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'TPP 11' faces new challenges as clock ticks down

New Zealand's demand for renegotiation could obliterate tenuous agreement

Kazuyoshi Umemoto, center, Japan's chief negotiator on the so-called TPP 11, addresses his peers in Tokyo.

TOKYO -- Recent political developments have clouded negotiations on reconstituting the Trans-Pacific Partnership without the U.S. just two weeks before Japan and 10 other nations hope to reach a broad agreement on the trade pact, threatening to scuttle the effort in its final stretch.

Chief negotiators from the 11 remaining TPP nations are preparing to meet outside Tokyo starting Monday, hoping to hammer out a general agreement early next month in Vietnam on the sidelines of the Asia-Pacific Economic Cooperation summit. But New Zealand, a leading proponent of the "TPP 11" effort, suddenly seems to be wavering. Prime Minister Jacinda Ardern, who took office Thursday, has pledged to renegotiate the trade deal, seeking restrictions on foreign real estate investment.

Trade envoy Mike Petersen, who continues to represent New Zealand in TPP talks, assured fellow participants after the country's election last month that he would try to win over the new prime minister. But if Ardern holds to her demand for a renegotiation, momentum toward an agreement could crumble. The 11 nations already agreed not to alter the original terms of the pact, and "if exceptions are made for New Zealand alone, the whole thing will fall apart," said an official at Japan's trade ministry.

Some in Tokyo advocate simply removing New Zealand from the group, a solution that would reduce the amount of milk Japan imports under the deal. But such a step would be difficult given that New Zealand is a founding member of the TPP. "The only option is to convince them not to renegotiate," said an official in Japan's Cabinet Secretariat.

Vietnam also could prove a source of discord. The Southeast Asian country finally produced its formal list of TPP provisions that it wishes to suspend given the U.S. withdrawal. Sources involved in talks say the list contains no demands Vietnam has not already put on the table. But neither has the country relented on its request for changes to critical rules abolishing tariffs on textiles and banning restrictions on the international transfer of e-commerce data.

Loss of a leader

Even Japan stands on shakier footing than before: Koya Nishikawa, a former agriculture minister and a leader in the ruling Liberal Democratic Party's farm caucus, lost his Diet seat in the Oct. 22 lower house election. The lawmaker was in charge of the party's TPP policy, and he helped ease opposition to the pact, particularly from farm groups.

"There's no one who can replace him," a source close to the matter said. The farm caucus's other leading light, former Agriculture Minister Hiroshi Moriyama, became the party's Diet affairs chief in August. His hands will be full preparing for the upcoming legislative session, leaving little room for the lawmaker to coordinate TPP talks behind the scenes.

The absence of a commanding farm advocate could be a liability even if a TPP 11 deal does emerge: Devising measures to help Japan's farm sector adapt to the pact and shepherding them through the Diet will be a formidable task.

More to ponder

Farm policy is not the only issue to which Tokyo must tend: President Donald Trump comes to town in roughly a week for talks with Prime Minister Shinzo Abe, during which he might force the subject of a U.S.-Japan trade pact.

A Japanese government source told reporters after economic talks in Washington this month that Vice President Mike Pence had expressed "strong interest" in a bilateral agreement. But Pence "did not seem to be fixated" on the idea, a related government entity said when asked by a business group to comment further.

Finance Minister Taro Aso, who met with Pence in his capacity as deputy prime minister, has said he does not "remember the U.S. making strong demands" on the subject. A group from the Japan Business Federation, or Keidanren, will visit Washington starting Sunday to get American officials' take.

Some view these different interpretations as reflecting the opinions of the various entities toward a free trade agreement. The Finance Ministry, which fears the U.S. would insist on restrictions meant to curb currency market interventions, has roundly rebutted reports of Pence's "strong interest." The agriculture ministry also opposes a deal, as Japan is reluctant to open its agricultural markets further. But the economy ministry has warned against ruling out such a pact as a long-term option, insisting Japan and the U.S. would do well to take the lead on setting trade terms.

With no signs that the two sides have made advance arrangements on a pact, the stage may be set for Trump to shake up matters with a trademark off-the-cuff comment in his meeting with Abe.


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