after apec-the diplomat

Image Credit: REUTERS/Kevin Lamarque

With the U.S. and Japan nearing a dealand Republicans in control of Congress,could 2015 be the TPP’s year?

Last week, U.S. President Barack Obamatraveled to Beijing for a series of bilateralmeetings and to participate in the annual APEC Summit – his first since 2011. One of the manynewsworthy items to come out of that forum was a leaders’ meeting of the Trans-PacificPartnership (TPP), a regional free trade agreement that is a key pillar of Obama’s rebalance toAsia policy. In remarks before the meeting, the president struck a hopeful tone, heralding the“good progress” made by negotiators to resolve “several outstanding issues,” and encouraging hisfellow leaders to “break some remaining logjams.” He also reiterated the high priority hisadministration places on this agreement, and the immense economic benefits it would bring tothe countries involved.

Public optimism notwithstanding, the negotiations themselves have been anything but smoothsailing, hampered by thorny issues such as state-owned enterprise reform and intellectualproperty rights. Obama has also faced resistance from his own party, which tends to resist tradeliberalization on the grounds that it harms U.S. workers. These and other factors causednegotiators to miss several stated deadlines, and the talks are now more than halfway throughtheir fourth year. The future is not all doom and gloom, however. The U.S. and Japan are veryclose to reaching a deal on market access, which would resolve one of the primary remainingstumbling blocks and add momentum to the negotiations writ large. On the domestic front,prospects for congressional cooperation improved with a resounding victory for the generallypro-trade Republican Party in this month’s midterm elections. With political will, a deal may bewithin reach next year, possibly even in time for the 5th anniversary of the TPP’s launch onMarch 15. Nonetheless, significant challenges yet remain.

One crucial sticking point is the U.S.-Japan parallel negotiations on market access for agriculturaland automotive products. The issues are historically fraught, as U.S. auto producers have longmaintained that non-tariff barriers restrict their entry into a lucrative market, while high tariffson Japanese agricultural imports result in exorbitant prices for consumers and low productivityamong Japanese firms. In particular, the “sacred sectors” – beef, pork, rice, wheat, dairy, andsugar – have powerful political lobbies that command outsized influence in the Japanese Diet,which last year passed a resolution forbidding the administration of Prime Minister Shinzo Abefrom zeroing out tariffs on any of these products.

By Elliot WaldmanNovember 19, 2014

After APEC, Whither the Trans-Pacific Partnership? | The Diplomat http://thediplomat.com/2014/11/after-apec-wither-the-trans-pacific-partn...

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For these reasons the talks have been consistently difficult and often acrimonious, but they nowappear headed toward a denouement. Ambassador Hiroshi Oe, who heads working-levelnegotiations on agriculture for Japan, told reporters following a round of talks with his U.S.counterparts that the “sky is clearing considerably” and that 90 percent of the work may now beresolved. Meanwhile, Abe stated in a recent interview with the Washington Post that the talkshave reached a “final stage.” On the U.S. side, Ambassador Michael Froman noted in a post-APECcall with reporters that “the end of these landmark negotiations is coming into focus.” Japanesemedia reports now suggest officials are aiming to reach broad agreement by February 2015.

Of course, even if the two sides reconcile in the negotiating room, there is no guarantee of acomplete deal reaching fruition. Obama remains hamstrung by his lack of Trade PromotionAuthority (TPA), a temporary power that allows the executive to present a concluded tradeagreement to congress for a yes-or-no vote without amendments or procedural obstructions.Historically, TPA has been an important tool for presidents negotiating trade agreements, as itgave negotiating partners confidence that the agreed terms would not suddenly be altered duringthe domestic political review process. Moreover, influential industry groups such as the NationalPork Producers’ Council have been active on Capitol Hill in recent months, encouraginglawmakers to reject a deal that falls short of dramatic market liberalization. If U.S. trade officialsare unable to assuage the concerns of politically connected stakeholders, the deal could be indanger of falling through.

Japanese negotiators privately acknowledge that they would be much more willing to strike a dealif they can be certain of TPA passing congress, which is more likely with Republican majorities inboth the Senate and the House of Representatives. Indeed, in back-to-back press conferencesfollowing the midterms, both Obama and incoming Senate Majority Leader Mitch McConnellspoke of trade as a potential area of cooperation. There is concern in some quarters, however, thatRepublicans will use TPA as a bargaining chip to exact concessions on other issues, such as taxreform and executive action on immigration. A New York Times report suggesting that thepresident could take action on immigration as early as this week makes the outlook for TPAsomewhat murkier.

Further adding uncertainty to the mix are the difficult political circumstances currently facingAbe. Two separate opinion polls released last week by NHK Television and the Asahi Shimbunfound the prime minister’s approval rating at 44 percent and 42 percent, respectively, nearly adouble-digit drop from last month. Part of this damage is attributable to an unpopularconsumption tax increase that plunged the country into recession, but the cabinet was also hitrecently by a string of high-profile scandals and resignations. Mired in the worst political crisissince the start of his second term in 2012, and with snap elections now scheduled for next month,Abe may require further sweeteners from the U.S. side before he can afford the high politicalprice tag of a TPP deal.

As in any trade negotiation, then, the endgame will require a concerted effort at the highest levelsof government. As one senior U.S. trade official noted recently, “there is no substitute” for apolitical push from the leaders. According to Frank Januzzi, president of the MansfieldFoundation and longtime specialist in U.S.-East Asia relations, one important indicator to lookfor in this regard is Obama’s State of the Union address. “My hope would be that Obama, at hisState of the Union Address, would say to Congress ‘we may disagree on a lot of things, but here’san area where we agree. Let’s get it done, and let’s get it done sooner rather than later.’” This


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would also reassure Japan and other negotiating parties that the president remains committed topushing this agreement through Congress. Whether it would be enough to seal a deal by nextspring, though, is by no means guaranteed.

Elliot Waldman is a journalist based in Washington, D.C., focusing on U.S. foreign policy andEast Asian regional affairs. He tweets at @waldmane.

*”Wither” — although arguably suitable given the context — corrected in the title. Thanks tocommenter “tocharian” for pointing that out.


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