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TPP Countries Still Pushing for Deal by Year-End

Wednesday, October 09, 2013
Sandler, Travis & Rosenberg Trade Report

The 12 countries participating in the Trans-Pacific Partnership negotiations reiterated Oct. 8 their objective of completing a “comprehensive and balanced” trade liberalization agreement by the end of 2013. In a joint statement following a meeting in Bali, Indonesia, national leaders (other than President Obama, who canceled his trip due to the ongoing federal government shutdown) said they see the TPP as “a model for future trade agreements” and “a promising pathway” to the goal of building a Free Trade Area of the Asia-Pacific, noting that they are engaging with other countries in the region that have expressed an interest in joining this initiative.

The leaders said they are “on track” to complete the TPP negotiations and that ministers and negotiators have made important advances in recent months on legal texts concerning access to their goods, services, investment, government procurement and temporary entry markets. U.S. Trade Representative Mike Froman added that since August “trade ministers have been charting a path forward on outstanding issues, particularly state-owned enterprises, intellectual property rights, environment, and market access,” and that there was “significant progress” during talks among trade ministers in Bali this week. The TPP leaders tasked their negotiators with resolving “all outstanding issues” so that an agreement can be completed this year.

However, there are some formidable obstacles in the way of meeting that goal. For one, after 19 rounds of negotiations over nearly four years participants reportedly have completed only six or seven of the 29 chapters of a final agreement and remain far apart on such issues as investor-state dispute settlement, tobacco control, data flows, intellectual property rights for pharmaceuticals, state-owned enterprises and rules of origin. For another, the U.S. government shutdown could delay additional talks. While Secretary of State John Kerry emphasized that “none of what is happening in Washington diminishes one iota our commitment to our partners in Asia, including our efforts to promote trade and investment throughout the region,” USTR is operating at only about 25% capacity and may therefore not have the resources to take part in additional negotiations in the near future.

U.S. trade officials and business groups have repeatedly said they are more interested in ensuring a high-quality TPP than completing it by a particular deadline. At the same time, there may be some pressure from within the White House to wrap up the talks sooner than later, for reasons that could range from cementing access to dynamic markets in a region where the U.S. faces a fierce competitor to avoiding the policy and perception problems that could result from an extended negotiation similar to the stagnant Doha Round. Although little has been said publicly to support such an assertion, Commerce Secretary Penny Pritzker was quoted in a recent Reuters article as saying that “the president has … pushed us internally … to say that we will move forward and maybe not everyone will be there at the time and you can go in the second round.”

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