NYT: Trans-Pacific Partnership Session Ends With Heels Dug In

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Dairy cows at a farm in Granby, Quebec. Canada's refusal to accept more dairy imports is a sticking point in Trans-Pacific Partnership talks.

WASHINGTON — Tokyo was ready to extend major concessions on American truck tariffs but was blocked by Mexico, which wanted less competition for its own trucks in the United States market.

[Reposted from The New York Times  |  Jonathan Weisman  |  August 3, 2015]

Canada held firm on protecting its politically sensitive dairy market ahead of elections in October, but for New Zealand, a tiny country with huge dairy exports, that was unacceptable.

And virtually all of the parties hated American protections of pharmaceutical firms, but a compromise on that issue could cost the support of Republicans in Congress.

For President Obama, nailing down the largest regional trade accord in history would be a legacy-making achievement, proof that his foreign policy “pivot” to Asia was more than rhetorical — as well as a milestone in international economic cooperation. But Mr. Obama learned last week in his native state of Hawaii that his own administration does not always control its fate.

Final negotiations over the trade deal, the Trans-Pacific Partnership, are not like a checkers game with Congress, pitting two branches of government and two parties against each other. Rather, all 12 nations are asserting their particular economic and political interests in a multiple-dimension chess match, with one problem often setting off another.

Whether all of those can be resolved is now a matter of will. But the disagreements are pushing any resolution of the trade deal further into the politically difficult presidential election season in the United States. At least one negotiator suggested privately that it soon may become easier to say “no” than “yes.”

“The process of reaching a complicated trade agreement is to start with a huge number of uncertainties and slowly resolve them piece by piece until you can see one or two of the most difficult issues remaining,” said Tim Groser, New Zealand’s trade negotiator. “Now that the undergrowth has been cleared away, we can see clearly that there are one or two really hard issues.”

From dairy and sugar to autos and pharmaceuticals, the issues number more than one or two.

Vietnam is not ready to give up all the advantages that the communist country’s state-owned enterprises enjoy. Japan is still worried about Australia’s legal action against its treatment of marine mammals. And Chile, which already has free trade agreements sealed with each of the other members of the T.P.P., doesn’t see much of a loss in letting it all fall apart.

“To get one set of rules across 40 percent of world G.D.P., 33 percent of world trade, 12 disparate countries from Brunei all the way through the United States” was never going to be easy, said Andrew Robb, Australia’s minister of trade and investment.

Still, Obama advisers and trade experts say, the president remains committed, and United States leadership could help bridge a lot of the divides.

“It is still central to President Obama’s policy in Asia and the Asia Pacific. It is the centerpiece of his economic legacy,” said Jeffrey J. Schott, a trade expert at the Peterson Institute for International Economics.

Mexico’s secretary of the economy, Ildefonso Guajardo, is taking a particularly hard line against Japan’s automotive industry, a position that some negotiators said helped dash any hope of completing the trade deal in Maui.

At issue is the definition of a car or truck from one of the Trans-Pacific Partnership countries. Mexico wants only vehicles with around 65 percent of their components made in the T.P.P. region to qualify for lower tariff barriers under the deal. That would favor Mexican trucks made with American and Japanese parts. Japan wants that “rule of origin” threshold set closer to 50 percent, favoring its parts suppliers in China and Thailand.

“The auto industry in Mexico is the seventh-largest producer in the world and the fourth-largest exporter,” Mr. Guajardo said late on Friday. “What you can accuse me” of “is putting myself to the front to really push the interest of my country.”

New Zealand and Canada are at loggerheads over dairy. While tiny New Zealand produces just 3 percent of the world’s dairy products, it is the world’s largest dairy exporter. Canada’s government, embattled ahead of parliamentary elections in October, showed little inclination to let New Zealand’s cheese and eggs compete with its own.

Mr. Groser, the New Zealand negotiator, noted that his country was the first to propose a trade accord linking both sides of the Pacific Ocean. He wrote one of the first briefs championing it.

“I don’t really feel emotionally in the space of wanting to leave the party. No, we will not be pushed out of this agreement,” he said.

With so many countries angered by Canada’s closed-door stand on dairy, Ed Fast, Ottawa’s minister of international trade, was left to defend his stance. “Canada came to Maui ready to conclude a T.P.P. We were active, constructive partners at the table,” he said.

The biggest problem may be intractable differences over intellectual property protections, especially for pharmaceutical companies developing the next generation of medicines known as biologics. A copy of the still-incomplete intellectual property chapter, viewed by The New York Times, shows just how isolated the United States’ position is.

In one section, the United States and Japan want language saying a lack of enforcement resources is no excuse for failure to ensure compliance. That position is opposed by New Zealand, Vietnam, Mexico, Peru, Australia, Malaysia and Brunei.

In another section, 11 negotiating nations propose language to ensure judicial authorities have the power to force a company that “abuses enforcement procedures” to compensate a party “wrongfully enjoined or restrained” if a case is lost. Only the United States opposes that.

Much of the intellectual property dispute revolves around the protection of major pharmaceutical companies, which want the United States’ 12 years of data protection on new drugs expanded to the other 11 T.P.P. countries. Republicans in Congress, especially Senator Orrin G. Hatch of Utah, chairman of the Senate Finance Committee and a key ally of the president’s on trade, demand that the White House hold firm.

But most of the other countries — and most international health groups — oppose that position strenuously. They say it would keep drug prices high, drain government coffers and put new biologic medicines out of reach for the developing world.

“That is the toughest nut to crack,” Mr. Schott said.

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