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National Opinion Centre

Trade expert Peter Clark is in Lahaina, Hawaii, where he will be reporting on talks at the Trans Pacific Partnership Ministerial meeting.

LAHAINA, Hawaii – Day two of the TPP Ministerial went late into the night. Indeed we are into round the clock negotiations in the race for the concluding  media conference scheduled for 1:30 PM  HST (7:30 PM EDT) Friday.

Former Canada-US Free Trade Agreement Deputy Chief Negotiator Gordon Ritchie used to compare coordinating provinces on trade negotiations to herding cats. The TPP has set a new standard – it has been like containing bullfrogs in a wheel-barrow.

There is broader engagement and the wheels of consensus are rolling. No one missed the half-way cut. Ministers are on track to an agreement. The key questions are how broad will it be and how deep?

Agricultural issues are being addressed and other sticky issues have been moved to the plus side of the ledger. There is no leaderboard or scoresheet for the Ministers.  Scrums, leaks and posturing by participants provide our information base.

Ministers are negotiating. Posturing and threats are part of the game. Using the press to advance negotiating positions is fair game and plays well back home. But, it rarely influences the negotiators.

Australian Trade Minister Andrew Robb has been a media favorite because he actually talks to the press about substance. He has been laying out his “must haves”. They are exceptions – requests for special treatment for Australia.

Australia wants footnotes to limit application of Investor State Dispute Settlement to Australia. We know this as NAFTA Chapter 11. And no more than five years data exclusivity for biologic medicine patents.

Minister Robb has reportedly rejected the long awaited US offer on Sugar (a.k.a. – the white death) and was concerned about the US withdrawing its offer on dairy for Australia.

This is simply Ambassador Michal Froman playing hardball until OZ comes to it senses on data exclusivity for biologics. The final number will not likely be either 5 or 12 years but some middle ground.

There are differences which will be resolved over time.  A good negotiator will not close on sensitive issues  until it is clear that maximum benefit has been extracted – usually at 11:55 PM on the final day.

The Ministers at Maui will not sign the TPP agreement. That will not happen any earlier than the November 2015 APEC Leaders Summit in Manila, Philippines. This is about resolving differences in order to settle the terms of that agreement.

There has been progress on Japan-USA agricultural trade. The US will even increase imports of very expensive Wagyu beef from Japan. Why does free trading America limit imports of expensive beef from Japan? There is no premium on consistency in trade negotiations.

Canada is engaged with Japan on agriculture and automotive trade. Trade Minister Ed Fast will use Canada’s 6.7 percent automotive tariff very effectively with his Japanese counterpart. It is important for Japan to catch up with Korea in the Canadian market.

Why, with this prize at stake, would Amari join Froman in sophomoric badgering of Canada on supply managed products? Perhaps on the basis that misery loves company on dairy trade. The tune changed by day one of the Ministerial. Don’t poke the beaver with sharp sticks.

The mood is good. Negotiators may be bleary eyed from lack of sleep but some are smiling. Others are fretting about how everything can be done on time. There is momentum which has not existed in the past and an incentive to accelerate.

The glass is half full even if some of the participants see it as half empty. The level is going up not down.

Ambassador Froman is correct in holding to the Friday deadline. Extensions will remove the sense of urgency. He will hold back some of what he has to offer until the others are committed.

Canada is not the problem. As I explained in November 2012 just before Canada joined the Auckland Round everyone has their problems and need for exclusions or special treatment.

Some are easier to deal with than others. On the horizontal level, disciplines on the commercial activities of state owned enterprises is not ripe for harvest yet. It needs more work.  So does intellectual property issues particularly in the area of pharmaceutical patents.

Malaysia has special problems relating to preferential treatment of the Malay majority. The State Owned Enterprises Chapter is a problem and Malaysia is not alone in its concerns – they are shared by Singapore, Vietnam and others.

There is no minister from Brunei in Maui this week. A team of highly educated efficient officials is attending. I wonder how the Sultan reacts to these attempts to reign in sovereignty.

As the Ministers approach the critical mass needed to declare victory, extending the deadline becomes more attractive and more likely. This will depend on progress on moving day.

Any extension cannot be too long. There will be a tendency to drift.

Mother Nature, too, could play a hand. Tropical Storm Guillermo is barreling through the warm waters of the Pacific and could reach hurricane force by the time it reaches Hawaii early next week.

 

Peter Clark, president of Grey, Clark, Shih and Associates, is one of Canada’s leading international trade strategists. His clients in Canada and around the world include governments, corporations and trade associations. He is a frequent media commentator and columnist.  Follow him on Twitter at @jpclark14

 

 

 

 

 

 

 

 

 

 

 

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