The Obama administration's top trade official says the goal of concluding a major trade agreement with Pacific Rim countries by the end of this year is difficult but "doable."
US Trade Representative Michael Froman acknowledged at a House hearing on Thursday that numerous obstacles remain, however, including ensuring that Japan lives up to its commitments to open its markets to American products.
Froman said his negotiators would be working with Japan, the newest participant in the Trans-Pacific Partnership trade negotiations, over the coming months to resolve issues over Japanese barriers to US autos, farm products and insurance services. He said finalising the agreement by year end is "ambitious but I think it is doable."
Talks for the Trans-Pacific Partnership, or TPP, began more than two years ago, with the 18th round of negotiations now taking place in Malaysia. There are currently 11 participants - Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, with Japan set to join. It would be the largest free-trade agreement ever, including countries that make up about 40 per cent of world trade.
Members of the committee raised several other issues that have yet to be resolved, including how to deal with state-owned enterprises involved in commercial activities, currency manipulation, and US efforts to extend patent protections for pharmaceutical companies without depriving poorer countries of cheaper generic drugs. The negotiations have also met opposition from environmental groups and others who cite a lack of transparency in revealing the contents of the talks.
"You've got a heavy, heavy load there," said Rep. Mike Kelly. "I don't know how you are going to get it done as quickly as you want to get it done."
Much of the scepticism touched on whether Japan is serious about lowering barriers that has long made many of its markets closed to American goods and services. "In the TPP, I have serious concerns about Japanese non-tariff barriers in the auto, insurance and agriculture sectors," said committee chairman Dave Camp, R-Michigan.
"While there are many outstanding issues, Japan's engagement presents a broader policy question: whether and how to address one-way trade, a very unlevel playing field," added the top Democrat on the panel, Rep. Sander Levin of Michigan.
In 2010, the United States exported about 14,000 vehicles to Japan, while importing some 1.5 million vehicles.
Froman stressed that there were no upfront exclusions of individual Japanese sectors when the United States in April agreed to Japan's entry into the negotiations. He said US negotiators will be meeting with their Japanese counterparts at the end of the Malaysia round to "bring them up to speed" on the accord.
Japanese Prime Minister Shinzo Abe has said that he is prepared to expose the country's sheltered industries to more foreign competition, but he faces strong resistance from many in his own party.
Froman also pledged that the administration will work with Congress to craft a new trade promotion authority bill that would give the administration the power to negotiate trade deals that Congress can accept or reject but cannot alter. The last trade promotion authority act, also known as "fast track," expired in 2007, making negotiating partners less willing to proceed with trade deals because of concerns that Congress will tamper with them.
Republicans have pushed for renewal of trade promotion authority, but some Democrats, who see trade agreements as a source of environmental damage and labor rights violations, have resisted.
Froman said that it was important to have the authority in place before the TPP is sent to Congress, noting that there had only been one free trade agreement in history, with Jordan, considered without the authority in place.
Levin said a new trade promotion authority bill must give Congress a "significant, sustained role" in establishing trade principles. "Today, trade agreements address a broad and growing range of policy areas, so members of Congress must play an active role in their development," he said.