After a week of intensive speculation on the successful completion of negotiations regarding the Trans-Pacific Partnership Agreement (TTPA), news from Maui is that the parties could not, in fact, reach agreement on the TPPA.
Notwithstanding vocal opposition to some aspects of the TPPA, I remain of the view that it is an important and worthwhile agreement on its own account and sets an excellent foundation for further trade initiatives.
Details on the grounds for the failure to complete negotiations are not clear; although our Trade Minister commented last week that there would be no deal without liberalisation for Australian sugar exports to the US and Australia would not agree on a deal including an ISDS which was unacceptable to us. The US had its own demands for the length of IP protection for biologics which were being resisted by Australia and others. Press reports suggest that disagreements between Mexico, the US and Japan over cars and between Canada, the US and Japan on dairy exports also emerged as key 11th-hour problems.
The failure to agree on the terms of the TPPA creates some doubts as to its future although our Trade Minister has stated that a deal is close with 90% of the TPPA agreed and more talks to be scheduled in the near future. However the remaining 10% of issues appear to be largely the same issues which were outstanding before these Maui negotiations commenced which creates a question whether those issues can actually be resolved without some substantive concessions by one of more parties when such concessions have yet to happen.
Further, it had been seen that this round of negotiations was almost the last opportunity to complete a deal before the US and Canada move into election cycles which could make concessions unlikely. There is also time pressure from the need to maintain progress in other FTA negotiations by other TPPA parties. For Australia, that means the promised completion of FTA negotiations with India by November 2015 and advancing RCEP negotiations which are not going to be completed this year but potentially in the first half of 2016.
It may also represent a political blow to US interests which had seen the TPPA as a base to maintain US leadership on global trade issues ahead of China. When I was in Washington with the AmCham delegation recently, many of those to whom we spoke whether in the US Government or associated with US business interests were at pains to emphasise the importance of the US leading TPPA negotiations to a conclusion. Ironically though, it appears to have been other US business interests which opposed the trade compromises needed to close the deal in the recent negotiations. Doubts on the TPPA could affect US views on its place as the leader in the global economy and its ability to dictate terms on trade deals.