US hopeful of Asia trade deal by year-end, eyes Dec meeting

Reuters

By Randy Fabi and Lesley Wroughton

NUSA DUA, Indonesia, Oct 8 (Reuters) - The United Statesexpressed hope on Tuesday it could seal an ambitious trade pactby year-end despite resistance from some countries and theabsence of President Barack Obama from a regional summit thatwas to iron out differences on it.

Members of the U.S.-proposed Trans-Pacific Partnership (TPP)said after a meeting that "negotiators should now proceed toresolve all outstanding issues with the objective of completingthis year a comprehensive and balanced, regional agreement."

Three-year-old TPP talks, now involving 12 nations, areaimed at establishing a free-trade bloc that would stretch fromVietnam to Chile to Japan, encompassing 800 million people,about a third of world trade and nearly 40 percent of the globaleconomy.

The TPP meeting on the sidelines of the Asia-PacificEconomic Cooperation (APEC) summit in Bali, Indonesia, includedleaders from Australia, Brunei, Canada, Chile, Japan, Malaysia,Mexico, New Zealand, Peru, Singapore, Vietnam and the UnitedStates.

New Zealand Prime Minister John Key chaired the TPP meetingafter Obama cancelled his trip to the summit to deal with abudget crisis that has shut down the U.S. government. U.S.Secretary of State John Kerry stood in for Obama.

U.S. Trade Representative Michael Froman said on Tuesdaythat world trade ministers may discuss the TPP on the sidelinesof a World Trade Organization meeting that starts on Dec. 3,with a goal of reaching a deal by year-end.

But several outstanding issues remain, he told reporters atthe APEC summit, citing issues ranging from intellectualproperty to state-owned enterprises, labour and the environment.The World Trade meeting will also be held on Bali.

"I think there is a consensus that there has beensubstantial progress on outstanding issues and there are stillremaining issues that must be addressed," Froman told reporters.

Later, a senior U.S. administration official acknowledgedthat the end-year target for completing the trade talks mayslide into next year.

"As always the substance drives the timetable," the officialtold reporters, speaking on condition of anonymity. "None of usare here to agree to a bad agreement simply to meet a deadlines.The collective view is that it is ambitious but doable."

A major goal of the Obama administration, the TPP would teardown trade barriers in areas such as government procurement andset standards for workers' rights, environmental protection andintellectual property rights.

Obama had hoped to settle outstanding issues in discussionswith other leaders at the APEC meeting but was forced to cancelhis visit because of the fiscal standoff and partial governmentshutdown in Washington.

"We didn't expect any real breakthrough on TPP in themeeting, especially with Obama not here. There is some progressthough," said a delegate from an East Asian country, whodeclined to be identified.

The TPP, by seeking unprecedented access to domesticmarkets, is proving highly sensitive in developing countriessuch as Malaysia and Vietnam, whose political systems could beshaken by intrusions in areas such as government procurement andstate-owned enterprises.

'NOT SUBSTANTIALLY FINISHED'

Proponents call the TPP, the most ambitious trade pact sincethe demise of the Doha round of global talks, a "high-standard"agreement to eliminate tariffs and tackle an unprecedented rangeof non-tariff barriers that restrict growth.

Obama has touted the deal by saying that 5,000 U.S. jobs arecreated for each extra $1 billion in exports created under thepact.

For the United States, the TPP would complement its shift ofdiplomatic and military resources to Asia to tap the region'sfast growth and balance the growing influence of China, whichhas not joined the pact.

To its opponents, including a range of advocacy groupsglobally, the TPP represents an encroachment of U.S. economicmight that gives big corporations unprecedented powers tochallenge national policies in the name of free trade.

U.S. multinationals like Wal-Mart and Fedex have warned Washington not to compromise and weaken the tradepact in order to complete the deal by the end of the year.

"For Wal-Mart, we would like to see a high-qualityagreement, which is that no sectors and no products areexcluded. That there are no compromises that leak into theprocess for the purpose of speed," Scott Price, chief executiveof the U.S. retailer in Asia, told Reuters.

More intrusive than other trade pacts, the TPP seeks toregulate sensitive areas such as government procurement,intellectual property and the role of state-owned enterprises aswell as giving corporations more rights to sue governments.

In TPP nations such as Malaysia, Japan, and Vietnam,reform-minded leaders are seen as using the pact as externalleverage to break down vested interests and force liberalisationof protected, inefficient sectors.

Negotiators hope to revive global trade, which has weakeneddue to an economic slowdown in China and emerging markets likeIndia and Indonesia.

The 21 countries of APEC closed out the summit by agreeingto implement responsible macroeconomic policies that will helpoffset the slowdown.

"Global growth is too weak, risks remain tilted to thedownside, global trade is weakening and the economic outlooksuggests growth is likely to be slower and less balanced thandesired," the group said in a prepared statement.

"We will implement prudent and responsible macroeconomicpolicies to ensure mutually reinforcing effect of growth and tomaintain economic and financial stability in the region, andprevent negative spillover effect."

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