Hopes are high that the Trans-Pacific Partnership may finally be worked out thanks to the recent passage in the U.S. Congress of a crucial trade bill. But negotiation sources warn that the ambitious free trade agreement is still hanging in the balance.
Countries participating in negotiations for the proposed TPP — a key part of U.S. policy to focus on the Asia-Pacific region — have long been waiting for the enactment of the legislation known as trade promotion authority (TPA).
As the TPA will allow U.S. President Barack Obama to sign trade deals by only asking for a yes or no vote in Congress, negotiating countries are now expected to engage in bolder bargaining without fearing that U.S. lawmakers could then tear apart the deal.
Economic and fiscal policy minister Akira Amari said Friday in Tokyo that he was “relieved” at the TPA bill’s passage.
The 12 TPP countries will now arrange a ministerial meeting, probably in late July, to reach a much-awaited broad agreement, Amari said.
The TPP, which would create a massive free trade zone covering some 40 percent of the global economy, “is expected to contribute to the stability and prosperity of the (Asian) region beyond the existing trade framework. Thus I believe all risks should be taken to conclude the pact,” Amari said.
Bickering between Japan and the United States, the largest economies taking part in the talks, has been seen as another big obstacle for concluding the ambitious trade deal. With the TPA now having cleared Congress, the two sides are arranging to resume bilateral talks soon. Amari has suggested there are only a few differences left to be resolved between the two countries.
Though the future of the TPP appears much clearer now, negotiation sources say the authority granted to Obama is not a silver bullet to overcome all remaining disputes among the member states.
Among some outstanding issues, the U.S. and emerging economies have yet to fill a huge gap over intellectual property rights, including the period of drug patent protection, which affects the availability of generic drugs for the poor. Countries such as Canada are also believed to be very reluctant to open up their dairy sectors.
The TPA may lead to a bilateral agreement by Tokyo and Washington, but it will not necessarily make it easier to conclude the overall TPP talks, one negotiation source said.
Governments of many TPP countries believe that easy concessions on sensitive issues could jeopardize final approval of the TPP by the legislatures of each nation.
Chile’s ambassador to the U.S., Juan Gabriel Valdes, said Tuesday at an event in Washington that some people had thought that passing the TPA would resolve all matters pending in the negotiations, but that is “simply not true.”
Ashok Kumar Mirpuri, Singapore’s ambassador to the U.S., said at the same event that “the most complicated (part) will be going back again to Congress to get TPP approved even after we get over the TPA hurdle.”
Trade observes say that key to the eventual success of the TPP is concessions by the U.S., whose hard-line stance has often frustrated other negotiating members.
Keisuke Hanyuda, a partner at Deloitte Tohmatsu Consulting, said the U.S. side could end up making substantial concessions as it is “pressed for time” — given that it will soon enter campaign mode for the 2016 presidential election in earnest.
Obama, who has a strong incentive to achieve a TPP deal as part of his legacy, “got the TPA so he could utilize it to the maximum. The United States is now expected to show more flexibility” to reach an agreement, said Hanyuda, a former trade ministry official.
The TPP involves Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
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