No Trans-pacific Trade Pact This Year

An ambitious trade pact between a dozen countries around the Pacific Rim will not be finalized this year as hoped, with no agreement on thorny issues like intellectual property, agricultural tariffs and state-owned enterprises.

The U.S.-backed deal, which Washington wanted to conclude this year, aims to establish a free-trade bloc stretching from Vietnam to Chile and Japan, encompassing about 800 million people and almost 40 percent of the global economy. But differences over farm tariffs between the United States and Japan proved to be one of the major roadblocks.

“None of us have agreed on anything,” Tim Groser, New Zealand’s trade minister, told a news conference in Singapore on Tuesday at the end of a four-day meeting of the Trans-Pacific Partnership (TPP).

However, he added: “The outline of a genuine 21st century agreement is coming into view and, as is always the case in life, the toughest political decisions will be taken at the end.”

The ministers said they had found possible areas where they might agree, known as “landing zones” but need to continue discussions and will meet again next month.

More far-reaching than other deals, the TPP pact is aimed at going beyond tariffs on physical trade and it will try to regulate sensitive areas such as government procurement and give companies more rights to sue.

One problem area is the United States and Japan’s disagreement over Japan’s long-stated aims to exempt five sensitive farm products – rice, wheat, beef and pork, dairy products and sugar – from the scrapping of tariffs.

The two countries held bilateral talks during the Singapore meeting to try to discuss the issue but have not yet come to any agreement.

“Resolving the U.S.-Japan market access questions will be critical to the success of TPP,” said U.S. trade representative Michael Froman in a news conference on the sidelines of the meeting.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza