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Pacific Rim free trade talks unlikely to end in deal: sources

Saturday, August 1, 2015 - 09:28
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Talks on a Pacific Rim free-trade pact are unlikely to end in a final deal, sources involved in the negotiations said on Friday, with a dispute between Japan and North America over autos, New Zealand digging in over trade in dairy products and no agreement on monopoly periods for next-generation drugs.

[LAHAINA, Hawaii] Talks on a Pacific Rim free-trade pact are unlikely to end in a final deal, sources involved in the negotiations said on Friday, with a dispute between Japan and North America over autos, New Zealand digging in over trade in dairy products and no agreement on monopoly periods for next-generation drugs.

Trade ministers from the 12 nations negotiating the Trans-Pacific Partnership, which would stretch from Japan to Chile and cover 40 percent of the world economy, delayed until 4 pm local time (10 pm ET/0200 GMT) a news conference originally scheduled for 1:30 pm on the Hawaiian island of Maui.

Three sources involved in the talks said a last-minute breakthrough was unlikely due to issues with dairy and auto trade and a stand-off over biologic drugs, which are made from living cells. "It would be very difficult to arrive at a deal," one of the officials said, requesting anonymity because discussions were ongoing.

Australian Trade Minister Andrew Robb said the problem lay with the "big four" economies of the United States, Canada, Japan and Mexico. "The sad thing is, 98 per cent is concluded," he said. "I don't know how sticky it is." Failure to seal the agreement will be a setback for US President Barack Obama, given the trade pact's stance as the economic arm of the administration's pivot to Asia and an opportunity to balance out China's influence in the region.

The talks, which drew about 650 negotiators, 150 journalists and hundreds of stakeholders to the Hawaiian island of Maui, had been billed as the last chance to get a deal in time to pass the US Congress this year, before 2016 presidential elections muddy the waters.

The deal seeks to meld bilateral questions of market access for exports with one-size-fits-all standards on issues ranging from workers' rights to environmental protection and dispute settlement between governments and foreign investors.

Negotiators from the 12 TPP members had worked through the night and officials said great strides were made in many contentious areas.

But issues pegged as sticking points going into the talks were still blocking a deal after four days of discussions.

New Zealand has said it will not back a deal that does not significantly open dairy markets, with an eye to the United States, Japan and Canada, as well as Mexico.

John Wilson, chairman of the world's largest dairy exporter, New Zealand dairy cooperative Fonterra, arrived to attend the talks late on Thursday to press home the case.

Ministers had also yet to agree on how long to protect data used to develop biologic drugs. US drugmakers want 12 years, but Australia wants five. People briefed on the talks had seen seven or eight years as a possible compromise.

Ministers will likely head home from Maui with no set date for their next meeting.

Japan and the United States had been trying to agree on the rules of origin for cars, which determine when a product is designated as coming from within the free trade zone and therefore not subject to duties.

The United States and Japan had largely agreed on the rules, but had to get buy-in from Canada and Mexico, which are closely tied in to the US auto industry.

Japanese automakers source many car parts from Thailand, which is not a member of the TPP, and strict rules would upset existing supply chains. Japan also wants the United States to quickly drop duties on Japanese auto parts going to the United States.

REUTERS