TPP: Trans Pacific Partnership talks fail in face of NZ, Canada dairy clash
Pacific Rim trade ministers have failed to clinch a deal to free up trade between a dozen nations after a dispute flared between Japan and North America over autos, New Zealand dug in over dairy trade and no agreement was reached on monopoly periods for next-generation drugs.
Trade ministers from the 12 nations negotiating the Trans-Pacific Partnership, which would stretch from Japan to Chile and cover 40 per cent of the world economy, fell just short of a deal at talks on the Hawaiian island of Maui.
"We have made significant progress during the last week's meetings," US Trade Representative Michael Froman said. "We have advanced toward the conclusion."
Ministers and negotiators would leave Hawaii committed to build on the momentum of the meeting by staying in close contact as negotiators continued, he said.
"The progress made this week reflects on long-standing commitment to deliver an ambitious, comprehensive and high standard TPP agreement that will support jobs and economic growth across the Asia-Pacific region."
When asked for an example of one agreement to show their progress, Froman replied: "Nothing is agreed to, til everything is agreed to.
The result frustrated negotiators who had toiled through the night to cross off outstanding issues and made significant progress on many controversial issues.
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New Zealand trade minister Tim Groser said he was disappointed that the negotiations were unable to reach a conclusion.
"Good progress was made this week, but a number of challenging issues remain, including intellectual property and market access for dairy products.
"We will continue to work toward a successful conclusion. This is about getting the best possible deal for New Zealand, not a deal at any cost.
"I am confident that we will reach an agreement that is in the best interests of New Zealand when negotiations resume."
Speaking from Hawaii, former Chairman of Beef and Lamb New Zealand Mike Petersen said the discussions halted for two reasons - dairy and auto.
"I thought this morning it would be a hard ask to come to a conclusion and in the end that has been proven."
He was disappointed they had not reached a conclusion, but knew to get the best deal it would take a bit longer, Petersen said.
"Obviously, the best outcome is to get a good deal. Having halted with the deal that currently is good, rather than striking a deal we are not happy with.
"We need to get a better offer on the table."
NZ First leader Winston Peters said he predicted the talks would fail - but said New Zealand would eventually capitulate on dairy.
"They'll get over it in the end. The rural US senator and congressman is out for a certain deal for their constituency. Unless they can get it this is going to fall over.
"If the Government does its duty by the NZ dairy and health industry, no there won't be a deal. But I do not expect them to stand up for New Zealand people, that's why they got this deal so close."
Australian Trade Minister Andrew Robb said the problem lay with the "big four" economies of the United States, Canada, Japan and Mexico. "The sad thing is, 98 per cent is concluded," he said.
Failure to seal the agreement is a setback for US President Barack Obama, given the trade pact's stance as the economic arm of the administration's pivot to Asia and an opportunity to balance out China's influence in the region.
The talks, which drew about 650 negotiators, 150 journalists and hundreds of stakeholders, had been billed as the last chance to get a deal in time to pass the US Congress this year, before 2016 presidential elections muddy the waters.
The TPP seeks to meld bilateral questions of market access for exports with one-size-fits-all standards on issues ranging from workers' rights to environmental protection and dispute settlement between governments and foreign investors.
STICKING POINTS UNCHANGED
Despite the progress made, issues pegged as sticking points going into the talks were still blocking a deal after four days of discussions.
New Zealand has said it will not back a deal that does not significantly open dairy markets, with an eye to the United States, Japan and Canada, as well as Mexico.
John Wilson, chairman of the world's largest dairy exporter, New Zealand dairy cooperative Fonterra, arrived to attend the talks late on Thursday (Friday NZT) to press home the case.
Ministers had also yet to agree on how long to protect data used to develop biologic drugs, which a source from a non-US negotiating nation described as the biggest source of frustration.
US drugmakers want 12 years, but Australia wants five. People briefed on the talks had seen seven or eight years as a possible compromise.
"The US was on one side of the issue, while practically every other country were on the other side," the source said.
"Neither side was prepared to move and all claimed it as a red line issue."
Japan and the United States had been trying to agree on the rules of origin for cars, which determine when a product is designated as coming from within the free trade zone and therefore not subject to duties.
The United States and Japan had largely agreed on the rules, but had to get buy-in from Canada and Mexico, which are closely tied in to the US. auto industry.
Japanese automakers source many car parts from Thailand, which is not a member of the TPP, and strict rules would upset existing supply chains. Japan also wants the United States to quickly drop duties on Japanese auto parts going to the United States.
Talks were expected to resume in November.
NEW ZEALAND BLAMED
The president of the Canadian Dairy Farmers, Wally Smith, blamed New Zealand for the delay in the agreement saying it was not accepting what was on the table.
"New Zealand is being very obstinate ... I am really surprised that this late in the end game, a country like New Zealand would not put a little water in its wine," he said.
In a press conference in Hawaii, Groser said: "We will not be pushed out of the agreement."
They had agreed on comprehensive liberalisation and had made some "very large compromises", he said.
"As a small dairy producer, 3 per cent of world production, but the largest exporter in the world, away from the idea that we would eliminate all tariffs and the proposition, having made this huge concession, that New Zealand is now hanging out for something that is completely impossible for our negotiating partners as something I would reject."
"I refuse both in this country, with our hosts, America, and when I get back home, to start throwing numbers around because the essence of this negotiation will be to continue a negotiation in good faith and define through the negotiating process what is the sweet spot."
Groser added the process of reaching a "complicated" trade agreement was to start with a huge number of uncertainties and "slowly resolve them piece by piece until you can see one or two of the most difficult issue remaining".
"Now you don't really, in the real world, ever get to that stage until you've cleared the undergrowth away, so now that the undergrowth has been cleared...we can see clearly that there are one or two really hard issues, and one of them is dairy," Groser said.
"In every negotiation that I've been involved in, over the last 30 years, dairy is always either the last issue to be resolved or one of the last two issues to be resolved because it has been so distorted for so many years, but I'm extremely confident that we will find that sweet spot."
- Agencies and Stuff