Pacific trade negotiators chase elusive final deal in tough talks

By Krista Hughes and Ami Miyazaki

LAHAINA, Hawaii (Reuters) - Pacific Rim trade ministers neared the final spurt of negotiations on an ambitious free trade pact on Thursday, but differences over farm exports and monopoly periods for next-generation drugs kept them short of an elusive final deal.

Ministers from the 12 countries negotiating the Trans-Pacific Partnership (TPP), which would cut trade barriers and set common standards for 40 percent of the world economy, are meeting in Hawaii to try to hammer out a deal.

But major issues are still unresolved, including dairy exports and exclusivity periods for biologic drugs. The United States is pushing for 12 years but Australia and other countries worried about the impact on medicine prices want five.

"They are few but very contested," Mexican Trade Minister Ildefonso Guajardo told Reuters of the outstanding issues.

"I think that the negotiators will have to work through the night," Japanese Economy Minister Akira Amari said.

A final news conference is scheduled for 1:30 p.m. on Friday (7.30 p.m ET). Ministers appeared relaxed as they were garlanded with leis for an official photo.

"It's tough," said one official involved in the talks, who declined to be identified because of the sensitivity of the discussions, which seek to meld one-on-one negotiations over market access with a one-size-fits-all approach to rules.

"There are issues on dairy, on intellectual property, but it's not always clear where things stand. I know about my issues but I don't always know what's happening with other countries."

About 650 officials from 12 nations are taking part in the negotiations on the Hawaiian island of Maui, with numerous lobby groups and stakeholders also attending.

Negotiators have stressed they are doing their utmost to close the deal this week but also warned that not all industries will get what they want, amid a flurry of last-minute appeals.

TOBACCO TALKS

U.S. lawmakers, including from tobacco-growing states such as North Carolina, renewed warnings against excluding tobacco from rules allowing foreign companies to sue a host government.

An official briefed on the talks said there was discussion of a U.S.-initiated exception in Maui. It would be narrower than the broad exclusion for health and environmental policy sought by Australia, which is being sued by Marlboro maker Philip Morris (PM.N) over tobacco plain packaging laws.

Australian Trade Minister Andrew Robb said on Tuesday that

countries were "well down the track" on securing protection from litigation over health and environment policy. He said on Thursday investment rules and sugar remained open.

Australia's bid to export more sugar to the United States has the backing of U.S. confectioners and beverage companies.

"The United States needs to grant Australia commercially meaningful access," Sweetener Users Association chairman Perry Cerminara, who also handles sugar for chocolate maker The Hershey Co (HSY.N), wrote in a letter to U.S. Trade Representative Michael Froman.

U.S. canegrowers oppose more imports, and Mexico is keen to safeguard its preferential access to the U.S. sugar market.

"Of course we all have to make an effort, but the effort has to be in line with the principle ... that the very, very, very sensitive products are subject to a less aggressive schedule of market opening," Guajardo said when asked about sugar.

Dairy is another tricky issue, with New Zealand, Australia and the United States frustrated with Canada, and New Zealand and Australia also looking for more access to U.S. and Japanese markets. Robb said dairy was moving in "very tiny steps."

Australian Dairy Industry Council chairman Noel Campbell said discussions had gone backwards in some cases and he had hoped for more progress.

Canada hit back at complaints that it is holding up a deal. "To say that one particular issue is a sticking point to a potential deal just isn’t based in reality. A number of very serious issues remain for countries to negotiate," said Rick Roth, spokesman for Trade Minister Ed Fast.

(Reporting by Krista Hughes; Additional reporting by Christine Prentice in New York; Editing by Ken Wills and Robert Birsel)