Going into overtime: Dairy, drug data bring trade talks down to the wire

Going into overtime: Dairy, drug data bring trade talks down to the wire

ATLANTA — As negotiations on the Trans-Pacific Partnership trade agreement here run into overtime, dairy products and pharmaceutical data remain the toughest nuts to crack, even as the 12 participating countries move closer to a resolution on automobiles.

     U.S. Trade Representative Michael Froman, chair of the gathering of TPP trade ministers that began here Wednesday, proposed Thursday night an unscheduled third day of talks Friday. The move marked a tonal shift from the previous ministerial meeting in Hawaii at the end of July, where Froman brought talks to a timely close. Time was added “because reaching a broad agreement is still a possibility,” a Japanese government source said.

     Japan and the U.S. hope to take charge of the proceedings and lead talks to a conclusion, said Tami Overby, senior vice president for Asia at the U.S. Chamber of Commerce. Overby met here Friday with a group of lawmakers from Japan’s ruling Liberal Democratic Party.

     This ministerial meeting is the first to be extended since Japan entered the TPP talks in July 2013. The 12 nations have over the past several days labored deep into the night in bilateral talks and working-level negotiating sessions, attempting to close the remaining gaps.

Inching together

Place-of-origin rules governing duty-free automobile imports are close to resolution. Japan and Mexico have nearly settled their differences on what percentage of a vehicle’s components must be sourced within the TPP area for it to qualify for reduced tariffs. The countries appear to be working toward an agreement around the 50% mark.

     Japan, which sources many of the components used in its autos from Thailand and other non-TPP countries, has fought keep the required level as low as possible. The final number will likely come in below the slightly more than 60% required under the North American Free Trade Agreement.

     A messy spat over dairy products is also moving closer to an accord. Canada is starting to show signs of compromising with New Zealand, which seeks to massively expand dairy product exports to TPP countries. The Canadian ruling party hopes to make up for higher imports by enacting policies that compensate farmers for losses resulting from the agreement. New Zealand Trade Minister Tim Groser praised the efforts by Canada, noting that the country is trying to bring a serious, workable proposal to the table.

     Yet Japan and the U.S. continue to staunchly reject New Zealand’s demands as excessive. “Japan cannot bring its imports above the level we have previously proposed,” a Japanese lawmaker close to the agricultural sector said. Yet New Zealand retorts that an agreement that does not greatly expand its dairy product exports will come under heavy criticism at home, limiting the country’s ability to compromise. Groser did not respond to reporters’ questions after the general meeting of ministers Thursday evening. He instead rushed off to meet with top officials from Fonterra Co-operative Group, the country’s largest dairy producer.

Stalled on drug data

Very little progress has been made toward setting a protection period for new-pharmaceutical development data, with the U.S. firmly entrenched against Australia and others. The American side insists on a period of 12 years. But Australia sees no need to go beyond five, said Andrew Robb, trade and investment minister, in Thursday’s ministerial gathering.

     The U.S. seemed to be moving toward negotiations around an eight-year period, which had surfaced in July, but whether such an agreement can be reached will depend on the specifics of any deal. Chile, Peru and other countries are holding firm on demands for five years, putting even an eight-year proposal in danger.

     “We can’t really tell how things are going,” a Japanese government source said. “It’s as if the lattice is so fine that you can’t see the other side.”

     “It’s difficult going, as it has been all along,” said Akira Amari, Japan’s economic and fiscal policy minister. “But all of the ministers will continue to give their best efforts in the push toward a resolution.”

     As the week draws to a close, an agreement seems to be hovering just at the edge of reach. Whether it eludes negotiators’ grasp will become clear by the end of talks Friday.

Going into overtime: Dairy, drug data bring trade talks down to the wire