[CTC] Fast Track Passage Shifts Focus To TPP, But Some Skeptical Of Quick Conclusion

[Arthur Stamoulis]

Inside U.S. Trade - 06/26/2015
TPA Passage Shifts Focus To TPP, But Some Skeptical Of Quick Conclusion
Posted: June 25, 2015
The approval by the U.S. Congress this week of fast-track legislation shifts the focus of the U.S. trade agenda to completing the Trans-Pacific Partnership (TPP) negotiations, but some government officials and industry sources are raising doubts that the talks can be wrapped up as quickly as some have hoped due to the extent and complexity of outstanding issues.

TPP countries as of Thursday morning (June 25) had not formally scheduled a long-awaited ministerial where they will seek to close a deal, or a chief negotiators meeting that will precede it, according to informed sources.

Nevertheless, these sources said they expect the ministerial to take place in late July and the details to be worked out soon. They said there have been no formal TPP discussions since the May round of talks in Guam.

Ambassadors from Chile, Singapore and Peru each warned this week that passing the fast-track bill does not mean that concluding TPP is imminent because countries have outstanding issues that will still require negotiations at the highest political level. Among the outstanding issues they highlighted were intellectual property rights, the data exclusivity period for medicines and the length of tariff phaseouts.

Their assessment was more cautious than that of Australian Trade Minister Andrew Robb, who said last week that TPP countries are "one week of negotiation" away from striking a deal.

Similarly, one business source emphasized that a lot of "detailed work" remains to be done, particularly on market access with Canada on sensitive agriculture products. "It's not that simple," he said, responding to Robb's comments. "It's going to take Canada a while to wind its way through the system."

In a related development, U.S. Trade Representative Michael Froman highlighted on June 25 the U.S. has "work to do" with Canada on TPP. He specifically cited the "market access negotiations with Canada on issues like dairy and poultry where we're still waiting for them to come to the table with a meaningful offer so we can achieve the necessary level of ambition in that area as well."

Although Canada has been reluctant to engage with the U.S. and other TPP countries on dairy and poultry in the absence of fast track, merely having it in place is not enough to get the deal across the finish line, according to Canadian industry sources and observers. They expect Ottawa to ultimately determine how much it will concede on sensitive products based in large part on what the United States and Japan are willing to put on the table themselves (see related story).

Froman also acknowledged that the U.S. and Japan have work left to do to conclude a bilateral deal, but said the two sides have not yet scheduled a meeting to resume those talks. Informed sources have said they expected the U.S. and Japan to meet shortly after fast-track approval to continue their bilateral talks, likely at the working level.

As of April, the major outstanding issues in the U.S.-Japan bilateral negotiations were U.S. demands for more and better market access to the Japanese rice market; the level of U.S. tariffs on auto parts; the special dispute settlement mechanism that will apply to auto disputes; and the rule of origin for autos.

Froman, who spoke at an event organized by Foreign Policy Magazine, did not set a timeline for the TPP ministerial or the chief negotiators meeting that he indicated will precede it.

He did acknowledge that the TPP talks have essentially been on hiatus as Congress went through the last throes of the fast-track debate. "Now that this [TPA approval] is completed here, now we will be able to re-engage at a senior level with our other TPP parties," he said.

"We've been staying in constant touch with our TPP partners. We will be engaging with them bilaterally and in small groups in the coming days to try and address some of our outstanding bilateral issues," he said. "And then when the time is right and we think we're ready to close, we'll convene the chief negotiators and the ministers to resolve what will be the most challenging remaining issues, which are the issues which require political guidance."

Given the number of outstanding issues, one industry source held open the possibility that the TPP ministerial might result only in a broad agreement in principle, leaving more technical issues such as rules of origin to be worked out later by lower-level officials.

Speaking at a June 23 panel discussion hosted by the Atlantic Council, Chilean Ambassador to the United States Juan Gabriel Valdes poured water on the notion that the deal could be wrapped up quickly after TPA passage.

"There is sometimes a tendency to indicate that near approval of the TPA has solved all the matters pending in the discussion and negotiation, and this is simply not true," he said. His comments were echoed by Peruvian Ambassador Luis Miguel Castilla and Singaporean Ambassador Ashok Kumer Mirpuri.

Valdes said he expects TPP leaders to make the final political agreements necessary to conclude a deal. "There are some issues that are relatively simple and they could of course use one week," he said referring specifically to market access issues. "On other matters, I have the impression that political leaders will have to get involved in the process."

TPP countries have informally discussed the possibility that, once a deal is struck, leaders could sign the agreement during the United Nations General Assembly in mid-September, or at the Nov. 18-19 Asia-Pacific Economic Cooperation leaders meeting in the Philippines, according to informed sources. These options were discussed by TPP ministers on the margins of a May APEC ministerial meeting in the Philippines, they said.

But TPP countries seem to have already missed the window for signing a deal on the sidelines of the UN meeting because the pending fast-track bill requires the president to notify Congress 90 days before signing. This would have required Obama to notify Congress in mid-June, which has already passed.

If TPP leaders still hoped to sign an agreement by the APEC leaders meeting, Obama would have to notify Congress in mid-August.

Castilla emphasized the importance of concluding negotiations before the U.S. becomes immersed in the 2016 presidential campaign cycle, but also called attention to the fact that Peru will be focused on its own presidential and congressional elections in 2016.

Ratification of TPP after negotiations conclude could also be a lengthy process, according to Valdez and Castilla. Valdez said he expects there to be a "tough debate" in the Chilean Congress and that he hopes that other countries will show the same patience with Chile that is currently being afforded to the United States. -- Brett Fortnam and Matthew Schewel


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