The Economist; Feb 21, 2014
By Banyan | SINGAPORE
NEGOTIATIONS for the Trans-Pacific Partnership (TPP), which enter a crucial phase this weekend with a ministerial meeting in Singapore, seem to take place in two parallel universes.
In one, the 12 countries pursuing this ambitious “21st-century” plurilateral free-trade agreement, including America and Japan (but not China) and representing 40% of the world’s GDP and one-third of its trade, came tantalisingly close to meeting their deadline of finalising the deal last year, and are now one last big push—perhaps in the next few days—away from success.
In the other, TPP talks are bogged down in intractable disagreements on the most fundamental issues. The notion that it might be signed—let alone implemented—in the near future seems a delusion.
This week Singapore’s prime minister, Lee Hsien Loong, said that negotiators are “very close” to concluding the TPP this year. Australia’s trade minister, Andrew Robb, was similarly upbeat, expecting countries to show “the colour of their money” in the talks in Singapore.
Yet reports of the senior officials’ meetings that preceded the ministers’ get-together suggest they were dominated by debate about Japan’s insistence on positively 19th-century safeguards on agricultural products—rice, dairy, beef and pork, sugar and wheat. “Considerable gaps remain” with America and the other countries, said Akira Amari, Japan’s economy minister, on the eve of the meeting.
There are three main reasons for the contradictory stories about the TPP.
One is the much-criticised secrecy in which the negotiations are conducted. Much of the flak is rather unfair. The text being discussed has not been released but the American government, for example, has held more than 1,150 meetings on Capitol Hill to discuss the agreement. Some discretion is inevitable. No country is going to reveal its final negotiating position to the press.
Second, the reforms the TPP is seeking are politically sensitive in all of the 12 countries—to Japanese agriculture; the Vietnamese textile industry; New Zealand’s dairy farms; the procurement policies of state-owned enterprises in Malaysia, etc etc. (Here is a good summary of just some of what is at stake.) Domestic lobbies will be overcome only if it is clear that other countries are making big reciprocal gestures. So, to keep up the pressure on them, it is in every government’s interest to make it seem a deal is close.
Third, a consequence of the first two causes: it is far from clear what a deal would look like. In the effort to conclude it, countries may be tempted to water down some of the more ambitious aspects of TPP. For example, a draft released by Wikileaks in January suggested that America’s hopes of having the TPP impose environmental-protection standards that would be enforceable by a dispute-settlement mechanism had been dashed, and the provisions diluted.
Some analysts fear that the compulsion to get the deal done may result in a lowest-common-denominator agreement, whereby each country’s sacred cows are respected and the potential benefits (estimated at nearly $300 billion a year to global income) squandered in advance.
That risk may have increased following the biggest of the many setbacks TPP has suffered recently: it now seems highly unlikely that Barack Obama will persuade Congress to grant him “fast-track” authority (also called Trade Promotion Authority, or TPA), to negotiate trade agreements before the mid-term elections in November (if ever). Without fast-track, agreements can be unpicked line-by-line by Congress, and other TPP countries will be reluctant to sign up.
On the other hand, without a big trade agreement on the point of completion it is hard to argue that fast-track is essential and urgent. TPA may need the TPP as much as the TPP needs TPA.
It is in almost everybody’s political interests to show that the talks are making progress. Actually concluding the deal, however, may require more political capital than most governments at the table are willing to spend.
So hundreds of negotiators (or perhaps even thousands—the government was unable to “share” the number) are trapped in Singapore, engaged in what risks becoming a largely cosmetic exercise.