Last week, U.S. President Barack Obama traveled to Beijing for a series of bilateral meetings and to participate in the annual APEC Summit – his first since 2011. One of the many newsworthy items to come out of that forum was a leaders’ meeting of the Trans-Pacific Partnership (TPP), a regional free trade agreement that is a key pillar of Obama’s rebalance to Asia policy. In remarks before the meeting, the president struck a hopeful tone, heralding the “good progress” made by negotiators to resolve “several outstanding issues,” and encouraging his fellow leaders to “break some remaining logjams.” He also reiterated the high priority his administration places on this agreement, and the immense economic benefits it would bring to the countries involved.
Public optimism notwithstanding, the negotiations themselves have been anything but smooth sailing, hampered by thorny issues such as state-owned enterprise reform and intellectual property rights. Obama has also faced resistance from his own party, which tends to resist trade liberalization on the grounds that it harms U.S. workers. These and other factors caused negotiators to miss several stated deadlines, and the talks are now more than halfway through their fourth year. The future is not all doom and gloom, however. The U.S. and Japan are very close to reaching a deal on market access, which would resolve one of the primary remaining stumbling blocks and add momentum to the negotiations writ large. On the domestic front, prospects for congressional cooperation improved with a resounding victory for the generally pro-trade Republican Party in this month’s midterm elections. With political will, a deal may be within reach next year, possibly even in time for the 5th anniversary of the TPP’s launch on March 15. Nonetheless, significant challenges yet remain.
One crucial sticking point is the U.S.-Japan parallel negotiations on market access for agricultural and automotive products. The issues are historically fraught, as U.S. auto producers have long maintained that non-tariff barriers restrict their entry into a lucrative market, while high tariffs on Japanese agricultural imports result in exorbitant prices for consumers and low productivity among Japanese firms. In particular, the “sacred sectors” – beef, pork, rice, wheat, dairy, and sugar – have powerful political lobbies that command outsized influence in the Japanese Diet, which last year passed a resolution forbidding the administration of Prime Minister Shinzo Abe from zeroing out tariffs on any of these products.
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