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Pacific-Trade Pact Misses 2013 Deadline as Talks Recess

Dec. 11 (Bloomberg) -- Negotiators of the 12-nation Trans-Pacific Partnership trade pact said yesterday they would miss a year-end deadline to complete the deal.

“We identified potential landing zones for the majority of key outstanding issues in the text,” U.S. Trade Representative Michael Froman told reporters after four days of talks in Singapore, reading a joint statement from ministers and delegation heads. “We intend to meet again next month,” he said, with market access issues yet to be resolved.

Talks on the TPP, which would link an area with about $28 trillion in annual economic output, have faced differences over issues from agricultural tariffs to intellectual property. Leaders from the U.S. to Malaysia and Japan must also deal with opposition to the pact from lawmakers at home, an obstacle that will have to be overcome once the agreement itself is finalized.

No new timeline has been set to reach an agreement on the TPP, a pact that goes beyond usual trade deals that focus on tariffs and traditional goods such as agriculture. It would establish rules for digital commerce and include environmental standards and protection for companies that compete against government-backed businesses.

Speaking to reporters on a call from Singapore, Froman said he is optimistic that all 12 nations working toward the accord will remain involved in the talks and that they’ll be able to create a trade deal with high standards.

Ambitious Goals

“It’s easy to get a quick agreement. All you have to do is drop your level of ambition,” which none of the trade ministers did in Singapore, he said.

With talks resuming in January, the prospect of a deal in the first weeks of 2014 is murky.

“To actually close a deal then is tricky,” said Deborah Elms, head of the Temasek Foundation Centre for Trade & Negotiations in Singapore, referring to the January meeting. “What is critical is that it’s very clear to the ministers what the compromises will have to be,” she said. “It’s more plausible to expect a slightly later conclusion,” such as in March or April.

“We had various bilateral talks and of course everybody understands that there are sensitivities for each country,” said Yasutoshi Nishimura, Japan’s Deputy Economy Minister, speaking through a translator to reporters. Economy chief Akira Amari missed the talks after being diagnosed with early stage tongue cancer.

Agreement was in sight on about two-thirds of problematic issues according to Nishimura, Japan’s cabinet office said in an e-mailed statement yesterday.

Autos, Agriculture

“We have been making necessary adjustments and coordination and deepened our discussion,” Nishimura said. The U.S. made progress with Japan in talks on automobiles and insurance, and still has more work to do on cars and agriculture, Froman told reporters.

The delay in concluding the TPP complicates the Obama administration’s so-called pivot to Asia, already dogged by tensions with China over the East and South China Seas. President Barack Obama sent Secretary of State John Kerry in his place on a four-nation trip to Asia in October as he dealt with a partial government shutdown at home. He plans a trip to the region in April.

The countries in the pact are the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. China, which has been excluded from the TPP, is separately moving on trade talks with countries such as South Korea, Japan and Australia.

WTO Deal

The TPP talks follow an accord struck by the World Trade Organization, the first multilateral agreement negotiated by the WTO’s 159 member nations in its 18-year history. The pact, unveiled in Bali Dec. 7, is designed to smooth commerce at borders and safeguard food security in developing nations. A successful WTO deal may add $1 trillion to the world economy, supporters among business groups have said.

“There is a line on which Japan can absolutely not compromise,” Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters said in Tokyo yesterday of the TPP. Still, Japan’s team “will continue to put all their energies into the negotiations until the end for the sake of the national interest.”

Japan’s defense of its farming and automobile industries and reluctance to allow access for U.S. automobiles have been among issues impeding progress on the deal. Prime Minister Shinzo Abe seeks to increase agricultural efficiency in the nation’s 1.2 million rice farms and remove hurdles to his pursuit of free-trade pacts including the TPP.

Fast Track

In the U.S., Obama faces opposition to the deal from Congress, consumer advocates, automakers and labor unions over a range of issues. Last month 151 House Democrats sent a letter to Obama stating their opposition to granting him fast-track authority to negotiate trade agreements, citing a lack of congressional consultation in the TPP negotiations.

U.S. Vice President Joseph Biden’s trip to Asia last week, intended to pin down the TPP and renew the U.S. emphasis on Asia, was overshadowed by China’s Nov. 23 announcement of an air defense zone over a large swathe of the East China Sea, including islands at the center of a territorial dispute with Japan.

South Korea late last month expressed interest in joining the talks, and said it could start preliminary bilateral discussions with TPP parties. That would not amount to a formal decision to join the TPP process, the trade and finance ministries said in a joint statement Nov. 29.

Investor-State

“The Australian government has said that it would be able to consider, on a case-by-case basis, the possible support for an ISDS -- investor-state dispute settlement -- pursuit,” Trade Minister Andrew Robb told reporters in Singapore. “We’ve said that we’re prepared to consider that in the context of TPP provided there is a substantial market-access result.”

The anti-secrecy group WikiLeaks on Nov. 13 released a document said to be a draft of the intellectual-property chapter of the accord, a move which Malaysia’s international trade minister Mustapa Mohamed said in an interview Nov. 20 “is not helping the process.”

Some TPP provisions would “trample over individual rights,” according to WikiLeaks, which this week also released two documents it said were prepared by a TPP negotiating country and showed strong disagreement between the U.S. and its partners on issues including investor-state dispute settlement, intellectual property and the treatment of medicines.

To contact the reporter on this story: Sharon Chen in Singapore at schen462@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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