The Trans-Pacific Partnership: A Struggle to Conclude Negotiations

By Craig Tarasoff

Those hoping for the trade boom in the Asia-Pacific countries may have to wait a little bit longer. Despite numerous assurances over the past few years that substantial progress had been made in the Trans-Pacific Partnership (TPP) negotiations, we still appear to be mired in uncertainty and unsuccessful deliberations.

TPP negotiations seem to have stalled in the past few months. According to Law360, Acting Deputy U.S. Trade Representative Wendy Cutler has noted that points of contention range from liberalizing “agricultural products to establishing a strong and effective dispute settlement mechanism in the auto sector.”

The Trans-Pacific Partnership is a trade agreement between twelve Asia-Pacific countries designed to enhance trade and investment among its charter countries. Negotiations began in 2005 between four countries, and the agreement has expanded now to include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Key features of the agreement include sharp decreases in tariffs, development of supply chains among TPP countries, and investment in innovative products and services. Through this partnership, the US attempts to remain a significant player in the Asia-Pacific area.

One major problem that appears to have caused talks to drag on is the United States’ insistence on negotiating with each country bilaterally, which keeps other countries in the dark and impedes transparency. Other countries may be reluctant to negotiate without knowing the negotiation details of the two largest members, the US and Japan. Another significant problem comes from a lack of fast-track authority for President Obama without which it would be virtually impossible to sign TPP. The Democratic Congress rejected fast-track authority earlier in the year, but the new Republican Congress may just pass such a bill.

It seems clear that the headlines confirming progress are a bit overstated. The October 27^th summit in Sydney showed how stagnant the two countries negotiations were. Japan is notably hesitant to open its domestic markets to foreign competition, and the US has often objected to the steep Japanese trade tariffs on “politically sensitive farm products,” such as rice, wheat, beef and pork, dairy, and sugar.  The recent November 10^th summit, which was set as a soft deadline for progress to be made, did not prove to be as successful as was projected.

What is clear is that the US and Japan need to work more cooperatively to finalize negotiations. According to an estimate by the Brookings Institution, the total GDP of the twelve member nations is over $27 trillion, which is over 40% of global GDP. The previous goal of coming to a broad agreement by the end of the year seems highly unlikely at this point. Now, US negotiators hope to come to an agreement within the first six months of 2015. A partnership with the emerging Asia-Pacific markets is key to our continued economic success, and hopefully more fruitful negotiations are around the corner.