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The TPP 11 agree to move forward with minimal tweaks

Signatories hope to entice the US back into the fold

TOKYO The U.S. may be out of the picture, but the Trans-Pacific Partnership is far from dead, with the 11 remaining signatories agreeing to salvage the free trade deal without too many revisions. Forging a new pact, however, will still likely prove a contentious process.

Negotiators met for two days through July 13 in the Japanese hot-spring resort town of Hakone, less than 100km southwest of Tokyo. The countries aim to lay out a rough picture of the so-called TPP 11 ahead of cabinet-level and leadership meetings in Vietnam this November.

Attendees "achieved mutual understanding on a path forward" toward implementing the treaty, Japanese chief negotiator Kazuyoshi Umemoto told reporters. The 11 countries "will carry on working without lowering the TPP's high standards," he said.

Among the countries leading the discussions were Japan, Australia and New Zealand, which hope to quickly put the pact into force as is. Drastic changes could not only bring clashing interests among signatories back to the fore, but also make it harder to lure the U.S. back.

Discussions did not go deep enough to yield concrete revisions on such important issues as whether to alter terms on repealing tariffs. Nor did members set terms for implementing the revised treaty. The TPP as currently written goes into force when ratified by at least six members accounting for at least 85% of the bloc's gross domestic product.

Areas where Washington's desires show through heavily would be focal points in revising the treaty.

The U.S. fought hard to extend protection periods for data on biotechnology-based pharmaceuticals under the pact, for example. A number of members at the latest meetings, including Japan, expressed a preference for shorter periods.

But the signatories fully intend to retain the bones of the TPP.

Some countries, such as Vietnam and Malaysia, originally conceded to softer domestic protections in return for an open U.S. market. How they will approach revisions is unclear. Countries with weak domestic industries may even seek to revise tariff agreements, but New Zealand and Australia are standing firm.

The domestic conditions among the remaining signatories will also factor into whether they stay enthusiastic. Malaysia did not send its chief negotiator to the meetings in Japan. Nor did Canada, which has seen a change of government since backing the TPP.

The next talks will begin in late August or early September in Australia. The biggest question then will likely be whether members can sustain momentum while clearing away barriers to forging a new pact.

While the U.S. has shifted away from the TPP, it has sharpened its focus on what it considers an unfair free trade agreement with South Korea. Washington wants to rework the deal; Seoul, meanwhile, is trying to persuade its ally that the pact has benefited both sides.

South Korean President Moon Jae-in on July 13 directed Blue House officials to prepare for all possibilities a day after U.S. Trade Representative Robert Lighthizer said his office had requested bilateral talks toward renegotiating the agreement.

This came as no surprise to Seoul; U.S. President Donald Trump pushed Moon hard on correcting "trade imbalances" when the two met in the U.S. on June 30.

FEWER SOUTH KOREAN CARS Though South Korea runs a trade surplus with the U.S. in goods, the Asian country's vehicle exports, which Washington singled out as cause for particular concern, began shrinking last year. The automotive sector, including autoparts, accounts for 80% of the trade imbalance, according to Ahn Duk-geun, a professor of international trade law at Seoul National University.

The U.S. actually has a growing trade surplus in services with South Korea, due partly to rising intellectual-property royalties paid to American companies. Direct investment flows in both directions have also grown substantially.

Over the longer term, Seoul expects imports of U.S. shale gas to narrow South Korea's trade surplus, as Moon looks to steer South Korea away from nuclear power and toward renewable energy and plants fueled by liquefied natural gas.

Nikkei staff writers Yuta Koga in Tokyo and Sotaro Suzuki in Seoul contributed to this report.

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