Push for Apec trade pact faces barriers

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Doubts have been raised over a renewed Asia-Pacific push for a regional trade agreement amid setbacks to a US-Korean deal and scepticism over Japan’s commitment to agricultural reform.

Leaders of nine of the nations attending the 21-member Asia-Pacific Economic Co-operation forum in Japan this weekend stepped up efforts to complete a Trans-Pacific Partnership (TPP) to liberalise trade and harmonise business regulation and environmental protection.

Barack Obama, US president, reiterated his commitment to the pact, saying it “would facilitate trade and open up markets throughout the Asia-Pacific”.

Japan is not one of the TPP nine, but Naoto Kan, Japan’s prime minister, joined their talks as an observer, highlighting Tokyo’s interest in membership while stopping well short of formally applying.

With many of the nine – including Australia, Chile, Peru, Singapore and the US – having bilateral or regional trade deals with each other, Japan’s membership would greatly increase its influence.

But while Japanese manufacturers see membership as essential to future competitiveness, agricultural groups and officials insist it would be disastrous for a farm sector that depends on high tariffs for survival.

Trade experts said US commitment was debatable after the failure to conclude agreement on the bilateral Korea-US (Korus) deal at last week’s G20 meeting in Seoul. Since it was negotiated in 2007, the trade pact has stalled after opposition in the US Congress and from US car companies.

“Korus is a keystone for the US thrust on trade in Asia,” said Ernest Bower at the Center for Strategic and International Studies in Washington. “Without Korus, partners in the [TPP] negotiation won’t believe the US has the political will to complete and pass an agreement.”

Yet the US administration, which says it hopes to finish negotiations with Korea in the next few weeks, denies it will hold up progress elsewhere.

“While it would be helpful to get Korus done, it is not a prerequisite for pursuing the rest of the trade agenda,” said a US official.

After the Apec summit, Mr Kan said Japan was poised to reduce trade barriers. “Of course, reform will bring pain, but we need to get down to concrete action in the agricultural sector,” he said.

Slumping public support for Mr Kan’s government has fuelled scepticism that it can overcome entrenched agricultural interests.

The US official said the administration would welcome Japan’s participation, possibly in a later tranche of nations, but that the TPP deal would not be diluted.

“Our focus is on making sure the highest standards are set,” the official said.

The pact is seen in Japan as the most promising of the regional initiatives that could act as possible steps towards an Apec-wide trading area. It is one of the few trade deals actively being pursued by Mr Obama’s administration, which has been hamstrung by congressional opposition to new liberalisation.

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