Interview: Asia-Pacific trade talks to tackle most difficult issues, aiming for substantial conclusion: U.S. expert

The United States and 11 other countries in the Asia Pacific region are expected to tackle the most difficult outstanding issues for the Trans-Pacific Partnership (TPP) and substantially conclude the controversial trade talks this week, a leading U.S. trade expert said.

"I think the TPP ministers are going to Hawaii with the hope that they can finish or substantially complete the negotiations," Jeffrey Schott, a senior fellow at the Washington-based Peterson Institute for International Economics (PIIE), told Xinhua in an interview, referring to the upcoming TPP trade ministers' meetings set to kick off here Tuesday.

"Doing so is only the first part of the process, because then they have to go home and have the agreement ratified and approved by their legislatures," said Schott, who is leading the PIIE's work on TPP and watching the trade talks closely.

Talks on the TPP had been stuck for months as other participating countries were reluctant to make major concessions needed to close a deal before the U.S. Congress granted the trade promotion authority, also known as the fast-track authority, to President Barack Obama.

That trade authority would allow the U.S. president to submit trade deals to Congress for an up-or-down vote without amendments, which is crucial for the swift congressional consideration of a TPP deal.

With the fast track authority in hands by the end of last month following weeks of tough fight in Congress, the Obama administration is stepping up efforts to push for an early conclusion of the Asia-Pacific trade pact.

U.S. Trade Representative Michael Froman said earlier this month that he hoped to finalize the TPP trade deal "in the near term" and send it to Congress for ratification before the end of this year.

"That would be a very ambitious schedule, and more likely it would fall over into early 2016," said Schott.

The TPP, covering about 40 percent of global economy and believed to be the biggest trade agreement in the world in the past two decades, is central to the Obama administration's policy of advancing economic engagement in Asia and writing the rules for international trade in the 21st century.

Schott said "a large majority of the agreement is very close to completion" after more than five years of negotiations, and there are "only a small number" of issues remaining open.

But these outstanding issues are "generally the most difficult, the most complex, or the most political sensitive," he said, citing examples of rules on the intellectual property, discipline on the state-owned enterprises, labor and environmental provisions, and the investor-state dispute settlement.

One of the highlights of the upcoming four-day trade ministers' meetings is whether the United States and Japan, the two biggest players in the TPP, could complete their bilateral market access negotiations of agriculture and autos, which had stalled overall TPP trade talks.

"They have not completed negotiations, but they have made substantial progress, and they're very close to a deal on both the agricultural component and the negotiations on the autos," Schott said, adding that it's essential for the United States and Japan to reach a deal on market access for the overall TPP negotiations to be concluded by the end of this month.

One of the sticking points remaining to be resolved in U.S.- Japan bilateral talks is the U.S. demand for an increased access to Japan's rice market. "The expectations is that the Japan will agree to increase the import of rice, perhaps under tariff-free quotas," said Schott, noting that "both sides expect a deal to come together very soon."

Schott also believed that the progress in U.S.-Japan trade talks could successfully push other TPP participants to move forward their negotiations over issues of market access and rule making, even if the U.S. and Japan would not announce a final deal this week. "They have to have a good idea that they will have increased access to the Japanese market just as the U.S. .. I think the signals are very strong."

But Canada's reluctance to come forward with an offer on the market access of dairy and poultry products might frustrate other TPP nations and drag down the overall talks. A bipartisan group of U.S. lawmakers have warned that it would be hard for them to support Canada's inclusion in a final TPP deal if Ottawa would not significantly open its market to more dairy imports.

Schott said Canadian Prime Minister Stephen Harper "has been reticent to formally put out proposals for reforms of supply management policies" related to Canadian dairy and poultry products as he faces re-election in October.

But compared with beef and pork products, dairy products are not that important for Canada in terms of exports, according to Schott. So he expected Canada to eventually put forward an offer to reform its supply management programs that meet general requirements of "significant improvement in commercial opportunities" in Canada.

"It makes no sense at all for Canada to stay out," Schott said, dismissing the speculation that TPP negotiations could be concluded without Canada. "I'm very confident that it will be in the TPP when the deal is signed."

While trade ministers or representatives of the 12 TPP nations might not be able to finalize a deal this week, they could reach an agreement in principle, leaving the remaining issues to be resolved later, according to media reports.

The Obama administration is under pressure to seal a TPP deal and get it passed in Congress as soon as possible, securing the president's trade legacy before the 2016 U.S. presidential campaign heats up.

Australian Trade Minister Andrew Robb warned Sunday that failure to reach a TPP deal this week could delay an agreement for years due to elections in the United States and Canada.

"They (The talks this week) are very important, partly or mainly because of the political cycle in the U.S. and also an impending Canadian election. So if we don't do it this week things are going to be very difficult I think to conclude it within a couple of years," Robb said in an interview with the Australian Broadcasting Company.

The TPP talks involve Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Endite