[A2k] WSJ: As Trade Deal Nears Potential Home Stretch, Worries Abound

Thiru Balasubramaniam thiru at keionline.org
Mon Jul 27 07:06:54 PDT 2015


*As Trade Deal Nears Potential Home Stretch, Worries Abound*

Negotiators must hash out thorny disputes during expected final round of
Trans-Pacific Partnership talks in Hawaii this week; some fear talks may

The Wall Street Journal


July 26, 2015

Hauling a skeptical Congress on board was hard enough.

Now U.S. negotiators must resolve disputes ranging from drugs to dairy as
they push this week to conclude a major trade agreement with 11 Pacific

As trade ministers gather Tuesday on the Hawaiian island of Maui, enough
uncertainties remain that both participants and observers worry the talks
may falter in what is supposed to be the final round.

“They will find out when they get to Hawaii how hard it is,” said Clayton
Yeutter, a Republican former U.S. trade representative in the George H.W.
Bush administration. “Closure is a lot more difficult exercise than they

The goal is a 12-nation bloc accounting for two-fifths of the world’s
economic output that would boost growth and put pressure on China, which
isn’t part of the talks, to adopt American-style rules for commerce, U.S.
officials say.

But the U.S., Japan, Canada, Malaysia, Australia and the seven other
countries involved each bring sensitivities and demands ranging from
disagreements over dairy and sugar to unease with U.S. rules on
pharmaceuticals and the treatment of state-owned businesses.

“There’s a lot of hard work to be done before this agreement is put to
bed,” Canadian Trade Minister Ed Fast said last week in Toronto.

Significant setbacks in wrapping up the Trans-Pacific Partnership would
carry consequences, particularly for President Barack Obama
<http://topics.wsj.com/person/O/Barack-Obama/4328>’s trade
representative, Mike Froman.

Delay could push a U.S. congressional vote on the deal into the middle of
the U.S. presidential election season, lengthening the odds of its passage
in Mr. Obama’s second term.

Making deep concessions to achieve a quick deal would also be dangerous. If
Mr. Froman gives too much ground in politically delicate areas—including
automobiles, dairy, drugs, sugar and textiles—he risks a backlash from
powerful U.S. farm and industry groups that could erode the razor-thin
majority in Congress that voiced support for Mr. Obama’s trade policy in
June. If the talks go well, the congressional vote on the deal could come
as soon as late this year or in early 2016.

“If you don’t get it right, there can be too many minuses and not enough
pluses,” said Rep.Sander Levin
<http://topics.wsj.com/person/L/Sander-Levin/5988> (D., Mich.), the top
Democrat on the House committee that oversees trade and a top critic of the
Obama administration on trade. “There’s a long way to go.”

Spokesmen for Mr. Froman didn’t respond to repeated requests for comment on
the challenges negotiators face this week.

Some countries are dealing with opposition from politically influential

Led by Canada, several TPP countries have said they are reluctant to lower
tariffs and other measures protecting their domestic dairy industries, but
other members of the group—including New Zealand, where dairy is the
biggest export—are insisting on greater access to milk consumers around the
Pacific bloc. Similarly, the U.S. has long worked to protect its domestic
sugar cane and beet farmers from low-cost producers abroad, but Australia
is looking to boost sugar exports to North America through the deal.

With Vietnam, Mr. Froman has to strike a balance between allowing the
country preferential access to U.S. apparel and footwear markets and
maintaining rules favored by the U.S. textile industry that limit the use
of Chinese fabric, common in Vietnam. Disappointing the well-connected U.S.
textile industry and sugar farmers could alienate Republican lawmakers from
southeastern states whose votes may be needed to pass the TPP.

Another thorny issue is pharmaceuticals. The U.S. Chamber of Commerce and
key lawmakers are warning Mr. Froman on achieving something close to 12
years of exclusive marketing ability for name-brand biologic drugs, despite
concerns in Australia and New Zealand, as well as from generic drug makers
and Democrats worried about the affordability of medicine.

Meanwhile, unions and other left-leaning groups are expected to criticize
the deal’s labor and environmental standards.

Mr. Froman worked to set the foundation for a successful gathering,
traveling in the past month to meet trade ministers and lawmakers from
Vietnam, Malaysia, Mexico, New Zealand and Singapore, as well as hosting
top officials from Peru and Chile in Washington.

His agricultural deputy has met with Canadian officials in an attempt to
resolve a dispute over the country’s dairy and poultry trade that has some
U.S. lawmakers calling for Ottawa’s exclusion from the TPP.

The history of international trade negotiations is rife with delays and
setbacks. The TPP ministers failed to notch significant progress at
meetings in late 2013, and the talks since have been plagued with
disagreements between the U.S. and Japan—now patched up—and then by
concerns about support in Congress.

Difficulty in winning congressional approval for enhanced negotiating
powers, known as fast track, nearly derailed the Pacific deal last month.

U.S. officials concede the Hawaii negotiations next week could fail to
produce a deal, thus triggering further talks. The stakes involved remind
some observers of the 1999 negotiations of the World Trade Organization in
Seattle, now remembered mainly for street protests. Those talks failed and
were later rekindled as the Doha Development Round, which quickly stalled.

Still, all the countries involved have economic and strategic reasons to
play ball, notwithstanding their domestic concerns, according to backers of
the deal.

“Part of the reason all the ministers are coming to Hawaii is that they
know the U.S. political schedule, and there are concerns that if this isn’t
wrapped up soon the ratification process could get bogged down,”
said Jeffrey Schott, trade expert at the Peterson Institute for
International Economics, which backs trade liberalization.

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