ASIA-PACIFIC leaders will seek momentum on talks for a sweeping 12-nation trade pact when they meet in Bali in coming days, trying to overcome concessions sought by countries that threaten to further delay completion.
President Barack Obama cancelled plans to attend the Asia-Pacific Economic Cooperation (Apec) summit due to the US government’s partial shutdown, with Secretary of State John Kerry instead leading the US delegation, White House spokesman Jay Carney said. The list of demands from parties to the talks, amid pressure to protect key industries, means the US will be hard pressed to show progress.
Japan’s defense of its farming industry, Malaysia’s proposal to keep tobacco control measures out of the deal, and the impact of currency manipulation on markets are among issues impeding progress on an accord the US calls the cornerstone of its economic policy in the region.
At stake for member economies amid an uneven global recovery is the prospect of faster growth as their goods and services find new and bigger markets.
“Each country has its own different views and there will be a way forward, even if it’s a struggle,” said Hiroshi Imazu, a Japanese ruling party lawmaker who represents an agriculture-heavy constituency on the main northern island of Hokkaido. “If our views are not accepted, we can withdraw,” Imazu said.
Trade officials from the nations participating in the Trans-Pacific Partnership met in Bali today before the leaders summit. There have been 19 rounds of talks, and they will submit a status report to leaders, who have asked country teams to complete negotiations this year, the US Trade Representative’s Office said in September.
“We have been told by the US negotiating team that they are planning to hold the TPP leaders’ meeting as scheduled,” Japan’s Deputy Chief Cabinet Secretary Hiroshige Seko told reporters at the prime minister’s residence yesterday.
Asia pivot
Obama’s absence may add to growing anxiety in Asia that the US is too preoccupied with internal political challenges to pursue its so-called “Asia pivot,” the president’s second-term foreign-policy priority designed to enhance US standing in a region that’s adjusting to China’s economic and military emergence. As part of that push, the US.will base 69 per cent of its naval fleet in the Pacific by 2020, up from about 50 per cent.
The free-trade zone would link an area with about US$26 trillion in annual economic output. Nations forging the Pacific accord are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
Political will
“The political will is very high, but like any trade agreement there are domestic sectors for and against the deal,” said Sanchita Basu Das, a fellow at the Institute of Southeast Asian Studies in Singapore whose research interests include trade policy. “They are about 90 per cent done on the TPP, and it’s more feasible that we may see something in the first quarter of 2014. I’m not expecting much to come out from this week’s meeting.”
Delays in finalising the agreement – the initial target was the Bali summit – could exacerbate the effects of a slowdown in China and India that is reverberating across the region, with the Asian Development Bank lowering its forecasts for growth this year and next. The road to a “robust and comprehensive” recovery remains bumpy, International Monetary Fund Managing Director Christine Lagarde said this month.
“The TPP will be beneficial when growth is slow,” said Eduardo Pedrosa, secretary-general of the Pacific Economic Cooperation Council in Singapore.
Shanghai zone
Chinese officials last month inaugurated a new free trade zone in Shanghai as the country experiments with loosened capital controls and other reforms to sustain growth.
The 11-square-mile area is a testing ground for free-market policies that Premier Li Keqiang has signaled he may later implement more broadly.
“Within the Shanghai Free Trade Zone or other similar arrangements, a more efficient and open business environment could also pave the way to potential access to multilateral trade agreements such as TPP one day,” Morgan Stanley economists led by Helen Qiao said in a research note last month.
Li will attend meeting with leaders of Association of Southeast Asian Nations later this month and will also make visits to Thailand and Vietnam, China’s Ministry of Foreign Affairs spokesman Qin Gang said today in a statement on its website.
Philippine Prices
In Asia today, the Philippines reported inflation accelerated in September, while Malaysia’s exports grew more than economists estimated in August. The Bank of Japan refrained from adding to unprecedented monetary stimulus after business confidence surged and Prime Minister Shinzo Abe decided the economy was strong enough to weather a sales-tax increase.
Europe’s producer prices probably fell in August from a year earlier, a Bloomberg survey showed. Iceland is due to release its trade balance for September.
As negotiations on the Trans-Pacific Partnership continue, other challenges are yet to come, Das said.
“All the voices that you hear now are going to be even louder when it comes to the ratification process in the parliament of each country,” she said. “That’s the crucial time for the TPP.” — Bloomberg