Time running out for a TPP deal

TOKYO -- Negotiations for the Trans-Pacific Partnership, a proposed free trade agreement among 12 Pacific Rim countries, are drifting dangerously.

To break the deadlock in the talks, Akira Amari, Japan's minister for economic and fiscal policy, who is also in charge of the TPP talks for Japan, will visit the U.S. starting Tuesday for discussions with U.S. Trade Representative Michael Froman.

A diplomat from a member of the Association of Southeast Asian Nations has expressed excitement over Amari's involvement in the talks, saying, "Mr. Amari's appearance is unexpected good news." The meeting between Amari and Froman will be the first between the two sides in about four months. The 10 other countries taking part in the TPP negotiations will be watching developments carefully.

Japan and the U.S. are the two biggest economies in the would-be free trade zone, accounting for 80% of the members' combined gross domestic product. Unless the two economic powerhouses can resolve their differences, there will be no agreement among the group as a whole. Instead of a "21st-century trading order," negotiators may end up with a 21-century failure. Aware of the danger, Japan and the U.S. are both motivated to reach an agreement, both bilaterally and in the group as a whole.

Miles to go

Although Japan and the U.S. share the goal of reaching a broad agreement among all TPP negotiators during a meeting of leaders from the Asia-Pacific Economic Cooperation forum in Beijing in November, they remain sharply divided over how to get there. 

The Office of the U.S. Trade Representative is adept at dragging out negotiations and refusing to budge until the last minute. The USTR will probably rely on this tactic at a politically sensitive time in Washington. With the Nov. 4 midterm congressional elections drawing near, the USTR cannot make concessions to Japan that would draw domestic criticism. But Froman probably does not see his meeting with Amari as a final showdown. He is likely to stall until just before the APEC summit. Froman appears to be treating a deal with Japan as the final piece of a jigsaw puzzle.

Ticking clock

Japan, for its part, has good reason to accelerate its negotiations with the U.S. Even if it reaches a consensus with the U.S., including on the thorny question of tariffs on five key agricultural products, it still has to conclude bilateral negotiations with the other 10 participants. Tokyo has much to do because it joined the TPP negotiations late.

Top negotiators met in Hanoi in early September. On the sidelines of the meeting, Japan moved energetically, holding bilateral talks with seven of its TPP partners on import tariffs, not including the U.S. Japan also held talks with Australia on import tariffs during a recent secret visit to Japan by a high-level official from the Australian Department of Foreign Affairs and Trade. But despite the effort, Japan was not able to reach agreement with any of its counterparts because it could not discuss items still under negotiation with the U.S. Its list of items up for liberalization remains blank.

Emerging-market countries taking part in the TPP talks are thus waiting for Japan and the U.S. to move. The other countries in the group may, in fact, have higher hopes for the talks between Amari and Froman than the two men themselves.

Only a month and a half remains before the APEC meeting in Beijing, which U.S. President Barack Obama has effectively set as his deadline for the entire TPP negotiation. The U.S. appetite for brinkmanship is unabated. The longer the Japan-U.S. talks drag on, the less time Japan will have to negotiate with its other partners.

If Washington and Tokyo cannot bridge their differences over how to secure a broad agreement among all TPP negotiators during the summit, the clock could run out on the entire enterprise. The group would miss an opportunity to wrap up a deal and the talks could founder. A former senior USTR official who was in Japan recently warned of the danger of finger-pointing and said the ideal of free trade may be lost as a result.

Source: Nikkei