Negotiators Fail to Reach Pacific Trade Pact; More Talks Expected

By | August 3, 2015

High-level negotiations in Hawaii on a trade agreement in the Pacific Rim wrapped up without a final deal as disagreements over dairy and vehicle policies trumped progress in other areas. The dialogue may resume within weeks.

During four days of talks on the island of Maui, the 12 Trans-Pacific Partnership countries ironed out differences in areas such as environmental standards and trademarks. Officials went out of their way to avoid blaming anyone for the failure to clinch a deal and vowed to stay focused on the sticking points.

“We’ve made significant progress and will work on resolving a limited number of issues paving the way for the conclusion of the TPP negotiations,” U.S. Trade Representative Michael Froman said at a concluding press conference on Friday.

Failure to conclude a deal soon would be a blow to President Barack Obama, who invested six months of lobbying in a successful, but damaging, effort to win enhanced negotiating authority from the U.S. Congress to complete the pact. Timelines wired into that legislation now guarantee his bid for congressional approval of TPP, a divisive issue for Obama’s Democrats, would come in the presidential election year of 2016.

Ministers at the talks in Hawaii shared the view the negotiations should resume before the end of August, Japan’s Economy Minister Akira Amari told reporters, according to the Kyodo news agency. All issues would be resolved if another meeting were held, he said, according to Kyodo.

Lower Duties

This week, autos and trucks came to the fore as the U.S., Canada, Japan and Mexico tussled over a mixture of tariffs, regulations and rules governing what products benefit from lower duties that the proposed pact foresees.

The dispute pitted a Japanese desire to fully integrate the Asian supply networks of its automotive giants such as Toyota Motor Corp. into the TPP framework to create a huge value chain, as Amari put it in earlier remarks.

That triggered strong resistance from Mexico, the fourth- largest auto exporter in the world thanks to massive investment by global manufacturers, a fact for which its economy secretary, Ildefonso Guajardo Villarreal, made no apology.

“What you can accuse me of is putting myself to the front to really push the interests of my country,” he said.

Dairy policy bedeviled the negotiations all week as New Zealand, a leading exporter of whey protein, cheese and milk powder, warned that it wouldn’t embrace a deal that didn’t crack open this highly protected sector.

Ire focused on Canada, which resisted making an offer in the talks until the gathering in Maui got under way, despite Prime Minister Stephen Harper’s insistence that it’s determined to be a part of TPP.

‘Last Issues’

“Dairy is always one of the last issues or the last two issues to be resolved because it’s been so distorted for years,” New Zealand Trade Minister Tim Groser said.

A mix of farmers and laborers kept up the pressure to leave intact Canada’s system for limiting imports and local output to raise prices. “No TPP is better than a TPP that undermines the dairy sector,” said Francois Laport, president of Teamsters Canada, who congratulated Canadian officials for “standing firm” in Maui.

Ed Fast, Canada’s trade minister, said at the talks that Canada would be “constructive” over TPP in the weeks ahead. Harper is likely to call new elections this week, raising doubts about whether Canada would be in a position to reach a deal after Maui.

Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, predicted a deal would come together in August as Harper faced pressure from the U.S. and Japan, who are keen to close the talks.

“If Canada walks away from TPP, or is pushed out over dairy, Harper will be pilloried as the prime minister who degraded Canada’s status in world economic affairs,” Hufbauer said in an e-mail.

–With assistance from Angela Greiling Keane in Washington and Josh Wingrove in Ottawa.

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