12 Nation to Prepare for TPP Deal in Obama Visit to Asia

Chief negotiators from the twelve Trans-Pacific Partnership (TPP) countries are meeting this week in Singapore, in a bid to give the talks a major push before ministers arrive this weekend. The upcoming ministerial gathering is expected to be a key indicator of whether the group can seal a deal in time for US President Barack Obama’s trip to Asia this April.

The twelve-country coalition, which includes Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam, has said that it aims to create a high-ambition, “21st century” trade pact that could serve as a template for a broader agreement across the Asia-Pacific region.

Current participants cover over 40 percent of global trade, and the potential gains from the pact have been placed by some analysts at US$223 billion a year in added global income. However, questions over the deal’s content and timing have grown in number and intensity, particularly as negotiators try to close a deal in the months ahead.

Deal this year?

Last year, TPP officials had set end-2013 as their target date for concluding their negotiations, only to announce during a ministerial-level meeting in December that - despite achieving “substantial progress - they would have to extend their talks into 2014.

Two months into the new year, many trade observers have already asked whether concluding the TPP in 2014 is actually a viable goal, given reports of major outstanding differences in some of the agreement’s chapters, and in light of the US midterm elections this November. Washington officials have sought to downplay these questions, with a senior Obama Administration official telling reporters last week that “it is still very much our goal to complete a TPP agreement this year.”

US-Japan bilaterals

Whether the US and Japan will also be able to resolve their own differences is expected to be a key determinant of the TPP negotiating pace. When Japan joined the group a year ago, the US only gave its support on the condition that the two sides hold parallel discussions on non-tariff barriers in automobiles, and with the expectation that Tokyo would lift some of its agricultural protections.

The two sides have since struggled to advance on both fronts, leading Japanese economy minister Akira Amari to make a last-minute trip to Washington last week to meet with US Trade Representative Michael Froman, in the hopes of reconciling these disagreements.

In the days since, Amari has told reporters that while the two sides remain deadlocked in the area of farm trade, he recognised that Japan may have to make concessions with its agricultural tariffs, particularly in the five sensitive areas of rice, wheat, beef, pork, dairy products, and sugar.

US trade debate hones in on income inequality

Major trade deals such as the TPP or the US-EU Transatlantic Trade and Investment Partnership (T-TIP) have come under growing scrutiny by both Washington lawmakers and the American public, with various members of Obama’s own party questioning whether such trade deals can actually exacerbate income inequality, rather than resolve it.

Responding to these concerns, Froman stressed this week that an “aggressive trade strategy” is instead a key part of the solution to the inequality issue.