SINGAPORE (Reuters) - Expectations are growing that an ambitious trade pact between a dozen nations around the Pacific Rim may be wrapped up in 2-3 months, with signs that political desire for a deal is trumping a string of technical difficulties in drawing it up.
Just days after the first World Trade Organisation trade reform deal was pushed through on Saturday, trade ministers from 12 countries are in closed-door talks in a Singapore hotel to try to tie up the Trans-Pacific Partnership (TPP).
Agreement would establish a free-trade bloc stretching from Vietnam to Chile and Japan, encompassing some 800 million people and almost 40 percent of the global economy. More far-reaching than other deals, it would go beyond tariffs on physical trade and try to regulate sensitive areas such as government procurement and give companies more rights to sue governments.
Just a few months ago a deal looked a long way off, with Japan only entering into the talks in July and many countries at odds over issues ranging from tariffs on farm produce to rules on Internet freedom and state-owned enterprises.
However, a push by the United States to try to reach some kind of agreement by the year-end looks as if it may be starting to pay off. Japan’s trade minister Yasutoshi Nishimura told reporters on Monday that progress was made during talks over dinner on Sunday, and observers say plenty of pre-work for the TPP talks went on during last week’s WTO meeting in Bali.
“I would like to continue to make efforts toward an agreement by the year-end,” Nishimura said, adding he planned to hold bilateral talks with the United States later on Monday.
Observers say that while an agreement in Singapore by the time the 4-day talks end on Tuesday is unlikely, there could be enough impetus to conclude a deal within the next couple of months, even if many technical issues are not finalized.
“If they’re close enough on the political issues, they could announce a sort of political agreement and say ‘we’re done’, and the last little bits will be resolved on their own,” said Deborah Elms, head of the Temasek Foundation Centre for Trade & Negotiations. “That’s possible.”
One sticking point has been Japan’s long-stated aims to exempt five sensitive farm products - rice, wheat, beef and pork, dairy products and sugar - from the scrapping of tariffs.
Nishimura said they are unlikely to move far on that issue. “I’ve already mentioned the parts we can’t budge on, so the issue is what both sides can do based on that,” he said, referring to the bilateral talks between Japan and the U.S.
“For my part, I would like the United States to show flexibility.”
The TPP negotiations, which have run for three years, have been mired in controversy over a lack of transparency, and slowed by the conflicting interests of the negotiating countries, U.S. lawmakers and advocacy groups.
No draft of the entire text has been released - a move criticized by campaigners, who say they are being kept in the dark about what’s at stake. A leak of a draft chapter on intellectual property, released by Wikileaks last month, revealed a number of serious rifts among the countries, which would have suggested a deal was some way off. However, observers say political manoeuvring is likely to push it through.
“We are not in a rational zone, we are in a political zone and this agreement has increasingly become one about foreign policy issues and strategic alliances, and making the least worst trade-offs to achieve a final agreement,” said Jane Kelsey, a law professor at the University of Auckland, who is in Singapore to try to observe the talks.
The U.S. has also faced roadblocks at home, with Congress complaining about a lack of consultation over the deal and opposing proposed new legislation that would give the White House a freer hand to clinch such trade agreements.
Even if a deal is reached within the next few months, it’s likely to be some time until it comes into effect.
With the U.S. government lacking the ability to “fast track” approval of the deal and mid-term elections coming up next year, it may not be put before Congress for approval until November at the earliest. “Best case scenario is July 1, 2015, and probably more likely is January 1, 2016 for this to come into force,” said Elms at the Temasek Foundation Centre.
The agreement could also be expanded - last month, South Korea said it planned to join the 12-nation talks soon, while there is also a possibility that China could eventually enter the talks, too.
The full list of those already in the talks is the United States, Canada, Japan, Australia, New Zealand, Singapore, Malaysia, Brunei, Vietnam, Chile, Mexico and Peru.
Editing by Ian Geoghegan