[CTC] TPP Next Steps Materialize

[Arthur Stamoulis]

A few on TPP below...

Inside U.S. Trade - 04/03/2015

TPP Next Steps Materialize With April CN Meeting, Ministerial After APEC

Posted: April 02, 2015 
Trans-Pacific Partnership (TPP) countries have mapped out a plan to advance the negotiations over the next two months that includes a meeting of chief negotiators April 23-26 in the United States and a gathering of trade ministers tentatively slated for late May, according to informed sources.

The dates of the chief negotiators meeting have been confirmed but the exact location has not, these sources said.

In contrast to prior informal rounds, TPP negotiating groups will not hold separate meetings in parallel to chief negotiators during the April 23-26 session, according to these sources.

One informed source pointed out that much of the negotiation on key outstanding issues is taking place bilaterally at this stage, rather than in groups. He said this is an indication that the talks are in their final phase.

Business sources speculated that TPP countries may have timed the chief negotiators' meeting to come after the introduction of Trade Promotion Authority (TPA) legislation in the U.S. Congress -- expected in mid-April -- in hopes that the bill's release will spur momentum in the negotiations.

The timing of the TPP meeting coincides with a negotiating round for the Transatlantic Trade and Investment Partnership (TTIP) that the U.S. is hosting in New York City during the week of April 20 (see related story).

The chief negotiators' meeting will come just days before Japanese Prime Minister Shinzo Abe meets with President Obama in Washington on April 28. A Japanese official said last week that Tokyo would like to a reach a bilateral deal with the U.S. on market access and auto trade when Abe visits Washington, but cautioned that the substance of the talks will determine when an agreement will be reached (see related story).

The informed source said there are indications from U.S. officials that the U.S. and Japan are close to a deal and that the U.S. has also been clearing a path with other TPP countries so that the final outstanding issues could be resolved quickly once TPA is passed.

But Canada has still not engaged in substantive negotiations with the U.S. and other countries on market access for its sensitive agriculture products including dairy and is taking a tough position that it will not make any concessions until Congress passes TPA, according to government and business sources.

They said Ottawa's cautious position also seems to be driven by the political dynamic in Canada ahead of federal elections currently slated for October, with the government of Prime Minister Stephen Harper apparently reluctant to make concessions on these sensitive products that could hurt its chances for re-election. Canada's supply management system restricts both imports and domestic production of dairy, poultry and eggs.

One Canadian source said the general assessment by observers in Ottawa is that the political ramifications of the Harper government's decision to open up new access for certain dairy products in a bilateral free trade agreement with the EU are still not fully clear. As a result, the government feels it must get past the current election before making any other market opening on supply managed products, this source said.

This source noted that the ruling Conservative Party is running neck-and-neck in the polls with the opposition Liberal Party and that even losing a few seats in parliament could be politically damaging.

Against that backdrop, three Canadian business groups urged Harper in an April 1 letter to take a "leadership role" in concluding the TPP negotiations.

"On behalf of our member companies, their employees across Canada and the families they support, we urge your government to take a leadership role in completing this historic effort to create a framework and a system of rules that will govern trans-Pacific trade for decades to come," the leaders of the Canadian Council of Chief Executives, the Canadian Chamber of Commerce and Canadian Manufacturers & Exporters wrote in the letter.

The letter is an apparent response to comments that Harper made in Saskatchewan on March 12 suggesting that Canada will not be able to hold up the conclusion of a TPP deal even if it is unhappy with some of the outcomes and that Ottawa therefore faces some "difficult choices" (Inside U.S. Trade, March 20). The Canadian source said these comments left some doubt as to the Harper government's commitment to concluding the TPP, even though the prime minister also stressed that it is important for Canada to have a seat at the TPP table.

Some observers have speculated that a U.S.-Japan deal during Abe's visit would set the stage for congressional approval of a TPA bill, which would then pave the way for TPP ministers to conclude the negotiations at their late May ministerial (Inside U.S. Trade, March 20).

The Chilean government in a March 26 press release confirmed that TPP countries are planning to hold a ministerial meeting in late May, but said the dates and location for the gathering have not yet been set. But informed sources said the ministerial is tentatively slated to take place after a May 23-24 meeting of Asia-Pacific Economic Cooperation (APEC) trade ministers in the Philippines.

House Ways & Means Committee Chairman Paul Ryan (R-WI) also said March 26 that TPP countries were tentatively planning a ministerial meeting in late May, but Chile was the first TPP country to confirm that timeline (Inside U.S. Trade, March 27).

