US, Japan May Force Unwanted Agriculture Deal on TPP Partners, Says New Zealand Trade Minister
The U.S.-Japanese bilateral negotiations over Trans-Pacific Partnership market access may force a poor agriculture access arrangement on New Zealand, said New Zealand’s Trade Minister Tim Groser in comments that followed the latest TPP talks in Sydney, according to The New Zealand Herald (here). Trade analysts are divided over whether those remarks indicate TPP partner fears are spiking because the end of negotiations is actually on the horizon. But those analysts, as well as TPP trade officials and some lawmakers, admit that significant agriculture market access provisions still need to be hashed out before the 12 parties finalize a TPP text.
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The parties eliminated outstanding issues on both tariffs and the rules chapter of a pact in Sydney, said the TPP ministers and heads of delegation said on Oct. 27 as the round wrapped up (see 1410270006). But Groser said he met with U.S. Trade Minister Michael Froman and the Japanese lead cabinet official for TPP Akira Amari during the summit to urge the two officials to give New Zealand more say in the details of a TPP market access schematic. "I said New Zealand is the largest dairy exporter in the world so you can't just brush us aside,” said Groser, according to the report. "We have standing in this argument." Some analysts say the U.S.-Japanese negotiations will, at least partially, dictate the terms of other bilateral market access agreements in TPP among the 12 total countries (see 1410230018).
Groser’s comments suggest it’s still unclear what a final agricultural market access arrangement will look like, the trade analysts said in interviews. “I would speculate that what he is concerned about is the U.S. and Japan will craft a market access deal that is essentially bilateral in nature, through establishing a quota or something like that for the Japanese market where U.S. agriculture producers benefit, and not the other partners,” said Scott Miller, a senior analyst with the Center for Strategic and International Studies. “Groser wants a single dress code, which means there’s a single rule of origin for agricultural products in TPP and the 11 parties who want to access the Japanese market will all have the same arrangement.”
The Central American Free Trade Agreement, which includes the U.S. and the Dominican Republic, harmonized rules of origin for all parties, and Groser would likely prefer that type of arrangement, said Miller. Groser would also likely oppose a NAFTA-like market access, which differs between U.S., Mexico and Canada, Miller added. But Groser did dismiss the prospect of the 12 parties striking an accord. The end is near in the talks, but failure is still a possibility, Groser said. "Outline generally where you want to go but do not just close this deal and try and impose it because that will cause a timebomb in this negotiation,” said Groser. "They know that if they try to make a sweetheart deal that benefits just them and not Australia and New Zealand, it is going to cause massive political problems in getting us on board."
New Zealand is continuing to press forward to try to ensure its dairy producers reap the most substantial benefits through TPP. Australia is also pushing access to the U.S. sugar, beef and dairy markets, said Gary Hufbauer, a senior analyst at the Peterson Institute for International Economics. The U.S. and Japan may also try to implement a product classification arrangement in the harmonized schedule that awards the U.S. more access than other countries by specifically liberalizing U.S. origin products, said Hufbauer. “The way they work is they come to an agreement, and say ‘this is a great deal' for all TPP markets. The other countries don’t have a big opportunity to change the shape of the deal, but the U.S. and Japan will say ‘we’ll never have a TPP in our lifetime if you don’t agree to this,’” said Hufbauer. “The others can reject it. They can walk away and so forth. Their consent has to be obtained, but it’s a situation where their freedom to walk away is limited.” Australia is still urging the U.S. to open its sugar market, but that is unlikely through TPP, say some (see 14100601).
The particularly vocal concern from Groser does, however, suggest the end of TPP negotiations is edging closer, Hufbauer added. “I think everyone is waiting to see what smoke signals come out of Congress and the Administration after the elections,” said Hufbauer. “There is general recognition that Obama will have to do a lot of work to get a deal through Congress. Some question whether he’s willing to do that. Abe will have similar trouble getting a deal through.” Canada also oversees a protectionist dairy regime, but Hufbauer said the market access negotiations for other countries in TPP besides the U.S. and Japan may not be a significant obstacle.
House Ways and Means ranking member Sandy Levin, D-Mich., a vocal critic of status quo U.S. trade policy, also said much progress still needs to materialize before TPP partners can close the text. “We must confront Japan's longstanding and persistent exclusions of agricultural and automotive products from its markets,” said Levin in Oct. 27 comments (here). “There are many outstanding, unresolved issues pinpointed in most chapters or not yet considered, so now it is vital to have an open door for a broad understanding and involvement on how they should be resolved, with increased transparency. We need more public input and debate on all of the mentioned issues, as well as intellectual property, food safety and investment.”