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TPP Countries Unable to Reach Deal in Latest Negotiating Round

Negotiators were unable to conclude a free trade agreement among a dozen Asia-Pacific countries in late July due to continued disagreements on a handful of tough issues. Talks on the Trans-Pacific Partnership, which includes United States, Australia, Brunei-Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, could resume by the end of August as participants seek to finalise a deal ahead of election cycles in key countries that could delay further progress.

Officials said the most recent negotiations in Hawaii were "productive" and yielded "significant progress," with several chapters closed and most of the TPP text now agreed. However, there was minimal movement on the most politically sensitive issues, including expanded access to Canada's dairy market, the U.S. sugar market and Japan's rice market, the length of time that test data for biologic medicines should be protected, and rules of origin for automotive products. Negotiators will "continue their intensive engagement to find common ground" on the "limited number of remaining issues," officials said, adding that "in this last stage of negotiations [they are] more confident than ever that TPP is in reach."

In the area of dairy and poultry market access, sources indicate that Canada is proposing to create several tariff-rate quotas for some of these products, although it appears that certain countries do not think the TRQs are sufficiently generous. The parties are also wrestling over the specific value threshold that automobiles would have to meet in order to benefit from preferential duty treatment under TPP, with Japan pushing for a flexible threshold significantly below the 62.5 percent level included in the North American Free Trade Agreement. On textiles and apparel, the United States and Vietnam appear to be very close to a deal on market access and rules of origin for these products and an agreement is expected to fall into place if and when the other outstanding issues are resolved. U.S. officials have also stated that enhanced market access for sugar will hinge on the extent and breadth of concessions in other areas.

The next opportunity to finalise the TPP could be the 22-25 August meeting of ASEAN trade ministers in Malaysia. The White House would then have to wait 90 days to submit the agreement to Congress, which under the recently enacted trade promotion authority law would have a limited amount of time to review and then vote on it. As a result, observers say that if the TPP is not concluded within the next few weeks it may not have a chance to pass Congress before the 2016 presidential election season begins to heat up.

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