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TPP Trade Talks hit Major Snags

— August 1, 2015

Although the 12 countries involved in the Trans-Pacific Partnership (TPP) nearly wrapped up the final negotiations of the agreement this week in Hawaii, a few major roadblocks have caused the countries to leave empty-handed. The Hawaii round was expected to be the final negotiating session after nearly five years of talks between the U.S., Japan, and 10 other Pacific nations, but disagreements remained involving dairy production, auto imports, labor provisions, and pharmaceutical patent protection as talks came to an end on Friday. The countries vowed to continue the negotiations at a future point, but the lack of a deal is certainly disappointing for President Obama, who has championed TPP since the secretive negotiations were unveiled to the public by whistleblower Eric Snowden in 2013. Obama secured Fast-Track Authority (FTA) from Congress in June to negotiate the deal and present the completed agreement for an up-or-down vote with no amendments; however the delay will almost undoubtedly mean that no deal will be presented to the legislature this year.

Australia’s Trade Minister Andrew Robb said as he and his counterparts prepared to leave on Friday, “The sad thing is, it’s 98% concluded.” There are several major sticking points however; perhaps none as difficult to maneuver around as the dairy provisions. Canada wants increased protections of its sensitive dairy industry, a move that its legislature strongly desires whereas other countries want more inclusion into the lucrative market, especially the U.S. and New Zealand, whose main dairy provider Fronterra is eager to expand its global dairy empire. The U.S. also has disagreements with Japan, desiring more access into the country’s highly restrictive automobile and agricultural markets. Japan’s President Shinzo Abe faces an uphill domestic battle, however, as the country’s legislature is filled with small rice farmers and the country’s automotive trade protection laws are complex and will be a difficult hurdle to break down. Even with the looming disagreements, both U.S. Trade Representative Mike Froman and Japan’s Economic Minister Akira Amari believe the setbacks are temporary. Amari said, “With the next meeting I believe all the problems will be resolved.”

In addition to the battles looming among these industrialized countries, the latest negotiations have highlighted the rich-poor divide among the potential members as well. The U.S. is adamant about maintaining a 12-year patent protection timeframe for new medicines in order to protect U.S. pharmaceutical company’s profits from cheaper generic alternatives. Poorer countries like Malaysia and Vietnam are resisting this provision, claiming that the lack of cheap generic drugs in their countries could lead to national health epidemics. Meanwhile, Democrats in Congress, who strongly oppose the agreement for the most part regardless, have raised multiple concerns regarding the labor laws in those countries as well as in Mexico. Democrats in the Senate succeeded earlier this year in attaching a provision into a separate customs’ enforcement bill that prohibits the U.S. from joining trade deals with countries known to use sweatshop labor, an obvious jab at the aforementioned countries. This could make for tricky wordplay during the final negotiations for the U.S. and the accused countries. The labor chapter of the TPP agreement has not been revealed to the public, and many around the world including myself have questioned the sincerity of Obama’s continued mantra that TPP will contain the “toughest labor standards of any trade deal in history.”

If approved, TPP will be the world’s largest trade agreement, involving over 40 percent of the global economy. The agreement, which does not include China, is designed to prod that country into developing more U.S.-friendly trade policies as the country last year surpassed the U.S. as the world’s largest economy. The deal will still have to be approved by all 12 domestic legislatures, including in the U.S., where the Republican majority supports the deal. Obama’s adamant championing of the agreement has put him at odds with his own party, and the delay could put the deal in some form of jeopardy domestically. The timing of the next round of negotiations is still unclear, but many believe it will occur in November, following Canada’s legislative elections. Proponents of a deal are hoping a legislative shift in the country will make it easier to negotiate the dairy provisions. Likewise, Obama will hope for a conclusive agreement in time for the 60-day public review process to occur before the November 2016 elections. Obama leaves office in January 2017. A Democratic takeover in Congress could block the measure and it is unknown how strongly presidential front-runner Hillary Clinton would oppose her own party in support of the bill. While the current delay will not likely put Obama’s timeline in danger, any further stalled negotiations certainly could.



CNN –Eric Bradner

Financial Times – Shawn Donnan

Wall Street Journal – William Mauldin






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