USTR Intensifies Focus On TPP In Face Of Potential New Entrants

From World Trade Online.   The Office of the U.S. Trade Representative is intensifying its outreach and focus on the Trans-Pacific Partnership (TPP) negotiations in light of the interest that Japan, Canada and Mexico have expressed in possibly joining them and its determination to essentially conclude a deal by the middle of next year, sources said.

Even under the most ambitious timetable, U.S. consultations with Japan, Canada and Mexico will likely take several months, and USTR will likely not be in a position to provide a 90-day advance notice to Congress regarding any new country joining the TPP negotiations perhaps until March, sources speculated.

This means that Japan, Canada or Mexico would likely not be able to join the talks until at least the middle of next year. In light of USTR's goal to wrap up the talks by mid-2012, some observers wondered whether USTR wants to achieve as much as possible in the talks before new countries could potentially be ready to join.

Some sources say this could be a strategic approach meant to ensure that if new countries do join, they would not "bog down" the talks at too early a stage. Another source said this could be because USTR wants to have the structure of a deal in place and then force Japan to either "take it or leave it."

USTR has made clear that any new country joining the TPP would have to accept everything to which TPP partners have already agreed during the course of the negotiations. This means that the longer it takes for a new country to join the talks, the less impact that addition would presumably have on the negotiations.

USTR envisions a series of negotiating rounds early next year to help bring about progress in the negotiations, as well as possible involvement by trade ministers to break any logjams at a political level, sources said.

TPP negotiators this week met in Malaysia in an informal round, and plan to reassemble early next year, possibly in the United States, for another informal round. A USTR spokeswoman said countries are still setting up the inter-sessional schedule, but that TPP partners have already agreed to hold a meeting of the environment working group.

After that, TPP negotiators will meet in Australia in March, and will then hold several more rounds before the middle of 2012, although USTR says it is still working out the schedule, sources said.

In terms of domestic outreach, USTR Ron Kirk was slated to have a closed-door meeting with Finance Committee members yesterday (Dec. 8) to discuss the TPP talks and some sort of expedited approval authority for a TPP deal, along with other issues. The Ways and Means trade subcommittee this week also announced a TPP hearing on Dec. 14.

Administration officials also discussed TPP with members of cleared advisory committees this week and launched its formal consultative process with the private sector writ large by issuing three Federal Register notices requesting comments on the possible inclusion of Japan, Canada and Mexico in the TPP talks. Those comments are due by Jan. 13.

Sources say Assistant USTR Barbara Weisel, the lead U.S. negotiator for TPP, has long taken a skeptical view of new countries joining the talks before they are completed. However, sources said that USTR overall appears to be taking a very cautious approach when it comes to the possibility that Japan, Canada or Mexico could join the TPP talks soon.

Many observers expressed doubt this week that TPP partners will achieve a deal by mid-2012, or even by sometime next year. One observer said that Japan is more interested in joining the ongoing talks, and is less keen on simply accepting a deal that has largely been worked out.

Leaders set the goal of working out a TPP deal by the end of next year when meeting on the sidelines of an Asia-Pacific Economic Cooperation (APEC) forum summit last month. This week, TPP negotiators in Malaysia are discussing bilateral market access issues, services, investment, intellectual property rights, and rules of origin, sources said.

Assistant USTR Wendy Cutler said late last week that USTR will undertake an extensive consultative process on these three countries' interest that reflects Obama administration consultations on how to alter the Korea-U.S. free trade agreement (KORUS). "We will take the time needed to get this right," she stressed.

According to Cutler, TPP negotiations will continue as the United States, Japan, and other TPP partners consider the possibility that Japan could join the talks. The speed with which this could happen depends in part on how soon Japan can offer up convincing responses to U.S. priority issues, she signaled.

Demetrios Marantis, speaking at a Dec. 5 event at the Woodrow Wilson International Center for Scholars, delivered the same message. He said that over the next few months, the administration will be "in active consultation" with stakeholder groups, members of Congress, as well as with our partners in these applicant countries, so that they have "a very clear sense of what our expectations are."

In these consultations with the aspiring countries, the U.S. will share the results of the stakeholder outreach so they have a " clear sense of what the expectations are for joining the TPP," he added.

Cutler made it clear that the United States will at the same time move forward in the TPP talks among current TPP partners "as quickly as possible." How quickly Japan can join the talks "will really depend on how quickly Japan and the United States can work together so Japan can demonstrate its readiness to live up to the TPP standards and to address concerns that are raised in our domestic process," she said.

Cutler, speaking on Dec. 2 at the Brookings Institution, said the United States will evaluate Japan's readiness to join the TPP both by examining whether it will "live up to the high standards of the TPP agreement" and if it is ready to address specific issues and concerns in agriculture, manufacturing and services.

Observers suspect that U.S. trade officials will place the most emphasis on three issues: beef market access, automotive market access and Japan's rollback of the privatization of its postal and insurance sectors. These three issues were raised by Marantis during talks in Tokyo last month (Inside U.S. Trade, Nov. 25).

Cutler will head up the negotiations with Japan over its potential entry into the talks, while Assistant USTR John Melle will head up talks with Mexico and Canada. Assistant USTR Barbara Weisel will continue to serve as the lead negotiator for the ongoing TPP negotiations, Cutler explained.

Overall, Cutler walked a fine line in her remarks on Japan's potential participation. On the one hand, she praised Japan's interest in the TPP talks and pointed out that, if Japan were to join the TPP talks, it would dramatically increase the economic value of a TPP deal.

On the other hand, she acknowledged that the U.S.-Japan trade relationship has been historically difficult.

Japanese Prime Minister Yoshihiko Noda's announcement last month that Japan would explore the possibility of joining the TPP talks was "bold" and "historic," Cutler said. Japanese participation would "elevate" the TPP talks.

Cutler pointed out that, measured in terms of gross domestic product (GDP), Japan is the third largest economy in the world. If you take the United States out of the equation, Japan's GDP is more than double the GDP of the other eight TPP countries combined. If Japan were to join, that would offer enormous opportunities for U.S. exporters, she said.

It could also help make Japan's economy more dynamic and competitive, she argued.

At the same time, Japan has a "history of trade protection," and the U.S.-Japan trading relationship has "been characterized by trade friction" in the past, although in recent years this relationship "has really moved from one of trade friction to trade cooperation," she said. The two sides have made progress, although "some barriers remain," she said.

This article comes from insidetrade.com.