April 26, 2014 5:26 am JST

Lingering disputes could spell trouble for TPP

TOKYO -- Despite making some progress, Japan and the U.S. were unable to iron out their differences over the Trans-Pacific Partnership free trade agreement in time for the summit between Japanese Prime Minister Shinzo Abe and U.S. President Barack Obama.

     What does this mean for the TPP's prospects going forward? Three possible scenarios are presented below.

A talking point for the midterms

One scenario is that Japan and the U.S. keep up their current momentum, and both the bilateral negotiations and the overall agreement are finished by summer.

     If everything is wrapped up by November, the Obama administration could chalk up the pact as a success in time for the U.S. midterm elections that month.

     The next milestone comes in mid-May, when chief negotiators are slated to meet in Vietnam. If working-level negotiators from Tokyo and Washington hurry, "they can finish up in Vietnam," says Koya Nishikawa, head of the Liberal Democratic Party's TPP Committee. He contends that the two sides can conclude the talks alongside the cabinet-level meeting to be held shortly afterwards.

     This would require the U.S. to complete all the negotiations it had so much trouble with in the last cabinet-level meeting.

     But even after tariff talks with the U.S. end, Japan will need to repeat the process with New Zealand, Mexico and Canada. There is little time to spare to finish the overall talks.

Opportunity at APEC

Another rumored possibility is that a broad framework could be worked out in November, after U.S. elections and alongside the Asia-Pacific Economic Cooperation meeting to be held in China.

     The gathering of leaders and cabinet members could offer an opportunity for a TPP meeting, and both the Japan-U.S. talks and the overall agreement could be settled there. This course would lend the negotiations some breathing room in terms of time.

     U.S. midterm elections could have a negative impact on the process. Congress has significant sway over trade talks, and negotiations are held while consulting with legislators. As the election nears, representatives will return to their districts, potentially holding up talks.

     "U.S. negotiators probably won't be able to do their jobs between August and November," says a Japanese government source involved in the negotiations.

     If negotiators are unable to do enough consensus-building and Washington tries to strong-arm other TPP participants into finishing the agreement, opposition from emerging countries could drag out the process further.

Clashes with emerging nations

The third possibility is that the overall talks founder, and the year ends without a finished framework due to disagreements with emerging nations on investment and intellectual property rules.

     TPP negotiations do not cover tariffs alone. Washington's real aim is said to have such countries as Malaysia and Vietnam relax restrictions on investment and commerce, allowing easier access for American companies.

     Asia has loose intellectual property protection rules, and the U.S. film industry has been hurt by pirated movies. Many countries favor state-run businesses over private-sector counterparts, making it difficult for foreign companies to do business.

     Malaysia and Vietnam have objected strongly to America's call for sweeping reform, and no compromise is in sight. Some in Malaysia are calling for it to drop out of the pact.

(Nikkei)