by John Kehoe
Resistance from a stubborn Canada and protectionist Malaysia is emerging as the biggest hurdle ahead of a crucial Trans-Pacific Partnership meeting starting in Hawaii on Tuesday.
Trade negotiators believe sealing a ministerial-level deal at the TPP on the island of Maui is critical, because further delays risk negotiations dragging the talks into the US election season where populist anti-free trade rhetoric could jeopardise any deal.
Trade sources say that an in-principle TPP deal at the Maui meeting would allow time for legal documents to be prepared for leaders like US President Barack Obama and Prime Minister Tony Abbott to officially sign at the Asia-Pacific Economic Cooperation meeting in the Philippines in November.
Australian trade minister Andrew Robb who’ll attend the meeting said negotiations were at a very advanced stage.
"We are pushing hard to ensure we can secure major gains and opportunities for Australian business and for economy," he said.
Matthew Goodman, a former economic adviser to President Obama and now an Asia Pacific adviser at Washington’s Center for Strategic and International Studies, said trade ministers like US Trade Representative Mike Froman would make a concerted effort to "get an initial agreement done."
"I don’t think Froman would have called this meeting unless he thought he had a good shot," said Mr Goodman, who has been speaking to government officials from the countries involved in the talks.
The TPP is a proposed accord that would cover more than 40 per cent of the world’s economy and set sweeping new rules for trade, investment, intellectual property, state-owned enterprises, labour and the environment.
The 12 TPP countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
Notably, it excludes China, which was unable to meet the rules seeking to level the playing field for private companies against favoured state-owned enterprises.
The TPP is central to the Obama administration’s "rebalance" to Asia. The President has championed the mooted deal at home as a way for the US to set the economic rules in the region, to trump emerging rival China.
Sugar and dairy to figure prominently
The most contentious issues in the TPP chapters are on agriculture, intellectual property rights and state-owned enterprises.
The US is aggressively pushing to strengthen IP protections for its pharmaceutical, technology and entertainment companies.
Better market access for Australian farmers, including sugar in the US and dairy in Canada, are likely to figure prominently in Mr Robb’s agenda at the Maui meeting.
However, Canada is a potential stumbling block because the conservative government is reluctant to open up its protected dairy and poultry sectors ahead of an election in October.
Prime Minister Stephen Harper needs to secure votes from rural farming districts cosseted by the severe limits on foreign imports.
The ruling Conservative Party’s caution was amplified by a shock loss at the Alberta province election in May.
Complicating the final TPP stages, the scandal-plagued Malaysian government is resisting reforms to state- owned enterprises and opening up government procurement contracts to foreign firms.
Some trade officials are privately discussing the possibility of Malaysia being left out of the pact.
"Canada and Malaysia are the real problems in trying to get a deal done at Maui," Mr Goodman said.
More promisingly, the US and Japan, the TPP’s two largest economies, have virtually agreed to a deal on cutting tariffs and other import restrictions on their respective agriculture and automotive markets.
"Japanese and US agreement on multiple issues in early July makes a broader agreement by all 12 countries more likely," said IHS country risk senior analyst Alison Evans.
"Both US President Barack Obama and Japanese Prime Minister Shinzo Abe have used political capital to push their respective trade policies."
President Obama is required to give Congress 90 days’ notice before he signs a deal and must publicly release the agreement 60 days before signing.
Given this timetable, achieving a ministerial-level agreement in Maui would allow time for a deal to be formalised in a legal document ahead of the APEC leaders meeting at Manila on November 18-19. The White House and congressional leaders are aiming to push the TPP through Congress before the 2016 election year begins.