Less than three weeks after wrapping up the previous round of trade talks in Brunei, TPP negotiators were already back on the road and meeting in Washington, D.C. late last week for an additional series of “intersessional” meetings between several key countries. Though the ostensible reason for this quick turnaround was to “further advance the negotiations in the lead up to APEC leader meeting in Bali, Indonesia” in early October, the reality is that the Brunei round was not as productive as many had expected and, as a result, countries were attempting to make significant progress in the hopes that the agreement can be concluded by year’s end.
Though all eyes in Washington are currently on Capitol Hill as a debt ceiling/continuing resolution fight to fund the government looms, U.S. Trade Representative (USTR) TPP negotiators have been working “around the clock” on the agreement. Key trade staff from Capitol Hill, helped by the fact that the talks were being held in DC, could help gauge the political viability of the agreement in the U.S., though outstanding issues like environmental, textile and market access concerns will have to be resolved well before Congress can consider any agreement. Adding to the already high stakes was an announcement just prior to the TPP talks that Brazilian President Dilma Rousseff has postponed the only state visit President Obama was set to receive in 2013 due to the NSA/Snowden revelations, casting a pall over the two country’s healthy trade relationship and likely commanding attention from USTR that would have otherwise been directed towards the TPP.
While the TPP negotiations cover over 20 “chapters,” the previous round of talks, which concluded on August 30, addressed roughly 10 of these sectors without seeing some of the breakthroughs anticipated. Among the most notable challenges, a working group tasked with addressing environmental concerns made less than 40 percent of the progress expected. This issue, which tends to divide more developed countries advocating for stricter environmental protections against developing countries arguing for looser standards, will likely come up again in negotiations on the sidelines of the Asia-Pacific Economic Cooperation (APEC) conference in Bali next month.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Textiles, another issue that similarly divides developed and developing countries, remains unresolved as the U.S. continues to push for “yarn forward” rules of origin, much to the chagrin of textile-producing countries like Vietnam. This rule stipulates that all materials used to make an item “from the yarn stage forward” must come from a country that is also a signatory of the agreement. If implemented, the policy would restrict Vietnam’s ability to source the best (in terms of both quality and price) provider in the supply chain of raw manufacturing materials: China. For its part, China is pursuing a rival regional free trade agreement that would no doubt attempt to renegotiate these rules with Vietnam should they become standardized in the TPP.
Tariffs, and market access more generally, are understandably the most sensitive piece of the agreement for most countries. After sitting at the table for the last two rounds of negotiations, Japanese negotiators in Brunei met bilaterally with representatives from all TPP countries except Chile and Peru to discuss proposed tariffs that would raise their trade liberalization rate to 85%. Although most countries in the TPP maintain a liberalization rate in excess of 90%, this concession was seen as a positive step in spite of the fact that the proposal excluded several key agricultural products. In the latest round of talks in Washington, however, sources report that four countries – Australia, Chile, New Zealand and Singapore – have upped the ante by offering to eliminate tariffs on all agricultural and industrial goods.
That’s more pressure for Japan, which faces significant opposition to the TPP from the domestic agricultural interests that represent rice, wheat, beef/pork, dairy and sugar. Recent news that protests from the agricultural ministry have sidelined the Japanese government’s internal discussions make chief negotiator Koji Tsuruoka’s job even more difficult as he and a team of ten Japanese negotiators continue talks in Washington.
Nonetheless, Kyodo was reporting Tsuruoka saying on Saturday that negotiators were ready to hand the talks to the politicians, who will meet on the sidelines of the APEC gathering in Bali. However, the Asahi notes that agreements on more than half of the chapters have still yet to be reached.
John VerWey is a Program Assistant at the American Enterprise Institute.