THE TTALK QUOTES
On Global Trade & Investment
Published Three Times a Week By:
The Global Business Dialogue, Inc.
Washington, DC   Tel: 202-463-5074
No. 63 of 2017
THURSDAY, NOVEMBER 2, 2017

Click here for Monday's quote from New Zealand Trade Minister David Parker. 
TPP, AFTER PROGRESS IN JAPAN

"The momentum towards (an agreement) at the meeting in Danang has significantly increased." 

Kazuyoshi Umemoto
November 1, 2017
CONTEXT
 Is it odd that the Japanese market is the magnet that attracts so many to a TPP 11 deal and also that Japan is now leading the negotiations? In any event, it is the case. It was Japanese officials who took the lead in the negotiations earlier this week in Japan, and that leadership is set to carry over to next week's negotiations in Vietnam.  Kazuyoshi Umemoto is Japan's chief negotiator for TPP. 

By all accounts - at least all of the accounts we have seen - the negotiators made significant progress in the Urayasu meeting. Reportedly, they have agreed on which elements of the original TPP should be suspended as a consequence of America's withdrawal from the deal. Among other things, those include certain IPR provisions and other top U.S. priorities.

The New Zealand Issues. Last week, the new coalition government in New Zealand, headed by Labour leader Jacinda Ardern, had two problems with TPP. Now they only have one.

Land and Housing. The problem they believe they have solved - and we have no reason to doubt them - relates to land policy, specifically the government's desire to keep foreigners from buying New Zealand homes. Their concern was that the investment language in TPP might have prevented them from following through on that policy. As Prime Minister Ardern explained to the press on Tuesday:

"We have found a solution, a way that allows us to act in the best interests of New Zealanders and home buyers in New Zealand."

The plan is to introduce legislation this year to restrict foreign purchases of New Zealand land, with the expectation that it will become law early next year. According to Ms. Ardern, the policy, that is the new law, "will not impact TPP if passed on the timeline that I have proposed."

ISDS. The Investor-State Dispute Settlement provisions of TPP are more problematic. They are opposed by both the New Zealand Labour Party and by their coalition partners - NZ First and the Green Party - and there is no easy fix. On the other hand, Ms. Ardern's commitment on ISDS and TPP would appear not to be a so-called red line.

She will be in Vietnam next week for the next phase of the TPP negotiations, and what she has said is that she and her government will do their "utmost" to get ISDS language revised or eliminated.   She has also said that New Zealand will oppose ISDS in any future trade agreement. Putting those promises together, it seems reasonable to conclude that the new government in Wellington places a higher priority on getting TPP than on getting rid of ISDS.
THE PRESIDENT'S TRIP
Yes, President Trump took the United States out of the Trans-Pacific Partnership, but he did not take America out of the Pacific. More pertinently, his 12-day Asia trip begins tomorrow, and his presence will be a noteworthy part of the backdrop to whatever happens next week in Vietnam and the Philippines. The highlights of the trip include: 

November 3 - In Hawaii, a briefing from the U.S. Pacific Command and a visit to the USS Arizona Memorial. 

November 5 - In Japan and discussions with Prime Minister Shinzo Abe.
 
November 7 - In the Republic of Korea for meetings with President Moon Jae-in and a speech to the National Assembly. 

November 8 - In Beijing for meetings with President Xi Jinping and other events.
 
November 10 - In Danang, Vietnam, where he will participate in the APEC Leaders' Meeting and deliver a speech to the APEC CEO Summit.
 
November 11 - In Hanoi, Vietnam, for a meeting with President Tran Dai Quang and other leaders.

November 12 - In Manila "to participate in the Special Gala Celebration for the 50th Anniversary of the Association of Southeast Asian Nations (ASEAN)." 

November 13 - Also in Manila, "the President will celebrate the 40th anniversary of U.S.-ASEAN relations at the U.S.-ASEAN Summit and participate in bilateral meetings with President Rodrigo Duterte of the Philippines and other leaders." 

Editor's Note: All of the above details about the President's forthcoming trip to Asia are from the White House press release on the trip of October 16.
COMMENT
Will there be a TPP breakthrough next week? Will we have a major announcement from Danang or perhaps Manila? What follows is pure speculations, starting with the usual, on-the-one hand-on-the other-hand preamble.

On the one hand, betting against a breakthrough (any breakthrough) is almost always the safer bet. Put differently, the unnamed Canadian who told the New York Times that "it's probably going to take a little longer," that expecting a deal next week is "highly optimistic" was nothing if not credible. 

On the other hand, Deborah Elms of the Asia Trade Centre was just as credible when she said of TPP, "If you don't do it now, you won't do it at all." After APEC, she argued, there is no other action-forcing event that might propel the TPP 11 to a conclusion. That too makes sense.

Then there is the Trump factor. There is merit in a TPP 11 and benefits for those involved, but our impression is that all 11 would prefer a TPP of 12, that is, one with the United States. Most, if not all, of the 11 will be in Danang. Presumably, most, if not all, of them will have a chance to speak with President Trump. If they really want him to change course, their strongest possible argument would be: Look. We've done it. Join us. 

Again we return to the wisdom of Helen Kellogg: "We'll see."
SOURCES & LINKS
TPP Progress takes you to a New York Times story on the progress of this week's TPP negotiations in Japan. Posted online earlier today, this article was the source for today's featured quote.

Negotiators make headway is a link to the recently concluded negotiating session among the TPP 11, held in Urayasu, Japan, outside Toyko.

TPP's Fresh Crisis is a November 1 article in Global Trade Review that focuses on ISDS, the sticking point for New Zealand that, as yet, still has no resolution -- and none in sight.

Ardern Briefs the Press is a link to NewsHub report on Prime Minister Ardern's October 31 press briefing in which she announced the Government's intention to introduce legislation that would in effect ban foreigners from buying New Zealand homes.

The President's Trip is a link to the White House press release of 16, with details of the President's upcoming travel to Asia.

The ISDS Hurdle is a November 1 article from Newsroom on the challenge that New Zealand's new government faces in reconciling its opposition to ISDS provisions with its desire to be able to say yes to the Trans-Pacific Partnership Agreement."

Lighthizer and ISDS takes you to a Forbes article by Phil Levy on ISDS, including an extended quote from U.S. Trade Representative Robert Lighthizer.




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R. K. Morris, Editor
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