[CTC] TPP Hawaii Ministerial Set, But Officials Signal Deal Not A Sure Thing

[Arthur Stamoulis]

Inside U.S. Trade - 07/10/2015
TPP Hawaii Ministerial Set, But Officials Signal Deal Not A Sure Thing
Posted: July 09, 2015
The United States this week announced it will host a Trans-Pacific Partnership (TPP) ministerial meeting at the end of July where parties are seeking to reach a deal, but officials from participating countries and others closely following the negotiations are holding open the possibility that meeting could fall short of that goal.

Akira Amari, Japan's minister in charge of the TPP talks, said this week that all TPP countries, including the U.S., hope this will be the last ministerial, but that "we cannot yet say" whether that will be the case.

Speaking at a July 7 press conference in Tokyo, Amari said negotiators must "hurry up" and make progress so that they can make it the last ministerial by the time it starts, according to an informal translation of a summary posted on a Japanese government website.

Chief negotiators will meet in Maui, Hawaii, at the Westin Maui Resort & Spa beginning July 24, ahead of the ministerial slated to take place there July 28-31. TPP countries had initially agreed to hold the ministerial July 28-29, but later acquiesced to a U.S. request to extend it by two days, sources said.

TPP officials and business representatives this week signaled they were either cautiously optimistic or uncertain about the chances for wrapping up the talks at the ministerial. Among the key outstanding issues outlined by TPP officials are those related to market access, intellectual property (IP), state-owned enterprises and investment.

A business source said there is also still work to be done to negotiate the exceptions countries will be allowed to take from market-opening commitments on services, government procurement, and e-commerce, stressing that these are consequential issues for U.S. businesses.

An informed source said he was still unsure whether TPP countries will be able to conclude at the ministerial, largely because some TPP countries lack information about the status of bilateral talks between other parties. This makes it difficult to assess how close parties are to concluding a deal, this source signaled.

In that vein, several sources argued that the U.S. and Japan will need to provide more information to the other TPP countries about their bilateral market access understandings -- either at the Hawaii meeting or prior to it -- in order to unlock other aspects of the talks. This is particularly true for the key outstanding issue of dairy market access, which involves a complicated dance between Japan, Canada, the U.S. and New Zealand, sources said.

In a related development, Acting Deputy U.S. Trade Representative Wendy Cutler headed to Tokyo to hold bilateral talks with her counterparts beginning July 9 on bilateral market access and automotive trade issues in the context of TPP.

An industry source said that, despite the enthusiasm of U.S. negotiators for getting a deal done, there is also the "cold reality" of trying to deal with conflicting positions on a wide range of outstanding issues. Another business source underscored the complexity of concluding a deal with 12 countries, noting that the final hours of negotiating a bilateral deal are complex and tense enough.

House Ways & Means Chairman Paul Ryan (R-WI) this week held open the possibility that TPP ministers may not be able to resolve all outstanding issues when they meet at the end of July, though he made clear he still is aiming for Congress to consider a final deal before the end of the year.

The ministerial is being planned for "a long enough time hopefully that they can reconcile a lot of outstanding issues, and there's still a pretty good amount of outstanding issues," he said at an event organized by Politico.

In particular, he called on Canada to come forward with an acceptable offer on agriculture market access, and for Malaysia to reform its "Bumiputra" policies, which give preferences to ethnic Malays in areas such as government procurement and services.

"The Canadians need to step it up, and get serious about agriculture and dairy. The Malaysians need to come to the table with reforms to their Bumiputra policies," Ryan said. He also said the U.S. still has outstanding issues on agriculture market access and automotive trade with Japan.

Meanwhile, Vice President Joe Biden on July 5 discussed the need to quickly complete the TPP negotiations in a meeting with Canadian Prime Minister Stephen Harper before both leaders attended the FIFA Women's World Cup championship game in Vancouver.

"Both leaders reaffirmed the shared commitment to deepening robust trade relations and the early conclusion of negotiations for the Trans-Pacific Partnership," the White House said in a readout of the meeting, which also covered other issues such as the situations in the Middle East and Ukraine.

USTR Michael Froman said on June 25 that the U.S. was still waiting for Canada to come forward with a "meaningful offer" on dairy and poultry.

A U.S. private-sector source expressed worry that Malaysia may ultimately be left out of a final TPP agreement, but said business representatives have been reassured that this would not be the case. But the source pointed out that the popularity of Prime Minister Najib Razak has suffered as he grapples with a corruption scandal, and that the TPP is already unpopular in Malaysia.

Amari, meanwhile, drove home the point that Japan is ready to conclude bilateral talks with various TPPcountries. He noted that the leaders of Japan and Vietnam had already resolved their main bilateral issues in TPP, leaving only work at the technical and potentially ministerial level.

Similarly, Amari said the U.S. and Japan have agreed to try to resolve outstanding issues at what he described as the working level, a likely reference to the talks between Cutler and her Japanese counterparts. He said Japan has created an environment where he believes those talks can be resolved at the working level, but that another U.S.-Japan ministerial may be required if the U.S. negotiators do not have a broad enough mandate.

"Japan wants the U.S. to give the full mandate to the negotiators so that we don't have to have another ministerial discussion," he said.

Similarly, Amari said he hoped Canada and New Zealand share the same "sense of urgency" as Japan about getting a deal done, and therefore offer final concessions in their bilateral talks with Japan. He said that when those countries offer their final concessions, Japan would do the same.

Ryan said he believes a "realistic timetable" for congressional consideration of TPP is "late fall," meaning it would still happen before the end of the year. But other observers say a congressional vote on TPP could be pushed back until early 2016.

The Ways & Means chairman also said he had met with Froman on July 8 as part of his efforts to ensure that the administration in the TPP talks follows the negotiating objectives laid out in the fast-track law. In a related development, Froman was scheduled to meet on Thursday with members of the Senate Finance Committee to discuss the ongoing TPP negotiations.

Even if trade ministers were able to reach an agreement on July 31, and USTR notified Congress the next day of the president's intent to sign a TPP deal, the fast-track law establishes a 90-day layover period before the U.S. could actually sign the agreement, pushing it to Nov. 1 at the earliest.

After the agreement is signed, the U.S. International Trade Commission (ITC) still would need to complete its economic impact assessment of the TPP before the implementing bill could be submitted to Congress. The president is required under the fast-track law to provide to the ITC -- 90 days prior to signing -- the details of the agreement as it exists at that time. The commission has up to 105 calendar days after signing to submit its report to the president and Congress.

That is likely to leave less than two months remaining in 2015 for Congress to consider a TPP bill. Froman himself has previously pointed out that consideration of trade agreements under fast track is designed to take up to 90 legislative days, which he said can amount to five calendar months or more.

In 2013, then-ITC Chairman Irving Williamson said that, due to the complexity of TPP and the number of countries involved, the commission would likely need five months from the receipt of the final TPP text with schedules and annexes to complete its assessment (Inside U.S. Trade, Nov. 22, 2013). However, Froman earlier this year pressed the ITC to begin its analysis even prior to completion of the full deal (Inside U.S. Trade, Feb. 13). -- Matthew Schewel
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