[CTC] Japan and the US in final stage in TPP consultation

[Arthur Stamoulis]

http://www.reuters.com/article/2013/04/03/us-usa-trade-asiapacific-idUSBRE93210D20130403

U.S. encourages South Korea to join Trans-Pacific trade talks
By Doug Palmer
WASHINGTON | Wed Apr 3, 2013 6:49pm EDT
(Reuters) - The United States would welcome South Korea joining  
negotiations on an Asia-Pacific free trade agreement, a senior U.S.  
trade official said on Wednesday, as Washington continues to weigh  
Japan's bid to enter the same set of talks.

"We do think it's natural and logical for Korea to join this  
negotiation. We think they would have a lot to offer," Assistant U.S.  
Trade Representative Wendy Cutler said in a speech at the Wilson  
Center, a foreign policy think tank.

The comments came as North Korea continues to rattle the region with  
threats of war against its southern neighbor. Pyongyang closed access  
to a joint factory zone with South Korea on Wednesday, putting $2  
billion in annual trade at risk.



The United States and South Korea are already free-trade partners  
under a one-year-old agreement.

Cutler, who was the lead negotiator on that pact, said Washington sees  
Seoul as a natural ally in helping shape the Trans-Pacific Partnership  
(TPP) agreement, a proposed regional agreement that Japan has asked to  
join.

"We would think that Korea would want to work with us and others in  
the region that want to promote a very high-standard, ambitious  
agreement," Cutler said.

The TPP negotiations include the United States, Canada, Mexico, Peru,  
Chile, Australia, New Zealand, Singapore, Malaysia, Vietnam and Brunei.

Bringing in Japan, the world's third largest economy, into the  
negotiation would set the stage for a final agreement covering the  
nearly 40 percent of world economic output.

South Korea, the world's 15th largest economy, has been much more  
aggressive than Japan in negotiating free trade agreements, having  
already struck deals with the United States and the EU.

"I think the Korean government is very closely examining the  
possibility of joining the TPP," but is already in a comfortable  
position because of the pacts it has negotiated, said Gheewan Kim,  
economics minister at South Korea's embassy in Washington.

SEOUL KEEN FOR DEAL TO OPEN JAPAN'S MARKET

At the same time, South Korea shares the U.S. interest in negotiating  
a deal that would open Japan's market to more foreign goods, Kim said.

Cutler said Washington was "working very hard with Japan" on its bid  
to join the TPP, but declined to say how close the United States was  
to a decision.

It is possible that the TPP countries could welcome Japan into the  
talk as early as a regional trade ministers' meeting this month in  
Surabaya, Indonesia.

"If I was Korea and I saw Japan at the TPP negotiating table, I'd want  
to be there and defend my interests," said Fred Bergsten, director  
emeritus at the Peterson Institute for International Economics.

Former U.S. trade officials at a separate event on Wednesday cast  
doubt on the goal of finishing the three-year-old regional trade talks  
this year.

"While it's true that meaningful progress has been made over the last  
16 rounds, the negotiations are not close to conclusion by any  
reasonable measure," Jay Eizenstat, a former U.S. trade negotiator,  
said at a Washington International Trade Association event.

Even if Japan stays out of the talks, "I think it would be improbable  
to conclude negotiations this year. With the involvement of Japan, ...  
it's optimistic to think they will be concluded by the end of next  
year," Eizenstat said.

Japan is such an economic powerhouse that it will be hard for the  
United States to demand that it eliminate virtually all of its  
agricultural tariffs, which has been Washington's approach with  
smaller free-trade partners, said Allen Johnson, a former chief U.S.  
agricultural trade negotiator.

Other issues with Japan, such as barriers to its auto and insurance  
markets, are expected to be tough to resolve by the end of this year,  
the former trade officials said.

Don Johnson, a former textile trade negotiator, noted that Vietnam's  
push for the United States to remove tariffs and other barriers to  
Vietnam's clothing exports is running into stiff opposition from some  
U.S. lawmakers.

"Even though we're heading into the 17th round (next month in Peru),  
we haven't reached the point now where we can tell exactly what (the  
deal) is going to look like," Johnson said.

"Of course, everyone would like to see it end this year, but that  
seems fairly optimistic."

(Reporting by Doug Palmer; Editing by Xavier Briand and Mohammad  
Zargham)
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