TPP off life support, final US 'fast-track' approval possible next week

The TPP agreement seeks a trade agreement spanning the Pacific Rim and currently involves 12 countries: New Zealand, Australia, the United States, Canada, Japan, Singapore, Malaysia, Brunei, Vietnam, Chile, Peru, and Mexico.

The fate of the Trans-Pacific Partnership trade and investment pact may be known as early as next Wednesday, US time, after a vote in the US Congress last night endorsed the elusive 'fast-track authority' that President Barack Obama needs if the 12 nation negotiation is to be concluded successfully.

However, the next few days will be a "swirling mass", says New Zealand Trade Minister Tim Groser, who concedes that even if a Senate vote, probably as early as next Wednesday, confirms 'fast-track', New Zealand has yet to see its most important sector, the dairy industry, formally included in the agreement.

TPP promises to tie together some 40 percent of world trade and would represent New Zealand's first free trade agreements with three of the world's largest and most agriculturally protected economies: Japan, the United States and Canada.

However, Groser indicated that New Zealand might have to settle just for seeing dairy products included in the agreement.

"We can't join TPP if it were to exclude dairy products, but I don't for one minute believe that's the issue," Groser told BusinessDesk. "The issue is: how big a deal?"

Japan and Canada, the biggest opponents to a dairy deal along with the US, have also said they will not negotiate TPP to a conclusion unless the US grants the president fast-track authority, thus preventing the US Congress from picking a multi-country deal apart on the floor of the House of Representatives.

TPP is widely politically opposed because of fears about its entrenchment of investor state dispute settlement provisions, allowing corporations to take governments to quasi-legal arbitration if they object to policy changes, and its treatments in areas such as intellectual property and medical procurement.

"This will be a swirling mass," said Groser of the stage set for a Senate vote to endorse fast-track, perhaps as early as next Wednesday. "This is an open poker game going on and different chips are being put on the table. All I know is we've taken a very important step forward."

A successful Senate vote would "unlock the end game for the TPP."

"The stakes are very high here for the United States," said Groser. "Is the United States going to play a leadership role in global trade in the first quarter of the 21st century or not?"

Failure to secure fast-track, also known as TPA, would not only jeopardise TPP but also the US's attempt to create a similar deal with the European Union, known as the Trans-Atlantic Trade and Investment Partnership, or TTIP

While the 10-vote Congressional majority appeared slender, Groser said he had been assured by email from US Trade Representative Mike Froman overnight that it had passed "comfortably", with many Democrat members of the Congress voting tactically to oppose it to protect trade union support and funding in their own electorates.

"A game of chicken goes on, where people, who know that it's strongly in the US's national interest to support this international trade agenda, will vote against it when they can calculate that there are negative implications (for themselves)," said Groser.

Obama has argued a US failure by on TPP risks ceding to its greatest geo-political rival, China, leadership on how trade rules are written in the future.

Assuming a successful Senate vote, meetings between chief negotiators and a ministerial meeting would be required in the next six weeks, along with coming to a landing on a deal for dairy, Groser said. Negotiators will want to avoid the talks sliding into the American summer holidays in August and September, with the political pressure of the 2016 US presidential election looming large as a stumbling block to ongoing progress.

Groser said that from New Zealand's perspective, there was now "a very good deal on everything but dairy products."

"It's not to say that there's a bad deal on dairy products, it's more to say that there's no deal. We've barely started. Phony negotiating positions have been put on the table but that doesn't help a professional negotiator make a judgement as to where the landing zone is.

It would be a "big call" to get a dairy agreement within the available timeframe, but New Zealand would not support a TPP deal that did not include dairy.