugar, dairy, beef and pork maintained. Japan’s trade representative was more pessimistic than Weisel.
Substantial gaps remain between the U.S. and Japan and more talks are needed, Hiroshi Oe, Japan’s ambassador to the TPP, told reporters today after meeting with U.S. Trade Representative Wendy Cutler in Tokyo.
As the campaign for the 2016 U.S. presidential election draws closer, the window of opportunity for congressional passage of a trade agreement, which is difficult even in the best of circumstances, closes, Elms said.
“The closer you get to the presidential election, the worse it gets,” she said. “That’s why it has to get done by May.”
The countries in the pact are the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. China, which has been excluded from the TPP, is separately moving on trade talks with countries such as South Korea, Japan and Australia.
The next round of TPP ministerial level meetings has not been determined, Weisel said. The U.S. sees the November Asia-Pacific Economic Cooperation summit in China, which Obama and other leaders will attend, as an opportunity for them to potentially make progress on outstanding issues, she said.