TPP Gaining Momentum as Platform For Regional Integration, Cutler Says

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By Len Bracken    

July 23 --The Trans-Pacific Partnership (TPP) agreement being negotiated by 12 Pacific Rim countries is gaining momentum as a platform for regional economic integration, acting Deputy U.S. Trade Representative Wendy Cutler said July 23.

In remarks at the Atlantic Council, Cutler traced this momentum to three factors:

• The TPP talks are in the final stages of negotiation;

• The pact's benefits come from addressing real issues of current concern in trade policy; and

• The TPP is of growing interest to new members.

 

Cutler described the state-of-play in the talks as dealing with a limited number of issues.

“Now is the time to complete TPP,” Cutler said, noting that as with other trade talks, some of the most difficult issues remain to be resolved at the end.

Sources familiar with the talks have told Bloomberg BNA that many of the 29 chapters on the rules side of the agreement are essentially or nearly completed and have been “parked” pending movement in other areas. Across-the-board progress was made at the July 3-12 meeting of TPP chief negotiators and subject-area specialists, with several sources confirming a narrowing of differences on the labor chapter.

Japan at Center of Talks

Cutler said that Japan has been a “great partner” with the U.S. in lifting standards on the intellectual property rights (IPR) provisions. Now that Japanese negotiators are in market access talks with TPP countries other than the U.S., she said, those countries are becoming more flexible in the rules negotiations.

She said that “enormous progress” has been made on the IPR chapter, with discussions taking place at the highest levels, but added that there was still a long way to go.

The IPR chapter, which is the longest and one of the most contentious of the TPP rules chapters, includes commercially significant provisions related to pharmaceuticals. Cutler said that the U.S. is focused on achieving the most robust IPR chapter possible.

She noted that U.S.-Japan TPP-related agriculture market access discussions, which have shown recent progress according to negotiators from both sides, will resume in early August .

The U.S. and Japan are also engaged in bilateral negotiations on trade in motor vehicles that run parallel with the broader TPP talks, and while progress has likewise been reported in recent talks, the chief Japanese negotiator characterized the latest round as being at a difficult stage.

Variety of Mechanisms

An industry source told Bloomberg BNA after the Atlantic Council speech that with negotiators discussing safeguards and other mechanisms for handling Japan's sensitive agriculture products--rice, beef and pork, dairy, wheat and sugar--the talks are at a substantive phase.

A safeguard could allow for tariffs to “snap back” into place in the event of an import surge, functioning much like a tariff rate quota where a tariff could be eliminated for a certain level of imports but would apply above that level. The source said that there appears to be an attempt by the Japanese to manage the level of imports.

Trade officials from various TPP countries have said that they anticipate the use of long phase-in periods for tariff elimination on Japan's sensitive products. The source said that low-cost U.S. producers could become competitive in the Japanese market as lower tariffs are phased in, before tariff elimination.

In response to a question, Cutler said that the U.S. is continuing to urge Canada to engage in market access talks.

Benefits, Interest of Others

TPP is gaining momentum as a platform for regional economic integration because of its comprehensive quality, the high standards it seeks to achieve and the 21st century issues it seeks to cover.

Cutler said that state-owned enterprises (SOEs), regulatory coherence and digital commerce are representative of the 21st century issues addressed by the TPP.

Sources familiar with the talks have said that progress has been made on the SOE provisions in the past year and they have stressed the importance of them to U.S. stakeholders. These provisions are primarily in the competition chapter, but appear in other areas of the agreement such as the investment and financial services chapters.

Regulatory coherence refers to the transparency of the rulemaking process, specifically the ability of stakeholders to comment in a meaningful way on rules affecting trade and investment. The new provisions on digital trade concern, most notably, cross-border data provision and data center requirements.

Cutler said that while the focus is now on completing the talks with the current 12 TPP countries, interest in joining the TPP negotiations is growing and consultations are already under way with Korea. She noted that this interest has expanded beyond members of the Asia-Pacific Economic Cooperation to Colombia and Costa Rica.

To contact the reporter on this story: Len Bracken in Washington at lbracken@bna.com  

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com


The Atlantic Council report “Bridging the Pacific” can be found at http://www.atlanticcouncil.org/images/files/Bridging_the_Pacific_report.pdf.