Bumps in the road for TPP
The Trans Pacific Partnership (TPP), a potential landmark agreement between 12 of the world’s biggest trading nations, moved inches closer after a four-day meeting in Singapore. But progress remains excruciatingly slow, leaving many to wonder if an agreement can ever be reached.
Difference over tariffs on imported goods and market access remain the key sticking points for the ambitious deal, which would encompass a dozen countries that together account for 40 per cent of the world’s GDP. Those hoping for agreement are the US, Canada, Chile, Mexico, Peru, Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam.
Gaps in areas like tariff reform, particularly between the US and Japan, could scupper the entire process. There are some key sticking points; Japan does not want to harm its vital auto industry by handing over the keys to its domestic market to Detroit, while the country remains firmly opposed to removing agricultural trade barriers.
The TPP agreement is being seen as a key component for Japan prime minister Shinzo Abe’s economic reforms - the so-called ‘three arrows’. But as Marcel Thieliant of Capital Economics said in a research note seen by the International Business Times, the country could be the main roadblock.
“Japan’s insistence on maintaining high tariff rates on many agricultural products remains a major stumbling block to an agreement,” he wrote.
Despite persistent differences, there seems a clear commitment to continue with the process.
“While some issues remain, we have charted a path forward to resolve them in the context of a comprehensive and balanced outcome,” a joint statement from ministers said.
“Through extensive bilateral meetings, we have also made progress on market access, which is an important part of our remaining work, and we will continue working toward completion of an ambitious package across all market access areas.”
Other barriers to the deal include rules on environment, intellectual property rights and state-owned enterprises. Thorny topics aside, there is broad agreement that the deal could be enormous - the biggest trade pact ever signed. But as yet we are still a long way off from anything actually being signed.