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Obama’s absence overshadows TPP summit meeting in Bali
Publication Date : 07-10-2013
It has become uncertain whether a clear road map can be drawn up at an upcoming Trans-Pacific Partnership meeting to conclude negotiations on the multilateral free trade pact by the end of this year. The absence of US President Barack Obama at the TPP summit will certainly cast a shadow over the negotiations.
Obama said he will skip the TPP summit to be held Tuesday in Indonesia with the participation of 12 countries including Japan, Australia, Canada and the United States.
Obama has been aiming to have the TPP-member countries reach a broad agreement at the summit in Indonesia and to put priority on concluding the free trade pact by the end of this year. However, he had to give up the trip to Asia because some functions of the US government have been shut down due to a standoff between the ruling and opposition parties that has left the passage of the federal budget for the new fiscal year stalled in Congress.
The absence of the US president was apparently unexpected, as he was supposed to chair the summit meeting and lead the negotiations.
Meanwhile, a split between the United States and emerging economies has become increasingly apparent at a TPP ministerial meeting in Indonesia that serves as a prelude to the summit talks.
Regarding intellectual property rights, the United States is demanding enhanced protection of new drug patents, while emerging countries such as Malaysia oppose the move, since inexpensive generic medicine made after patents for genuine drugs expire is widely used in those countries.
Negotiations on a competition policy have also been stalled, after the United States demanded the governments of emerging economies be prohibited from subsidising state companies and to provide the same conditions as private companies.
Still, in negotiations on the environment, the United States demanded the abolition of subsidies for the fishing industry, but Japan’s opposition to the move is likely to be approved, according to informed sources.
This shows that any negotiations under the TPP cannot be concluded at a pace set by the United States alone, but requires the broader support of other participants, even if Washington takes a tough stance.
Abolition of tariffs
A tough road appears to be ahead for the TPP talks, with negotiations on the abolition of tariffs, the biggest issue, postponed at the upcoming meeting.
Even if participating countries can reach a “broad” agreement over simplifying customs clearance procedures and other issues they can agree on, it cannot be called a real agreement as long as points of contention and areas that are difficult to negotiate are left out.
The ruling Liberal Democratic Party maintains that five agricultural items, such as rice and wheat, should be exempted as sacred cows from the abolition of tariffs. Eventually, however, the United States and other participating countries are expected to strongly pressure Japan to liberalise its agricultural industry.
The government is trying to limit the liberalisation rate to just over 90 per cent, with under 10 per cent of the items remaining subject to tariffs. But a final battle over it has yet to come.
Certainly, playing defence is not the only way to contribute to Japan’s national interests. The government must work out a strategy to boost Japan’s growth by tapping into the vitality of emerging Asian economies. Japan must quickly choose domestic products to be subject to liberalisation and take measures to strengthen the competitiveness of the domestic farm industry.
The upcoming summit will offer the Japanese side a chance to establish itself as a tough negotiator by winning concessions from the United States, which is pushing to conclude the TPP talks as soon as possible, and by reconciling the split between the United States and emerging countries. We expect Japan will make its presence felt at the summit meeting.