Trade Negotiations Update: Government Shutdown Hinders U.S. Participation

Due to the ongoing U.S. government shutdown, President Obama cancelled plans to participate in the Trans-Pacific Partnership (TPP) negotiations that took place at this week’s Asia Pacific Economic Cooperation (APEC) Summit in Bali, Indonesia. New Zealand Prime Minister John Key, who stood in for President Obama as chair of the talks, expressed confidence that the TPP gained momentum from this week’s negotiations and he remains hopeful that the agreement can be completed by the end of this year.

Upon his return from the Bali talks, Japanese Prime Minister Shinzo Abe also spoke of the need to complete TPP negotiations by the end of this year and said Japan must play a lead role in meeting that goal. Officials from Abe’s Liberal Democratic Party have begun studying the possibility of abolishing tariffs on some items in the sensitive sectors of rice, wheat, beef, pork, dairy and sugar, pledging to complete this review by mid-November. Not surprisingly, the review faces opposition from some domestic agricultural interests.

While discussions between TPP participants drew most of the media attention in Bali, Australian Prime Minister Tony Abbott also held a high-profile meeting with Chinese President Xi Jinping. Abbott told reporters he wants to conclude Australia’s long-stalled free trade agreement negotiations with China within the next 12 months. Australia has emerged as China’s leading beef supplier with imports through August totaling 92,680 mt – up nearly 1,100 percent from a year ago. New Zealand is the only major beef exporter that currently has a free trade agreement with China. Beef imports from New Zealand are subject to only a 4 percent duty under the FTA, compared to 12 percent for China’s other beef suppliers. Later in the week, Abbott also reiterated his desire to complete trade agreements with several Asian trading partners – including South Korea – within the next 12 months.

The government shutdown also caused postponement of the second round of Transatlantic Trade and Investment Partnership (T-TIP) negotiations that U.S. and EU trade officials were scheduled to hold this week in Brussels. In a significant development, EU Trade Commissioner Karel De Gucht proposed establishment of a new regulatory cooperation council that would bring together the heads of EU and U.S. regulatory agencies to monitor implementation of commitments made under the T-TIP.

Talks continue on the EU-Canada free trade agreement but the timeline for an announcement remains unclear. There has been some speculation that Canadian Prime Minister Stephen Harper may announce the agreement in his Oct. 16 Throne Speech, but questions surfaced this week about whether side agreement language on human rights and weapons of mass destruction will be addressed by that date.

In another casualty of the U.S. government shutdown, a sanitary and phytosanitary working group was forced to cancel planned meetings in Beijing this week. This working group was to meet in advance of the December meetings of the U.S. China Joint Commission on Commerce and Trade (JCCT), which is the next opportunity for U.S. officials to raise the issue of restoring market access for U.S. beef.

Both the TTIP negotiations and the JCCT SPS Working Group meeting will be re-scheduled once the U.S. government shutdown comes to an end, but the events of the past week led some overseas observers to question the United States’ commitment to seeing negotiations with its trading partners in the Pacific Rim and Europe through to a successful completion.