08.08.2015 Author: Vladimir Terehov

On the Next “Decisive” Meeting of TPP Participants

CD544433It looks like the long running soap opera called “the formation of the Trans-Pacific Partnership (TPP)” is beginning to make pucker not only those who are forced to watch it, more or less regularly, but also the main actors. There are currently 12 such participants, namely the United States, Japan, Canada, Australia, New Zealand, Singapore, Malaysia, Vietnam, Brunei, Chile, Mexico and Peru. In the recent 5-6 years, all of them have been members of various levels of negotiations for a collective Free Trade Zone (FTZ).

Each round of negotiations (which have already accumulated 19 “official” and over 20 “work sessions”) culminates in a standard declaration by the main participants in the style of: “a lot of work has been done and there is significant progress, but several outstanding issues still need to be resolved in the next decisive session.”

The latest round of negotiations, which took place in Hawaii from 24 to 31 July of this year (initially at the expert and subsequently at the ministerial level), had also been designated previously as “decisive”, where it had been expected to solve all the “remaining” issues from the previous meetings. So, in a solemn ceremony, the heads of states would only have to sign the prepared documents.

However, after the Hawaiian round there were “a few” problems. Moreover, the negotiators disagreed as to which of them was to be considered a priority.

In New Zealand, it is considered to be the delay in removal of import duties on dairy products; in the U.S. – opening domestic markets of the partner countries of the TPP (primarily Japan) for the import of various agricultural products. At the same time, Americans are in favour of extending the period of preferences for companies – producers of new medications. Japan, by contrast, is interested in extending the period of protection of its market of agricultural products from the free inflow of foreign products, but in prompt removal of barriers for car sales.

At the final press conference, the Minister of Economy of Japan, Akira Amari, said that it would take another joint meeting of all the participants of the negotiation process to approve the TPP statutory documents. The representative of the U.S., Michael Froman, intends to continue to focus on solving problems concerning US-Japanese economic relations as a key element in the success of this project.

Apparently, during the Hawaiian round, the bilateral US-Japan component occupied a central place. That is quite natural, since the total GDP of the two countries is at least 80% of the total GDP of all 12 TPP members combined.

Only on July 30, news agencies reported on problems in the bilateral economic relations being “basically” resolved. However, the ensuing important “clarifications” actually leveled official optimism.

So, Japan is really willing to lower the tariff barrier on US beef imports from 40% to 9% of its value – however, not immediately, but within 15 years from the date of implementation of the TPP.

In turn, the U.S. intends to maintain the current rates on the main components of Japanese exports, i.e. cars (2.5% for passenger and 25% for trucks) for 20 years.

Therefore, the restrained reaction of interested business circles to the timeframe of tariff barriers elimination, indicated during the Hawaiian negotiations, is quite clear. It’s very reminiscent of the saying: ‘when pigs fly.’

But after the Hawaiian round, they won’t even get ready ‘to fly’. The start signal for this should be the resolution of the aforementioned “few” problems, the official signing the final documents of the Summit and their subsequent ratification by legislative bodies of all 12 member countries of the TPP.

To complete the preparation of these documents as noted above, “another meeting” is required. And, immediately after the Hawaiian Round, experts began to express doubts about the possibility of the meeting at the ministerial level before 2017.

Now, hurrying is pointless, because there is not enough time to do this by the third week of November, when the next APEC summit is to be held in Manila, Philippines. At this venue, in a festive atmosphere, the “TPP” soap opera production director, that is the incumbent US President, Barack Obama, had planned to complete perhaps the most important act of his entire political life.

However, under the circumstances where the main participants in the negotiations are primarily concerned with the idea “not to miscalculate,” a new ministerial meeting in the remaining 2-3 months before the APEC summit can hardly be expected. If there had existed a real opportunity to overcome the notorious “few” problems in the near future, they would have been eliminated in Hawaii. Even if, by some miracle, it were possible to resolve them at the working session level, for example, in the next six months, a special summit after the APEC in Manila apparently, would be out of the question. For in 2016, the United States will be immersed, this time, in a very complicated situation – the presidential election campaign.

Therefore, it is predicted that the next ministerial meeting will be held only in 2017, and highly unlikely in the beginning of 2017 immediately after the new US President steps into office, when he will need to take time to assess the short-term priority challenges facing the country.

Here, it is worth noting that attempts to artificially push through a priori difficult negotiations on the formation of TPP are not just motivated by Obama personally, but also have the Democratic Party standing behind him. The latter is facing the problem of choosing ‘foreign products’, which, together with the candidate for the presidency of the country could be sold to American voters in the upcoming election campaign.

But today, what can it possibly offer the voter? Bad relations with Russia – a direct consequence of attempts to gain immediate benefits from using another outbreak of the ancestral disease (Ukranian separatism) against Russia on the outskirts of the historic Russian territory? … chaos in the Greater Middle East – which is dangerous to US interests? … aggravation of relations with China – the second world power?

In what way, besides rhetoric, has the US “global leadership” actually manifested itself during the final eight-year rule of the Democratic Party? In the effort to the ubiquitous proliferation of highly questionable “values” (which have no relation to “western” ones), the observance of which throughout the world (just do not fall off your chairs!) has been monitored by as much as a special envoy of the Secretary of State?

For a short time, it could have sufficed to submit the completion of the formation of the TPP as a symbol of such “leadership”. However, in reality and in the long term, this project is more a symbol of division and confrontation in the Asia-Pacific region.

It hardly responds to the long-term interests of the American people, either. It is noteworthy that, in the recent years, the most rigid criticism of the TPP has been heard in the United States. Previously, Nobel prizewinner in economics, Joseph Stiglitz, voiced his rejection of the project. In the summer of this year, one of the long-timers of the US Congress, Senator Bernie Sanders came out with the article “The Trans-Pacific Trade (TPP) Agreement Must be Defeated”. He, incidentally, is one of the contenders from the Democratic Party to participate in the upcoming presidential election.

Referring to the 20-year-old experience of the “North American Free Trade Agreement” (NAFTA), as well as some bilateral agreements previously concluded by Washington (e.g. with China and Japan), B. Sanders predicts the loss of at least 130 thousand US jobs in the case of the ratification of the TPP.

Critics of the project especially emphasize the air of secrecy surrounding the negotiation process. In their opinion, the initiators of the TPP have something to hide, because the main beneficiaries will not be ordinary Americans, but several transnational corporations.

Therefore, the fairly likely prospect of the TPP project’s collapse could be in the interests of all Asia-Pacific countries, including the United States. This would facilitate the mainstreaming of the Russian-Chinese concept of collective security and economic prosperity across the region without dividing them into opposing factions.

Vladimir Terekhov, expert on the Asia-Pacific region, exclusively for the online magazine “New Eastern Outlook”.