U.S. Business Groups Seek Better TPP Offer From Japan Following Ministerial Discussions

The International Trade Practice Center on Bloomberg Law® provides in one comprehensive, time-saving resource.

By Len Bracken

Sept. 25 — U.S. business groups Sept. 25 are calling for an improved market access offer from Japan following the lack of progress in ministerial-level discussions in Washington on agriculture and autos tied to the broader Trans-Pacific Partnership (TPP) negotiations.

Tami Overby, senior vice president for Asia with the U.S. Chamber of Commerce, told Bloomberg BNA it is unfortunate that U.S. Trade Representative Michael Froman and Japanese Economy Minister Akira Amari were not able to close gaps over agricultural market access and autos during their Sept. 23-24 meetings in Washington.

“We continue to urge the government of Japan to put forth a market access offer that will provide real market access for American agricultural and automotive products,” Overby said. “Japan stands to gain significantly from an agreement that opens its agricultural market along with those of the other TPP members at an equally ambitious level, but it appears that Japan is not yet prepared to take the bold step forward that meets the test of a high-standard, ambitious and comprehensive agreement.”

Overby said an agreement between the U.S. and Japan is a critical step in moving the overall TPP negotiations forward, including making progress on rules areas such as intellectual property.

“We hope Japanese officials will come forward with a stronger market access offer in coming weeks so that the TPP negotiations can be concluded soon,” Overby said.

Pork Producers, Big Three Cite Difficulties

The National Pork Producers Council (NPPC), in a Sept. 25 statement expressed “deep disappointment” in what it described as Japan's continuing rejection of the fundamental terms of a successful TPP agreement, as agreed upon by leaders of all participating TPP nations prior to Japan's entry into the negotiations last year.

The Pork Producers Council said Japan continues to demand exemptions from tariff elimination for an unprecedented number of agricultural products. Its negotiators have declared that products such as pork, dairy, beef, wheat, barley, sugar and rice are “sacred” and cannot be opened to free trade in the TPP.

“Either Japan will agree to do what all other TPP nations are prepared to do—eliminate tariffs on virtually all products—or the standoff will continue,” the Pork Producers Council said. “If Japan continues to refuse, the United States and the other TPP countries should close the negotiation without Japan.”

Matt Blunt, president of the American Automotive Policy Council (AAPC), which represents Ford, General Motors and Chrysler on trade policy issues, told Bloomberg BNA that it would be very difficult for USTR to reach an agreement with Japan.

“There's a decades-long history of closing Japan's automotive market through nontariff barriers and currency manipulation,” AAPC President Matt Blunt told Bloomberg BNA. “The Japanese mercantilist policies when it comes to the automotive sector and protectionist policies when it comes to agriculture make it extremely difficult to complete a real free trade agreement with Japan in a way that is fair to the United States and American workers.”

AAPC sees potential benefits for its members in the TPP agreement but will not support the pact unless it includes meaningful provisions against currency manipulation. Such provisions are not under negotiation, according to U.S. trade officials.

Labor Weighs In

Celeste Drake, a trade and globalization policy specialist at the AFL-CIO, told Bloomberg BNA that progress in TPP cannot be judged by any single meeting. But she noted that the deadlock between the U.S. and Japan does seem to put somewhat of a damper on the efforts to wrap up the pact by the time of the Asia-Pacific Economic Cooperation summit in November, particularly when so many other decisions are reportedly on hold until the U.S. and Japan complete their bilateral talks.

“And after the very weighty bilateral auto issues have been resolved, there remain some of the most important issues in the talks: outstanding questions on [state-owned enterprises], rules of origin, intellectual property, currency and more will affect the quality of life for working people in the US and the entire region,” Drake said. “A rush to make trade-offs means our interests are likely to be left behind.”

Meetings Cut Short

Froman and Amari were scheduled to meet for two days, but it was observed that the meetings lasted a day and half, which was not anticipated by the U.S. side in light of the statement Sept. 23 by Prime Minister Shinzo Abe in New York that Japan is determined to “boldly contribute” to the conclusion of the TPP pact.

“While there were constructive working-level discussions over the weekend, we were unable to make further progress on the key outstanding issues,” according to a USTR statement, released late Sept. 24 after the conclusion of two day's of meetings. “The United States continues to demonstrate a commitment to the level of ambition that all TPP countries agreed to attain when they entered negotiations.”

According to an industry representative, the reference to the “level of ambition” made at the outset of the talks is likely a reference to the stated goal by the 12 TPP leaders of tariff elimination, which Japanese negotiators have resisted with regard to sensitive agriculture markets such as rice, wheat, dairy, sugar, beef and pork.

The USTR statement added that both sides will consider next steps following consultations in Washington and Tokyo. Although it remains unclear what those next steps will be, the implication is that the U.S. feels it is up to Japan to meet the agenda the other TPP partners are working toward.

Amari told reporters Sept. 24 that the U.S. expressed appreciation for what he said was a “flexible” Japanese proposal but subsequent discussion did not yield results. While Amari did not provide any details on the proposal, he added that Japan would now focus on bilateral negotiations with the other TPP partners.

In addition to the U.S. and Japan, the TPP 12 comprise Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

USTR to Brief Advisers

Meetings among the chief negotiators of the TPP 12 are planned for late October in Australia, and the TPP trade ministers will meet subsequently.

In advance of these meetings, the Office of the U.S. Trade Representative will hold an all-day Oct. 9 meeting on TPP with members of the administration's trade advisory committees.

One adviser told Bloomberg BNA that the meeting is timely and much-needed given the complexity of the TPP agreement, which comprises 29 legal chapters and market access negotiations concerning tariffs, services and government procurement.

“Much has happened in the talks without even cleared advisers knowing,” he said, referring to advisers who have been cleared for security reasons to receive confidential information about the negotiations.

In addition to agriculture market access concerns by several of the partners, some of the major sticking points in the talks include provisions concerning:

• intellectual property rights, notably those concerning data exclusivity for pharmaceutical drugs;

• curbs on noncommercial business decisions by state-owned enterprises; and

• the U.S. proposals to make environmental commitments legally binding.


To contact the reporter on this story: Len Bracken in Washington at mailto:%20lbracken@bna.com

The readout can be found at http://www.ustr.gov/about-us/press-office/press-releases/2014/September/Readout-of-Meeting-between-USTR-Froman-and-Japanese-Minister-Amari.

The NPPC statement can be found at http://www.nppc.org/2014/09/national-pork-producers-council-statement-on-the-transpacific-partnership-negotiations/.

Request International Trade Practice Center on Bloomberg Law