US reluctant to give way at Hawaii TPP talks

By He Weiwen Source:Global Times Published: 2015-8-4 20:48:01

Illustration: Liu Rui/GT


The plan to seal a landmark Trans-Pacific Partnership (TPP) agreement by the end of this year has suffered a major setback in Hawaii on August 1, as trade ministers from the 12 countries involved failed to break deadlock on key issues.

The efforts to close the TPP deal were held up by disagreements over the intellectual property rules for new generations of drugs, auto parts trade, as well as the degree of market access to sensitive products such as dairy and sugar.

The failure of the Hawaii talk is largely attributed to US selfishness. Expecting other TPP members to make concessions, Washington was not ready to make its own necessary concessions. One of the main sticking points is on how long it should take to protect data used to develop drugs.

While the US drug manufacturers want 12 years, their Australian counterparts want 5 years. It is likely that the 12-year data protection would make it easier for the US to monopolize in Australia's drug market. The US monopoly would increase the medical expenses in Australia to a large degree.

Healthcare in Australia is partially subsidized by the state. Canberra needs to introduce generic drugs from time to time in order to cut the costs of its healthcare system.

An agreement on this issue would impose a heavy burden on Canberra's healthcare system and cause an inadequate supply of lower cost medicine, thus hurts the country's vital interests. It is nothing strange that Australia had rejected such a clause.

It should be stressed that the key for negotiation is to achieve a win-win result. Gaining joint benefits requires that all sides are willing to make concessions. However, The US has taken too much of its own benefits into consideration. Washington has been pressing hard on Tokyo for considerably lower rice tariffs and only 50,000 tons of tariff quotas, neglecting the harmful effects to the Japanese rice growers, just so the US rice exporters can make money. But Washington refuses to lower down the auto parts import tariffs because the US auto parts producers cannot compete.

It is ironic that while Washington expects other members to give in their interests, it is unwilling to make concessions in terms of the market access. It is impossible to clinch a deal if it only benefits the US but not the other TPP members.

The US should learn from China at this point. In the implementation of the "One Belt, One Road" initiative, China has given full consideration to the benefits of all relevant countries. The win-win principle should be the foundation of joint cooperation.

Domestic issues have also contributed to the failure of the Hawaii talks. Canada will hold federal election in October this year and the US is also preparing for a presidential election in 2016. So there is little room for compromise as candidates don't want to lose votes for being accused of behaving not tough enough.

Yet even if the plan to seal the TPP agreement has suffered a blow in Hawaii, the 12 TPP countries, namely Australia, Canada, Brunei, Chile, Japan, Malaysia, New Zealand, Mexico, Peru, Vietnam, Singapore and the US, have the political will to reach a deal. It is highly likely that these countries will hold another ministerial-level meeting by the end of August, trying their best to finish the "last 2 percent" and to clinch the deal.

US President Barack Obama will have to inform the Congress at least 90 days before signing the deal. This means that the TPP countries need to thrash out a deal by this autumn so Obama can sign it by early 2016. After that timeline, the 2016 US presidential election will become the prevailing issue. The TPP issue will be dragged into part of the presidential election debate, and be left aside on the Congressional agenda.

The TPP is more of a geopolitical tool than a trade pact. Even if TPP agreement is reached and later takes effect, its trade spill-over effect to China will be limited. Already eight years in the making, the TPP serves as the economic base of Washington's Asia-Pacific rebalancing strategy. This may have some strategic and political influence on China, which is not a member of the TPP. Further efforts should be made in following the development of TPP talks and assessing its full implications.

However, China has its own road map for high standard global Free Trade Area (FTA) network, including the "One Belt, One Road" initiative for common prosperity of Asia and Europe. In terms of free trade, TPP, if completed, will ultimately be incorporated into the larger umbrella of FTA of Asia and Pacific, which China is playing an important role in making.

The author is an executive council member at the China Society for WTO Studies. opinion@globaltimes.com.cn



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