But the key question with that scenario seems to be whether Congress can pass a TPA bill before the APEC meeting. If it does not, TPP ministers would likely not hold a full-blown ministerial, but merely a check-in meeting in conjunction with APEC, according to sources.

Ministers from key TPP countries will also be in Paris June 3-4 for a ministerial meeting of the Organization for Economic Cooperation and Development, as well as a meeting of World Trade Organization ministers that will take place on the sidelines.

The Chilean government disclosed the information about the late May ministerial at a March 26 meeting of its TPP advisory group consisting of industry and civil society representatives, according to a press release from Direcon, the economic division of the foreign ministry. During that meeting, Chilean chief negotiator Felipe Lopeandia updated the group on the status of the TPP negotiations following the March 9-15 round in Hawaii.

Lopeandia told the group that many of the issues still outstanding in the TPP talks are strictly bilateral, according to the Direcon release. "Although still complex, fewer of the outstanding issues involve all 12 member countries of TPP," he said in the release.

In a related development, Andres Rebolledo, who heads Direcon and serves as Chile's representative at TPP ministerial meetings, met in Washington on March 31 with U.S. Trade Representative Michael Froman. In a March 31 Twitter post, Rebolledo said his meeting with Froman was to evaluate pending issues in the TPP negotiations and the "next steps" of the process.

Chile is fighting to maintain the standards included in the U.S.-Chile free trade agreement on patent linkage for drugs and the removal of infringing content from the Internet, rather than having to agree to the higher TPP obligations on these issues.

It is also resisting U.S. demands for 12 years of data exclusivity for biologic drugs and seeking a carveout from the TPP's obligations to maintain open financial flows for its domestic laws that allow the imposition of capital controls to stem a financial crisis.

On patent linkage, the U.S. and Chile are already negotiating a side letter that would state that the relevant obligations from the bilateral FTA would prevail over the TPP standard (Inside U.S. Trade, March 13).

USTR has sought to downplay this disclosure by noting that U.S. free trade agreements always had side letters and that they will be publicly released along with the text of the final TPP agreement, sources said. -- Matthew Schewel


Japanese Official Says TPA Delay Hurting Bilateral TPP Talks With U.S.

Posted: April 02, 2015 
A Japanese official said late last week that the delay in congressional consideration of a bill to renew Trade Promotion Authority (TPA) is negatively impacting bilateral negotiations with the United States under the Trans-Pacific Partnership (TPP) because it causes Tokyo to question whether Washington is in a position to strike a deal.

Speaking to reporters in Washington on March 27, Ambassador Takeo Mori said the news that there are "immense political problems on the Hill" with moving a TPA bill is "quite worrisome" for Japan. He spoke after holding five days of talks on auto issues with Acting Deputy U.S. Trade Representative Wendy Cutler.

"Prospects that things are moving swiftly [with TPA] of course encourages the negotiations, and on the other hand when we hear that it is stagnating, we wonder if USTR in that kind of situation can really make the most difficult decisions necessary for a real free trade agreement," he said. "So we are very closely watching the discussion on the Hill and we really hope that we hear good news very soon."

His comments signal a fear that the contentious debate over trade in Congress may be causing USTR to hold back in the bilateral negotiations until it is able to ensure a critical mass of support for TPP in Congress. This may be difficult to do given the competing demands by congressional Republicans, who have said TPA passage must precede a TPP deal, and some House Democrats who want clarity on the substance of TPP before they are willing to consider TPA.

Mori's remarks seemed at odds with the position taken last month by Japan's deputy TPP chief negotiator, Hiroshi Oe, that Tokyo was willing to reach a bilateral deal with Washington on agricultural market access and auto trade before the Congress passes TPA (Inside U.S. Trade, March 13). Mori's comments may indicate that Japan is shifting away from that stance in light of the dynamic on Capitol Hill, or that Tokyo is delivering mixed messages.

Mori also said the two sides had made some progress in their five days of auto talks, but stressed that difficult issues remain and that more work would be needed at the technical level before the negotiations can be brought to ministers.

A USTR spokesman said in an e-mail that the two sides had a productive discussion that focused on reducing the number of outstanding issues. "More work remains and teams will continue working over the weekend to address technical details," he added.

The key outstanding issue in the auto talks is the special dispute settlement mechanism that the U.S. wants to put in place to provide a forum for challenging Japanese non-tariff measures it views as inhibiting market access for U.S. automakers. The U.S. and Japan are also still negotiating bilaterally on market access, where the main outstanding issues appear to be U.S. demands for more and better rice market access to Japan and the level of U.S. tariffs on auto parts.

Mori said the U.S. side during the meeting updated Japan on the status of the TPA debate in Congress, while the Japanese side expressed a desire for quick passage of TPA, also known as fast track.

