WASHINGTON — The Trans-Pacific Partnership could now be up to the next president.
After the 12 nations in the Asia-Pacific trade deal failed to reach an agreement in Maui, Hawaii, the pressure is growing to conclude the talks before the end of the year and before the U.S. presidential campaign enters full gear.
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, said a failure to reach a deal in Maui “pushes the whole process precariously close to the end of the year. Then next year that gets you into heavy duty presidential season and the possibility that it becomes a real political football.” While Republican presidential candidates generally are in favor of free trade, the TPP talks have created a schism among the Democrats. Hillary Clinton has equivocated on her stance on the trade deal, declining to come out either firmly in favor or against it.
Hufbauer said negotiators “still have hope if they can wrap it up by mid-August. After mid-August, it is really hard to see how it can be done.”
President Obama has made TPP a cornerstone of his administration’s trade policies. The irony is that if the talks drag on beyond the end of 2015, ratification of TPP — and its signature — could be in the hands of Obama’s successor.
The TPP agreement could have a major impact on the fashion and retail industries, by tearing down barriers to billions of dollars in global trade. A large contingent of sourcing executives, including from Wal-Mart, Gap and Target, as well as textile executives and industry trade groups were in Maui this week to meet with negotiators. The U.S. fashion industry has invested tens of thousands of dollars lobbying on TPP, which will impact their sourcing strategies for decades. Several outstanding textile and apparel issues, including rules of origin and tariff phaseouts, were said to be on the table in Maui but it was unclear whether negotiators made progress in the textile chapter.
Industry officials remained hopeful that a deal will be reached.
“I think that we knew it would be difficult to resolve so many issues this week,” said Julia Hughes, president of the U.S. Fashion Industry Association. “What is clear now is that it will take some time to craft a compromise on the biggest issues — autos, dairy and IP.”
“Definitely TPP will go forward. In the enthusiasm after approval of Trade Promotion Authority, we were hopeful that the negotiations would also move quickly. But it is hard to move quickly when there are 12 countries at the negotiating table,” she noted.
Vietnam is seen as the linchpin of the deal for retailers and brands. The country is the second-largest apparel supplier to the U.S. and could gain significantly with a finalized deal.
“Vietnam, of course is what everyone is looking forward to. I understand there is quite a bit of investment going in there,” said Maureen Gray, vice president of international trade at Ralph Lauren Corp. and chair of USFIA, which held a summer symposium here on Capitol Hill Thursday. “How soon it will be available for us, we still don’t know. I don’t think you are looking at anything until 2017 or 2018.”
The TPP talks have stretched over six years as the countries try to forge an agreement that would tear down trade barriers, including in textiles and apparel, and raise standards in a trade zone encompassing 40 percent of the world’s gross domestic product. Pacific Rim negotiators, who were hopeful that the round in Maui, Hawaii, would be the last, were unable to resolve contentious issues that plagued the talks all week, which reportedly included market access for dairy and sugar, auto exports, intellectual property protections and rules relating to certain pharmaceuticals.
TPP is considered a major market-opening opportunity for companies doing business in the 12 countries involved in the negotiations: the U.S., Japan, Mexico, Canada, Vietnam, Malaysia, Peru, Singapore, Brunei, Australia, New Zealand and Chile.
U.S. Trade Representative Michael Froman read a joint statement from the ministers in a closing news conference. “We’ve made significant progress and will continue to work on resolving a limited number of remaining issues, paving the way for the conclusion of the Trans-Pacific Partnership negotiations. Ministers and negotiators leave Hawaii committed to building on the momentum of this meeting by staying in close contact as negotiators continue their intensive engagement to find common ground.”
Froman cited intellectual property protection as one important area where ministers made progress.
One of the most contentious issues during the week centered around Canada’s tariffs on imports of dairy products. Many countries were pushing hard for more access to Canada’s dairy market but were unable to find a compromise.
Most ministers who spoke at the news conference expressed optimism about the momentum they achieved during the week in Maui and vowed to continue negotiations to resolve the remaining issues. But they are running up against the clock, particularly in the U.S., where the looming 2016 presidential election will create political complications if a deal is not reached soon. Canada is also holding elections in October.