Bloomberg Business: Pacific Trade Talks Start With U.S. Vow to Solve Toughest Issues


Top officials from 12 Asia-Pacific nations formally kicked off a four-day bid to hammer out a massive but so far elusive free-trade agreement that has been in the works for 6 years.

[Reposted from Bloomberg Business  |  Carter Dougherty  |  July 29, 2015]

Speaking at the opening plenary of the Trans-Pacific Partnership talks in Hawaii, U.S. Trade Representative Michael Froman told his counterparts they need to resolve the “tough political issues” standing in the way of a deal.

“Each of us brings our own priorities and sensitivities to the table, and our goal here over the next couple of days is to find a path forward to resolve those issues,” Froman said.

Before the ceremonial opening on the island of Maui, staff from all 12 countries had gathered to sound out the complicated tradeoffs that a final agreement would require, an effort that trade ministers joined Tuesday.

The negotiation could yet collapse over issues ranging from drug patents to dairy exports, and test the ability of the U.S. and Japan, by far the two largest economies in the TPP, to jointly drive a resolution. Froman and Economy Minister Akira Amari huddled for almost two hours before the plenary got under way.

“There are still tough political issues that remain to be resolved,” Froman said. “And as anyone who’s ever been involved in a trade negotiation knows, those final decisions are always the most difficult.”

Positive words notwithstanding, regarding the talks as the “final” round is risky given the unsettled issues, said Timothy Brightbill, a partner at law firm Wiley Rein LLP in Washington.

‘Too Early’

“Too early in the week for a wager,” Brightbill, an adviser to Froman’s office on the deal, said in an e-mail. “Right now, I’d have to say 50-50.”

A central sticking point in Maui involves opening the region’s markets to dairy products, particularly in the heavily protected Japanese market, and in Canada, which limits imports as part of a system to raise the prices farmers receive.

Without firm commitments to open dairy markets in Canada and Japan, countries like New Zealand won’t agree to U.S.-backed proposals on patent rules for a newer class of drugs known as biologics, a priority for pharmaceutical makers such as Pfizer Inc. and Amgen Inc.

Australia is seeking opportunities to sell more sugar in the U.S., a goal that eluded it in a 2005 deal with that country.

Drug Patents

Current U.S. law allows drug companies to keep confidential for 12 years the clinical data generated to win regulatory approval for biologics, drugs that use living organisms. President Barack Obama’s administration has proposed reducing the lockup period to 7 years, something the Republican-controlled Congress has rejected.

Some countries, notably Australia, have a 5-year term, while poorer ones like Vietnam and Peru have no rules on biologics. Japan has an 8-year period.

New Zealand and other countries are using the patent issue to pressure the U.S. to lean on Japan and Canada to open markets further, a step that would open a new area of contention between the two largest economies in TPP.

The U.S. and Japan worked intensely on their own piece of the deal involving access to the U.S. market in the weeks leading up to the visit of Prime Minister Shinzo Abe to Washington in April this year.

New pressure on dairy issues could undermine the progress the U.S. and Japan made, said Michael Green, the Japan chair at the Center for Strategic and International Studies.

‘Sacred’ Products

“The Japanese complaint about the U.S. is that the U.S. comes up with something else it wants after the Japanese think they are done,” Green said.

Japan entered the TPP negotiations in 2013 with promises to open markets for rice, beef, pork, dairy and wheat to greater foreign competition. The plan fit with Abe’s vision to revive the Japanese economy, but the move continues to be controversial in Japan.

The Abe government is abandoning protection for “sacred Japanese food products,” said Masahiko Yamada, Japan’s former agriculture minister, who traveled to Hawaii to lobby against the deal.

The concessions Japan has already offered prove the government is “deeply committed” to placating the U.S. at the expense of Japan’s interests, Yamada told reporters in Maui.

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