The Cable

Here Are the Remaining Hurdles to Obama’s Massive Asia Trade Deal

Here are the remaining hurdles to President Obama getting his massive Asian trade deal done.

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President Barack Obama has the authority to fast-track the Trans-Pacific Partnership (TPP). Whether he’ll actually be able to use this power could be determined this week in Hawaii.

There, trade representatives and chief negotiators from the 12 countries involved in the deal, meant to create a trade bloc covering 40 percent of the global economy, are trying to hammer out final details on the agreement that has been negotiated in secret for more than five years. The stakes are high — the Obama administration wants the deal as part of its economic legacy. White House officials argue that the pact, which would be one of the largest in U.S. history, is needed for the United States to compete in the 21st-century global economy. The Treasury Department says the deal would increase American exports to Asia by $123.5 billion.

Officials say they want the talks wrapped up by July 31, but negotiations would continue if they fail to come to an agreement. The White House wants a final trade agreement as soon as possible in the hopes it could be in place by the time Obama leaves office, in 2017.

Whether that can be done remains to be seen. There are a number of sticking points, both on the U.S. side and among the other negotiating partners — Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam, Brunei, Chile, Singapore, and New Zealand — that have yet to be resolved.

“This meeting will be extremely important to decide the fate of the TPP negotiations,” Japanese Economy Minister Akira Amari said as talks got underway. “I believe all the nations will come to the meeting with their strong determination that it has to be the last one.”

Now, the talks are mired in the minute, but important, details of international trade. Canada, for instance, is refusing to accept more dairy imports, something angering the United States and New Zealand, a country that has promised not to enter the agreement without having access to new dairy markets. Mexico is also resisting opening its economy to Asian exports.

The timing of Canadian elections, slated for Oct. 19, 2015, are also complicating Canada’s position. Its prime minister, Stephen Harper, is trying to avoid what his people could perceive as a bad deal, or a deal Canada can’t accept, prior to the vote, to shield himself from charges of poor financial management.

Japan and the United States also need to get their potential trading partners to buy into a bilateral pact between Washington and Tokyo. This deal would allow more American cars, auto parts, and agricultural products to enter the Japanese market. In exchange, the United States would gradually get rid of high import tariffs on Japanese sport utility vehicles and trucks. U.S. textile manufacturers also want strict rules to prevent Vietnam from flooding the American market with cheap apparel made from Chinese fabric.

Other issues include Australian sugar; Australian officials want this export to have more access to the American market. There are also concerns about intellectual property provisions that protect data on next-generation biologic drugs for 12 years, a boost to drug manufacturers that could increase the cost of state-subsidized medical programs in Australia and New Zealand. On Tuesday, New Zealand Prime Minister John Key admitted the cost of drugs would increase if the TPP is signed.

One issue already drawing criticism is Malaysia’s human rights record. On Monday, the State Department took that country off its blacklist of countries with the worst human trafficking records.

“How can the State Department call this progress?” Phil Robertson, Human Rights Watch’s deputy director for Asia, told Foreign Policy on Monday. “Migrants are being trafficked and abused with impunity … and convictions are down year on year.”

Photo Credit: Saul Loeb/Getty Images

David Francis was a senior reporter for Foreign Policy, where he covered international finance. @davidcfrancis

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