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USTR Froman

TPP in Trouble

7 March 2014

The recent Singapore round of the Trans-Pacific Partnership (TPP) negotiations has revealed major differences between the partners, especially the US and Japan. The initial deadline of a deal by the end of 2013 has proved illusory. Now there are doubts whether an agreement will ever be reached given the levels of domestic opposition within the US and Japan.

Among the US concerns are the need for disciplines against currency manipulation and enforceable labour and environmental standards. Over 230 Congressmen and 60 Senators have written to Obama demanding currency manipulation disciplines in the TPP but this is opposed by most partners. There is also broad opposition to US demands that if countries fail to enforce certain environmental agreements that they have signed, they will face TPP enforcement and trade sanctions. Other US aims that face broad opposition are a ban on trade in illegally harvested timber and endangered species, and enforceable action against fisheries subsidies.

The US pressure to include a clause limiting aid to state-owned enterprises is also opposed by most partners. Most TPP countries also oppose US proposals to expand the scope of patentability and measures to protect the American pharmaceutical industry from generic medicines. In addition there are no signs of agreement on copyright issues, financial regulation and capital controls and government procurement.

Asian leaders note that President Obama is unlikely to secure approval for Trade Promotion Authority (TPA) before the November Congressional elections. There is mounting criticism to free trade deals within Obama’s own Democratic Party and the President seems unwilling to twist arms. Many republicans are also unwilling to give TPA to Obama as it might result in a Democratic success before the elections. Michael Froman, the US Trade Representative, seems to accept the likely delays. A few weeks ago he was arguing that TPA was essential for TPP. Now he argues that a good TPP would facilitate TPA.

There have also been suggestions from some Americans that Japan should be excluded from the TPP negotiations as Tokyo is clearly unwilling to make any concessions on the sensitive issue of agricultural imports - rice, beef/pork, wheat, sugar and dairy. The idea is that the US could reach a deal with the other 11 nations and then present Japan with a fait accomplit. But this idea has not been formally discussed with other partners.

The lack of TPA could also affect the T-TIP negotiations between the US and EU. These talks, which were initially expected to conclude in 2014, are likely to drift into 2015.