While making clear that the TPA delay is impacting the bilateral talks, Mori said the U.S. and Japan are trying to reach a bilateral deal as soon as possible, even in the absence of fast track. He said the two sides are letting the substance drive the timetable, although he suggested it would be preferable if they could reach a deal when Japanese Prime Minister Shinzo Abe visits the United States in late April.

"I didn't quite say that it's our goal to strike a deal before our prime minister comes here," Mori said. "I rather said that, well, the substance drives the timing. So we will be of course happy if the leaders could celebrate an agreement, but we are trying to overcome the differences in the substance; that is where we are."

Separately, a senior lawmaker in Japan's ruling party on March 27 also suggested that a U.S.-Japan deal would be more likely to materialize if the U.S. Congress first passes TPA.

"From Japan's view, seeing TPA first basically allows the bilateral negotiations to go smoothly, without having to rehash things," Masahiko Komura, the vice president of Japan's Liberal Democratic Party and a member of the Diet's lower chamber, said through a translator at an event hosted by the Center for Strategic and International Studies (CSIS).

At the same time, he said that if the U.S. shows "sufficient flexibility," the two countries could "definitely" come to an agreement. Komura said it was unlikely that the two sides would reach a bilateral deal prior to Abe's visit to Washington.

Abe's trip is slated to include an April 28 meeting at the White House with President Obama and an April 29 address to a joint session of Congress. House Ways & Means Committee Chairman Paul Ryan (R-WI) this week held open the possibility that Abe's visit could spur Congress to consider TPA more rapidly.

Komura, who was in Washington for meetings with U.S. officials including Defense Secretary Ashton Carter, spoke with Vice President Joe Biden during a March 26 telephone call. A White House readout of the call said the two officials discussed the bilateral talks under TPP, "including resolving differences on autos and agriculture, as soon as possible."

Komura previously served as Japan's Foreign Affairs minister in two separate terms beginning in 1998 and 2007. His speech at CSIS largely focused on Japan's self-defense interests and its bilateral relationship with Washington, which he said would be enhanced by completing TPP.

South Korea Kicks Off New Round Of Consultations On TPP Entry

Posted: April 02, 2015 
South Korea is holding a fresh round of consultations with Trans-Pacific Partnership (TPP) members to discuss when and how it could join the trade pact, as Seoul begins to lean more heavily toward requesting entry.

This third round of consultations includes meetings with the United States. Moon Jae-do, Korea's vice minister for trade and energy, was in Washington this week and was set to return to home on April 4, according to an official schedule on his ministry's website.

The new round of consultations comes as the Korean government -- while refraining from making an official decision -- is taking new internal steps toward requesting entry into TPP. On Jan. 20, Korean ministers dealing with international economic policy matters held a cabinet meeting to discuss a range of issues, including trade, and released a statement afterward that expressed clear interest in joining TPP.

"In order to avoid the erosion of our [existing] FTA benefits, we will prepare for accelerated discussions around mega FTAs such as TPP," the Korean-language statement said.

In September 2014, Seoul's then-Deputy Minister for Trade Choi Kyonglim said Korea was weighing whether to request entry into TPP after the talks were finished but before parties ratified the deal (Inside U.S. Trade, Sept. 19, 2014). That option is still seen by Korea's government as likely the best and speediest route toward entry, as it would avoid drawn-out negotiations over accession terms.

But that approach would mean Korea would be seeking entry into TPP before Congress has passed a TPP implementing bill. That could complicate congressional debate over TPP, as it would likely dredge up issues related to the U.S.-Korea free trade agreement (KORUS), which TPP opponents already argue has failed to live up to its promises.

House Minority Leader Nancy Pelosi (D-CA), who is leading a congressional delegation around Asia, hinted in a statement that KORUS implementation may have an impact on the TPP debate regardless -- without referring specifically to prospects for Korean participation.

"On trade, our delegation met with Choi Kyung-hwan, Deputy Prime Minister for Economy/Minister of Strategy & Finance, and detailed how implementation of existing free trade agreements, such as the U.S.-Korea Free Trade Agreement, may impact decisions regarding free trade and consideration of the Trans-Pacific Partnership agreement currently being negotiated by 12 nations," Pelosi said in the April 2 release.

The U.S. government, for its part, appears to have dropped an earlier linkage it made between Seoul's participation in TPP and resolving implementation issues under KORUS. Assistant U.S. Trade Representative Bruce Hirsh in March struck a positive note about Korea's potential participation and expressed appreciation for Korea's efforts to address many of those irritants (Inside U.S. Trade, March 20).


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