NYT: Talks for Pacific Trade Deal Stumble

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LAHAINA, Hawaii — Trade negotiators from the United States and 11 other Pacific nations failed to reach final agreement on Friday, with difficult talks on the largest regional trade agreement ever deadlocking over protections for drug companies and access to agriculture markets on both sides of the Pacific.

[Reposted from The New York Times  |  Jonathan Weisman  |  July 31, 2015]

Trade ministers, in a joint statement, said late Friday they had made “significant progress” and will return to their home countries to obtain high-level signoffs for a small number of final sticking points on the agreement, the Trans-Pacific Partnership, with bilateral talks reconvening soon.

“There are an enormous number of issues that one works through at these talks, narrowing differences, finding landing zones,” said Michael B. Froman, the United States trade representative. “I am very impressed with the work that has been done. I am gratified by the progress that has been made.”

Still, the breakdown is a setback for the Obama administration, which had promoted the talks here as the final round ahead of an accord that would bind 40 percent of the world’s economy under a new set of rules for commerce.

President Obama’s trade push had been buoyed by Congress’s narrow passage in June of so-called fast track trade negotiating powers, and American negotiators had hoped other countries could come together once Congress had given up the right to amend any final agreement.

In the end, a deal filled with 21st-century policies on Internet access, advanced pharmaceuticals and trade in clean energy foundered on issues that have bedeviled international trade for decades: access to dairy markets in Canada, sugar markets in the United States and rice markets in Japan.

“No, we will not be pushed out of this agreement,” said a defiant New Zealand trade minister, Tim Groser, who held out for better access for his country, the largest exporter of dairy in the world.

Australia, Chile and New Zealand also continue to resist the push by the United States to protect the intellectual property of major pharmaceutical companies for as long as 12 years, shielding them from generic competition as they recoup the cost of developing next-generation biologic medicines.

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“There’s always been more than one issue,” said Representative Sander Levin, Democrat of Michigan, who is here as an observer.

The trade ministers who gathered at the luxury hotels of Maui this week for talks that went deep into the night did have some successes. They reached agreement on broad environmental protections for some of the most sensitive, diverse and threatened ecosystems on Earth, closing one of the most contentious chapters of the Pacific accord.

They also reached agreement on how to label exports with distinct “geographic indications,” such as whether sparkling wine can be called champagne. And they agreed on a code of conduct and rules against conflicts of interest for arbitrators who would serve on extrajudicial tribunals to hear complaints from companies about whether their investments were unfairly damaged by government actions.

But the failure to complete the deal — eight years in the making — means the next round of negotiations will push the United States ratification fight into 2016, a presidential election year. Most Republican candidates are very likely to back it, but a final agreement would force the Democratic front-runner Hillary Rodham Clinton to declare her position, which she has avoided.

This week, she told reporters, “I did not work on T.P.P.” as secretary of state, although she gave a 2012 speech in Australia declaring the accord “the gold standard in trade agreements.”

The push for the Pacific deal has already split most Democrats from their president. Further delay raises the prospect that a deal sealed by President Obama might have to be ratified by his successor, just as George H. W. Bush’s North American Free Trade Agreement was secured by Bill Clinton.

The failure of the Maui talks pointed to the extreme difficulty of reaching agreement with so many countries, each with its own political dynamics. Vietnam, Malaysia and New Zealand were willing to make significant concessions to gain access to United States markets.

But with Canada’s prime minister, Stephen Harper, fighting for his political life ahead of national elections in October, Canada would not budge on opening its poultry and dairy markets.

Chile, with a new, left-of-center government and existing free trade agreements with each of the countries in the Pacific deal, including the United States, saw no reason to compromise, especially on its demand for a short window of protection for United States pharmaceutical giants.

Australia’s delegation insisted that pharmaceutical market protections beyond five years would never get through Parliament, and the United States team was demanding 12.

Ildefonso Guajardo, Mexico’s secretary of economy, was defiant on the hard line he took against the export of Japanese cars with any less than 65 percent of their parts from T.P.P. countries. “I am fighting for the interests of my country,” he said.

The bright spot might have been the environmental negotiations. The completed environmental chapter would cover illegal wildlife trafficking, forestry management, overfishing and marine protection, and it could prove to be a landmark, setting a new floor for all future multilateral accords.

“As centers of biodiversity, T.P.P. countries cover environmentally sensitive regions from tundra to island ecosystems, and from the world’s largest coral reefs to its largest rain forest,” reads a summary of the environment chapter, obtained by The New York Times. “T.P.P.’s Environment chapter addresses these challenges in detail.”

Under the agreement, the 12 countries — from Peru and its rain forest to Vietnam and the diverse Mekong Delta — must commit to obeying existing wildlife trafficking treaties and their own environmental laws. Environmentally destructive subsidies, such as cheap fuel to power illegal fishing vessels and governmental assistance for boat making in overfished waters, are banned.

The chapter singles out the “long-term conservation of species at risk,” such as sea turtles, sea birds and marine mammals and “iconic marine species such as whales and sharks.”

Failure to comply would subject a signatory to the same government-to-government compliance procedures as any other issue covered by the trade agreement, potentially culminating in trade sanctions. United States negotiators hope that just the threat of economic sanctions will bolster relatively weak environmental ministries in countries like Peru, Malaysia and Vietnam.

Some environmental groups, and many Democrats in Congress, are very likely to be dissatisfied. They complain that agreeing to a series of “obligations” falls short of “requirements.” The Sierra Club has complained that the United States has not pursued trade remedies against countries obliged to environmental enforcement under existing accords, such as the United States-Peru free trade deal.

But most major environmental groups remained circumspect, or cautiously optimistic, until they could read the details.

“Negotiators have accomplished much, but the hard work is far from over,” said David McCauley, senior vice president for policy at the World Wildlife Fund. “Individual nations now must live up to their T.P.P. conservation obligations, including putting in place effective measures to ensure that they are responsible traders in wildlife and products provided by our forests and oceans.”

The impact of the Pacific accord’s environmental chapter could be broad, both for the nations in the deal and those outside. The 12 participating countries account for more than a quarter of the global seafood trade and about a quarter of the world’s timber and pulp production. Five of the countries rank among the world’s most biologically diverse countries.

Some, like Vietnam and Malaysia, have long been on the watch list for illegal wildlife trafficking, such as the illicit trade in rhino horns. Japan has long been scrutinized for its treatment of whales and dolphins. The World Bank has estimated that as much as 80 percent of Peru’s logging exports are harvested illegally.

Under the terms of the new accord, member countries would be required to strengthen port inspections and document checks, a provision that could expand the scope of the deal beyond the 12 countries. Illegal wildlife and timber harvests bound for countries like China go through ports of the 12 countries. And countries in the deal are required to take action if they discover contraband that has been harvested illegally, even if the product is not illegal in their country.

Negotiators say they substantially narrowed the number of outstanding issues. They vowed to keep the momentum going. But, as one non-United States official said, if talks go into hiatus for long, it could be easier for many of the countries to say no than yes.

Correction: August 1, 2015

An earlier version of this article misstated the position of Ildefonso Guajardo, Mexico’s secretary of economy, on car exports. He was taking a hard line against the export of Japanese cars with any less than 65 percent of their parts from T.P.P. countries, not on Mexican car and truck exports.

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  • commented 2015-08-04 10:16:57 -0400
    There should be no stumbling or fumbling. If all countries would agree to the premise of The Balanced Trade Agenda then there would be no net losers. Use the variable rate tariff to correct for any large imbalances. Let’s keep the play to trade field clear and balanced for all to see and to participate fairly in . We should not allow any one to game the system especially China , Japan or Korea.