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TPP talks end upbeat but year-end deadline uncertain

Sticking points abound; Obama no-show weighed on momentum

by Sayo Sasaki

Kyodo

The 12 Pacific Rim countries in the Trans-Pacific Partnership free trade negotiations declared they have made significant progress as they wrapped up a series of meetings Tuesday in Bali, Indonesia, but whether they can meet their target of concluding a deal by the end of the year is still uncertain.

Chief negotiators, ministers and leaders of the countries engaged in discussions for an unusually long six days to facilitate talks on a range of issues that need political decisions, including tariff eliminations, intellectual property protection rules and treatment of state-owned enterprises.

But the TPP leaders’ statement and the ministers’ report to the leaders, released after the closed meetings, remained vague, giving no specific dates and figures to be achieved, while acknowledging difficulties remain in a number of fields.

Most notably, the ministers said in their report that agreement remains outstanding on treatment of the “most sensitive products” in the negotiations for tariff eliminations.

As the countries each have their own sensitive products, such as rice for Japan, negotiation sources said the TPP members are considering a plan to allow a 30-year tariff phaseout, triple the usual 10 years in free trade agreements.

The extensive period could force all the members to agree on the basic rule of total elimination of tariffs, but it also raises a concern of undermining the spirit of high-level trade liberalization, observers said.

Other plans that have surfaced during the latest meetings include setting more relaxed standards for developing countries compared with the developed countries to address their different stages of economic development.

In line with trying to bridge the gap between developing and developed countries, the TPP leaders’ statement called for an agreement that “takes into account the diversity of the (members’) levels of development.”

The plan, however, could also work against the TPP’s fundamental aim to set unified standards among members, the observers said.

With such issues remaining, after more than three years of negotiations and 19 rounds of talks, members share the need to speed up the process as the yearend approaches.

But part of the negotiation momentum was lost when U.S. President Barack Obama opted not to travel to Indonesia and Brunei for the TPP, the Asia-Pacific Economic Cooperation forum and the Association of Southeast Asian Nations summits due to the major political crisis in Washington.

Obama was set to chair what was supposed to be an “important milestone” TPP meeting. But the absence of the leader of the world’s largest economy, which has been the most vocal about the negotiations, undoubtedly affected the overall mood.

New Zealand Prime Minister John Key, who took over as the chair, reportedly said before the summit that “it doesn’t mean that it’s a failure if we don’t get there (to the year-end deal) because these are quite big hurdles to get over now,” hinting at the possibility that the deal may not be struck under the envisioned time frame.

There has been a huge rift between the United States and other countries in the TPP, according to people engaged in the talks.

Akira Amari, Japan’s TPP minister, described the talks between the United States and other countries in Nusa Dua has being “one way,” said Koya Nishikawa, head of the Liberal Democratic Party’s committee on the TPP.

“I think the United States is supposed to make suggestions and see how the other countries respond, but I was told that the talks just end” after U.S. officials speak, with others making no response, Nishikawa said after meeting Amari.

“The negotiation appears to be the United States against everyone else,” said a source familiar with the talks.

As Washington continues to face difficulties in resolving political issues at home, Japan could assume a greater role in bringing countries together toward the year-end goal, Japanese officials said.

Prime Minister Shinzo Abe said after the summit that Japan is tasked with making contributions to resolving outstanding issues and that it will host a TPP meeting on intellectual property as part of this effort.

Amari said of the coming meeting, “If we can set the course for the most difficult field, then the schedules for the conclusion of easier fields would become clearer.”

Japan, whose sensitivities are in the field of tariffs as it faces strong domestic pressure to protect rice and other farm products, has begun making its own domestic adjustments to pave the way for reaching a pact.

The ruling LDP, which has adopted a resolution calling for the protection of rice, wheat, beef, pork, dairy products and sugar, and has considered them untouchable in the tariff negotiations, reversed its stance during the meetings in Bali and decided to revisit the possibility of eliminating tariffs.

Still, whether such efforts pay off remains unclear until the 12 countries are able to thrash out more concrete solutions to the difficult areas.

Chief negotiators and ministers are likely to meet before and around the time of the World Trade Organization meeting in December in Bali to work to that end.