* U.S. business hopes for significant progress in December
* U.S. losing market share in fast-growing region
* Asia-Pacific middle class seen more than tripling by 2020
By Doug Palmer
WASHINGTON, Nov 29 U.S.-led talks on a
free-trade pact in the Asia-Pacific region are entering a
potential make-or-break stage, putting pressure on President
Barack Obama and other leaders to sacrifice sensitive domestic
interests for a big deal to boost growth.
The 11 countries involved in the Trans-Pacific Partnership,
or TPP, talks meet next week in Auckland, New Zealand, for the
15th round since negotiations were launched in March 2010.
With Obama now re-elected, U.S. negotiators have more
freedom to deal with demands for the United States to open its
sugar, dairy, clothing, footwear and other markets to more
imports without worrying about hurting the president at the
"I think the feeling (among TPP countries) was that the
United States was negotiating in good faith ... but everyone
knew that it wasn't getting done before the election," said
Ernest Bower, director of Southeast Asia studies at the Center
for Strategic and International Studies in Washington.
While the TPP talks are set to mark their third anniversary
in March, there is no formal deadline for a deal.
But TPP leaders will be in Bali for the annual Asia Pacific
Economic Cooperation summit in early October, creating a
powerful incentive for negotiators to reach a deal by then.
"I think there's a deal in 2013 or it's dead, because I
don't think the Asian countries will wait around longer than
that," Bower said.
The Asia-Pacific region, which includes almost any country
with a Pacific shore, contains many of the world's biggest and
fastest-growing economies. The region's middle class is expected
to swell to 1.75 billion people by 2020 from 525 million in
2009, according to one estimate.
With the center of global economic activity moving
increasingly to the East, U.S. companies are worried about being
shut out of preferential trading arrangements in the region at a
time of increasingly fierce competition.
"The U.S.'s exports to Asia are growing, but its share of
the market in virtually every country in the region is going
down. It is missing out on opportunities," New Zealand's
ambassador to the United States, Mike Moore, said recently.
This month, China, Japan, South Korea, India and 12 other
countries - including six members of the TPP talks - formally
launched negotiations on a separate Asia-Pacific free-trade
agreement, known as the Regional Comprehensive Economic
Partnership, or RCEP, that does not include the United States.
The TPP talks have a big jump on the RCEP negotiations. But
after more than 2 1/2 years, it is time for the TPP negotiators
to begin making the tough final trade-offs needed to reach a
deal, said Tami Overby, vice president for Asia at the U.S.
Chamber of Commerce.
"It's post-election and we're at the part where hard things
need to be done. From all our conversations with U.S.
negotiators, they're well aware (of that) and everybody has been
working incredibly hard to ensure the December round is as
productive as it can possibly be," Overby said.
BIG U.S. DEMANDS
While the United States is on the defensive on some issues,
it also is making demands in areas like rules for state-owned
enterprises, intellectual property rights protection and reform
of trade-restricting government regulations that will require
other countries to make tough choices, Overby said.
Washington is also pushing for enforceable provisions to
protect workers' rights and the environment, a tough sell for
developing countries that fear those measures could be used by
other TPP members to block their exports.
The RCEP raises the possibility that other countries could
drift away from the TPP talks if the United States does not make
good market-opening offers in exchange for its challenging
demands, Overby said.
For now, interest in the TPP remains strong, with Thailand
announcing during Obama's visit this month that it would like to
join the negotiations, which now include the United States,
Australia, New Zealand, Peru, Chile, Singapore, Malaysia,
Vietnam and Brunei.
Canada and Mexico recently joined the talks and will be
participating in the negotiations for the first time in
Auckland. Japan also continues to toy with joining. Prime
Minister Yoshihiko Noda has vowed to move ahead if he wins an
uphill battle for re-election on Dec. 16.
The United States already has free-trade pacts with six of
the 10 other TPP countries, so some of its biggest new export
opportunities would come from Vietnam and Malaysia, which do not
currently have trade deals with Washington.
But reaching a deal with Vietnam, a major clothing and
footwear exporter, would require the United States to open some
of its most heavily protected sectors to increased competition.
"It's among the two or three most important political-level
issues that needs to be resolved in the negotiations," said Jay
Eizenstat, a former U.S. trade official now in private law
practice at McDermott, Will & Emory.
Given the potential gains for other U.S. manufacturers,
farmers and services providers, it was in the United States'
interest to offer meaningful concessions on footwear and
clothing to secure a deal, he said.