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Bridging Japan-U.S. gaps key to keeping TPP ball rolling

by Kayo Mimizuka

Kyodo

After failing to reach a deal by the much-touted 2013 deadline, the 12 economies negotiating the Trans-Pacific Partnership have pledged to keep striving for solutions to thorny issues, with the prospect of Japan-U.S. talks over farm products and cars as one of the keys for an early conclusion of the free trade pact.

A Japanese official said the TPP members could become even less motivated to make concessions after they missed the pledged deadline at a crucial four-day ministerial conference that ended Tuesday in Singapore, suggesting negotiations could now stretch on.

The United States was the most vocal about reaching a TPP agreement by the end of December as it seeks to rebuild its presence in Asia when China, a non-TPP member, is increasing its global influence, while trying to get an achievement before the midterm elections next year.

Japan was also pushing for concluding the deal in Singapore, but bitter conflicts with Washington were among major sticking points hampering the overall negotiations.

The two sides met at least twice on the fringes of a multilateral plenary meeting to discuss how to deal with Japanese tariffs on farm products as well as auto trade issues, but they fell short of filling the gaps.

“I think resolving the U.S.-Japan market access questions will be critical to the success of TPP,” U.S. Trade Representative Michael Froman told reporters after the Singapore session. “We’re hopeful Japan is able to come to the table prepared to achieve” a comprehensive deal.

Tokyo, however, apparently thinks it has conceded all it can and it is now Washington’s turn to bring a compromise plan.

“We cannot give even 1 millimeter” to the United States, Yasutoshi Nishimura, senior vice minister of the Cabinet Office, reiterated after the ministerial meeting, while declining to reveal the details of the negotiations. “The United States’ demand has never changed. They need to come to the table with flexibility.”

The two sides are going back to the capitals and again consult with stakeholders, but it is highly uncertain whether they could make a breakthrough on their sensitive issues as they continue to face strong pressures from the Japanese agricultural sector and the U.S. automobile industry, respectively.

An early conclusion of a “21st century” TPP pact, which would also set new international rules for Internet freedom, protection of labor rights as well as medicine prices, is seen as a highly ambitious goal, considering it took around 18 years before countries at the World Trade Organization reached a partial agreement last week on a simpler accord under the long-stalled Doha Round trade liberalization talks.

Apart from tariffs there are many other controversial TPP issues left unsolved, including intellectual property rights, reform of state-owned firms as well as the environment, and big gaps remain over those issues between the United States and others, including Malaysia and Vietnam.

The prime minister of Malaysia, which is strongly against the hard-line U.S. stance and is especially wary of reform of state-owned enterprises, does not deny the possibility of walking out of the talks.

“That is the worst situation,” but “if people can’t accept it, we have no choice,” Najib Abdul Razak said in an interview with Kyodo News on Monday.

While people involved in the talks say it won’t be easy to maintain momentum, the trade ministers said in their joint statement they will continue their “intensive work in the coming weeks” and decided to meet again in January, possibly on the fringes of the annual talks of the World Economic Forum at Davos, Switzerland, scheduled for Jan. 22 to 25.

Matthew Goodman, who holds the chair in political economy at the U.S. Center for Strategic and International Studies, said in a recent interview that a realistic deadline to seal a pact is April, when President Barack Obama is slated to visit Asia.

“That is when I now expect an agreement to be announced,” said Goodman, a former White House coordinator for the Asia-Pacific Economic Cooperation forum.