Jane Kelsey: Talks tread water in Obama's absence

John Key and John Kerry helped lead the TPPA meeting. Photo / AP

Try as TPPA leaders might to gain traction, nothing concrete came out of meetings, writes Jane Kelsey

The trade ministers and political leaders of the other 11 countries in the Trans-Pacific Partnership Agreement (TPPA) negotiations put a brave face on the absence of US President Obama from the Apec jamboree in Bali this week.

This was meant to be the meeting where political horse-trading on the TPPA began. Even though parts of the negotiations are in deadlock, there was a sense that other political leaders might fall into line with Obama in the chair.

Once Obama cancelled, the meeting was a non-event. US Secretary of State John Kerry "helped lead" the meeting alongside Prime Minister John Key, said the Americans, because New Zealand is the formal administrator of the talks. Two other leaders had to leave the 90-minute meeting early. To rub salt into the wound, the Indonesian hosts had asked the TPP leaders to meet elsewhere so it did not overshadow the Apec event.

Japan's Kyodo News reported that a draft of the leaders' statement pushed by the US had claimed the talks were "substantially finished", but that was downgraded to "significant progress" after some countries objected that the wording did not reflect reality.

The leaders' objective is still to conclude the TPPA before the end of the year. They do not seem to believe it themselves. The cautious Malaysians said they have deep concerns over areas that impinge on sovereign rights to formulate regulations and policies and they are not going be rushed. Before the meeting Key was not prepared to "bet the ranch" on the deal being concluded by Christmas. Afterwards he said there was still some "heavy lifting" to do. Key could have said more frankly that four of the most significant and controversial non-trade chapters, dealing with medicines, internet, environment and state-owned enterprises, are in a mess and have been for several years.

Obama's absence and the dynamics at Apec exposed two major problems beyond sorting out the text itself. The first is Obama's fractious relationship with the Congress. The US Congress has constitutional authority over trade. Obama does not have the "fast track" authority that constrains that authority to voting yes or no to a final deal. Even if the 12 countries reached agreement on a text, Congress could pick it apart.

Obama was expected to ask Congress for fast track, formally called Trade Promotion Authority, this month. But he will not move unless he is sure he can get it through Congress. The budget standoff shows the Tea Party is not about to do anything that makes Obama's life easier - and they oppose these agreements. The rest of the Republicans have become hostages to the fringe.

If a compromise TPPA were less than a "gold standard", the US corporate lobby would presumably enlist its supporters in Congress to oppose it; so would the unions and environmentalists if they consider those chapters are weak. It seems inconceivable that a responsible government would sign up to a TPPA knowing that diverse captive interests in Congress could cherry pick the bits they like and throw back what they do not.

The geopolitical impact of Obama's absence was equally significant, at a time when the contest for influence between the US and China has intensified. Much of the rhetoric around the TPPA inside the US has been directed at China.

Kerry's speech to the Apec Business Forum promoted the TPPA as a gold standard platform for an Apec-wide Free Trade Area of the Asia Pacific. He was followed by China's President Xi Jinping. The report described the TPPA as "widely considered a new step for the US to dominate the economy in the Asia-Pacific region".

Xi argued that Apec should take the lead and co-ordinate the negotiations over free trade areas in the region, given that several agreements are competing for dominance. Further, Apec should be kept informed of progress in negotiations and results achieved to create favourable conditions for an Apec-wide agreement. China itself is open to all trade arrangements as long as they are "inclusive" and would commit to a transpacific regional co-operation framework that benefits all parties.

Xi was throwing down the gauntlet to the TPPA parties, who are all Apec members. Expect China to advance this agenda as chair of Apec for 2014 and host of the senior officials', trade ministers' and leaders' meetings. Also expect China to have even less room at Apec for the TPPA than Indonesia did this year.

Jane Kelsey is a law professor at the University of Auckland.