August 16, 2015

TPP: Why Hawaii talks failed to reach consensus (The Financial Express (Bangladesh))

The meeting of the 12 trade ministers at Hawaii that ended on August 01 without reaching an agreement to seal a Pacific Rim trade deal by the year end indeed marked a setback for the proposed US-led Trans-Pacific Partnership (TPP). The dozen ministers from as many countries failed to break the deadlock on key issues and independent analysts felt this failure may further complicate the politics of what they have described as “an already controversial project”.

However, US Trade Representative Mike Froman and Japan’s Economic Minister Akira Amari put up brave faces at the end of the Hawaii meeting and affirmed that “significant progress has been made” and that they were closer than they had ever been “to closing the TPP.” The Hawaii meeting was supposed to be the final negotiating round to pave the way to finalise the deal before the year is out.

Apparently, the involved countries could not break the deadlock on key issues to close the TPP deal held up by disagreements over the intellectual property rules for new generations of drugs, auto parts trade, as well as the degree of market access to sensitive products such as dairy and sugar. Australia, Japan and Canada are vitally involved. The TPP would cover about 40 per cent of the global economy and is to become the biggest trade agreement “sealed anywhere in the world in two decades.” It is ironic that while Washington expects other members to sacrifice their interests, it is unwilling to make concessions in terms of market access. It is almost impossible to clinch a deal if it only benefits the US but not the other TPP members.

TPP has been the subject of intensive negotiations amongst those 12 countries for more than five years. However, the London-based Financial Times reported that ‘people close to the talks insisted that significant progress had been made this week on issues ranging from geographic appellation for products to the outlines of a new investment protection regime designed to address critics’ concerns and an environment chapter that would make the trade in endangered species more difficult.’

No doubt, TPP negotiations have made progress. The negotiators have narrowed down differences on more than 2000 contentious issues, leaving only the toughest matters left which, ironically, are agricultural disputes with Japan, and dairy and poultry disagreements with Canada. Australia has raised issues on drugs and medicines.

The deal is very important for the US. Writing in the Washington Post, David Ignatious recently made an interesting comment. He said that the Republicans like trade even more than they dislike Obama. He pointed out that it’s a jobs bill that doesn’t cost any money. According to the Peterson Institute for International Economics, ‘the market-opening features of the TPP will boost U.S. exports by about $123 billion annually by 2025 and add 600,000 jobs.’ So it’s a high-stakes game.

RECIPROCITY NEEDED FOR ANY DEAL: He Weiwen, a member of China Society for WTO Studies, commented that the “TPP is more of a geopolitical tool than a trade pact.” This opinion has been partially shared by Singapore’s Prime Minister Lee Hsein Loong. He said earlier this year: “It is an open secret that the US had reservations about Asian Infrastructure Investment Bank (AIIB) and discouraged its friends from participating, and on the TPP, some observers believe that the rules are being crafted to raise the hurdle for China to join¦.. But speaking as an Asian country and a participant of both AIIB and TPP, Singapore hopes that eventually China will join the TPP and the US and Japan will join the AIIB.”

He Weiwen, however, put the blame on US ‘selfishness’ for the failure of the Hawaii talks and said that while expecting other TPP members countries to make concessions, Washington did not make the necessary concessions needed in an international deal. For example, the US drug manufacturers want 12 years, while their Australian counterparts want five years’ time. It is likely that the 12-year data protection would make it easier for the US to monopolise Australia’s drug market. The US monopoly would increase the medical expenses in Australia to a large extent.

Healthcare in Australia is partially subsidised by the state. Canberra needs to introduce generic drugs from time to time to cut the costs of its healthcare system. An agreement on this issue would impose a heavy burden on Canberra’s healthcare system. It is not surprising that Australia rejected such a clause. This has been reflected in Australian Trade Minister Andrew Robb’s statement on August 12. He said the last negotiating stages of the TPP (in Hawaii) were “very difficult”, with the deal more likely to fail when the US presidential election cycle kicks in.

Besides, AFP quoted Robb from Australia as saying: “Canada is into an election already. So there are some complications and the close we get to a US presidential election, the more prospect of it falling over.”

Likewise, Washington also pressed Tokyo hard to lower tariffs substantially and offered only 50,000 tons of tariff quota neglecting the harmful effects to the Japanese growers. To put it simply, it would ensure the US rice exporters to make money. At the same time, the US side refused to lower tariff on auto parts import because these parts made in the US cannot compete.

The domestic compulsions of the member countries will possibly stand in the way of holding another TPP talks to finalise the deal in the near future. But there is no dearth of boldness though. Giving a positive twist, Japan’s economic minister Akira Amari told newsmen: “With the next meeting, I believe all the problems will be resolved.” But the timing of the next meeting is still not clear.

Reports from other sources point out that politically sensitive dairy industry represents one of the most sticking points. Ottowa is unlikely to agree to remove trade barriers protecting this industry before the October elections.

The interests of the 12 TPP counties who are at different stages of economic development vary widely. The list of the members would make even a casual reader understand this. They are: Australia, Canada, Brunei, Chile, Japan, Malaysia, New Zealand, Mexico, Peru, Vietnam, Singapore and the US.

LACK OF HUMAN RIGHTS AND ACCOUNTABILITY: Meanwhile, about 200 labour activists and migration experts from 45 countries of Asia-Pacific region at a meeting in Bogor, Indonesia on August 11 expressed their concern about the TPP talks and complained that they have been denied their voice in the trade talks. They said, the deal, once finalised, would allow corporations to sue governments for the potential loss of future profits.

Reuters news agency reports from Bogor quoting executive director of the Solidarity Centre Shawna Bader-Blau as saying: “The investor-state dispute settlement provisions in the massive trade deal ¦. if it’s passed, binds them to a controversial logic that allows multinationals corporations to sue¦ if a government passes a law or regulation that protects its people to the possible detriment of sales.” At the opening session of the meeting the executive director said: “Corporate rights are treated as potable, binding and protected by enforceable laws in global trade agreements, but not so human rights.”

The Solidarity Centre chief’s punch line was that while investor rights are protected, human rights are “relegated to unenforceable side agreements, aspirational multilateral protocols, spotty national laws and no accountability.”

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