Japan and the United States failed to overcome persistent obstacles to the Trans-Pacific Partnership as their latest round of negotiations ended Wednesday without agreement.
Lack of progress by the two largest economies in the Trans-Pacific Partnership clouds a goal set by President Barack Obama of its 12 negotiating members reaching agreement by the time they meet for an unrelated summit in November.
“We were unable to make further progress on the key outstanding issues,” said the Office of the U.S. Trade Representative, referring to the agriculture and auto sectors, after two days of talks between economy minister Akira Amari and U.S. Trade Representative Michael Froman in Washington.
“Both sides will consider next steps following consultations in both capitals,” the office added.
Japan “made a proposal with flexibility, but we were not able to make further progress,” said Amari. He was speaking separately to reporters.
“I had hoped (the proposal) would lead (negotiations) to the next stage, but there was a gap in our discussions,” Amari said.
How to proceed is now “up in the air,” he said, adding that he will focus on accelerating talks with other countries.
Japan and the United States, which would account for roughly 80 percent of gross domestic product of the planned free trade bloc, have been at loggerheads over market access for agricultural and auto products.
The biggest sticking point has been Tokyo’s proposed exceptions to tariff abolition and protection it wants to introduce on beef and pork products, one of five categories of agricultural products Japan deems sensitive.
Washington had hoped to close a deal among the 12 countries when their leaders gather for an Asia-Pacific Economic Cooperation summit in November in Beijing, but lack of progress in the talks with Tokyo means that can’t now happen, trade observers say.
TPP talks are already entering their fifth year. Washington regards the pact as central to its vaunted rebalance to Asia and is pushing for a substantial outcome before the U.S. midterm elections in November.
Top negotiators from all 12 countries are arranging a plenary meeting in October in Australia, which will likely be followed by a ministerial gathering. The progress they make in Australia will determine whether the TPP can be cemented in the near-term and realize the members’ vision of a bloc that accounts for around 40 percent of global output.
Tokyo has sought to shield tariffs on rice, wheat, beef and pork, sugar and dairy products to protect farmers from far cheaper foreign imports. The TPP aims for zero tariffs in principle.
Japan will likely be allowed to retain tariffs on sugar, which the United States also regards as sensitive, and is considering allowing greater imports of American rice and wheat in exchange for retaining their tariffs, sources close to the negotiations say.
For dairy products, Tokyo and Washington are likely to be able to find common ground by setting lower tariffs on a certain amount of imports, the sources added.
Speaking ahead of the latest round of talks, Amari said he hoped it would be the “last one.”
He said it would be difficult to arrange further talks in the near future, citing the Diet schedule. An extraordinary session begins next week.
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