Japan, US still at loggerheads over TPP

Tokyo and Washington are still at loggerheads over a number of issues regarding the delayed Trans- Pacific Partnership (TPP) free trade negotiations, with the latest round of ministerial talks failing to bridge significant gaps, government officials said here Friday. Speaking after Japanese TPP minister Akira Amari told local media that both sides were still in a "stalemate" over key items and that "fairly big gaps" remain between the two sides, government officials here said there was still hope that "steps forward" could be made. Amari will hold another round of talks with U.S. Trade Representative Michael Froman on Friday, and the government here is hopeful that the talks will resolve some of the thorny issues that prevented the pact from being finalized at the end of last year, and ahead of U.S. President Barack Obama's state visit to Japan on April 23. Japan and Washington have been in a long standoff regarding what Japan describes as its five "sacred sectors" -- rice, wheat, beef and pork, dairy products and sugar. Japan wants to protect these industries, but the United States demands full access to Japanese markets for its agricultural goods. Washington is also insisting that Japan eliminates some technical barriers that prevent the sales of some U.S. cars in Japan, while maintaining tariffs on Japanese automobile imports. Among the 12 countries involved in the TPP free trade talks, Japan and the United States, the two largest economies involved in the talks, have hit the biggest impasse, as Japan remains reluctant to alleviate tariffs on what it deems to be its sacred sectors. However, a breakthrough may still be on the horizon, although unlikely to be hammered out in time for U.S. President Barack Obama's visit here next week, government sources here involved in the negotiations said Friday. Japan may be allowed to retain its tariffs on rice and wheat, in return for increased U.S. rice imports, the sources reconfirmed Friday. Sugar cane products may also be exempted from abolishing taxes the sources said, as its in both sides' benefit to maintain their levies, and a deal may be struck regarding Japan's dairy products the sources also said. But the official line remains that the two sides are widely deadlocked and a broad agreement is unlikely to be reached before Obama meets with Prime Minister Shinzo Abe in Tokyo on April 24. The sources said that a lot is now hinging on whether Amari and Froman can make any headway on discussions over beef and pork. But Abe remains under immense pressure from farm lobbies, such as the politically powerful Central Union of Agricultural Cooperatives here, to uphold tariffs on its sensitive sectors, which in the case of rice sees tariffs of more than 700 percent slapped on foreign imports to protect the age-old sector from cheaper overseas competition. Such lobbies comprise large numbers of powerful, conservative supporters of Abe's ruling Liberal Democratic Party (LDP). Japan's farm minister Yoshimasa Hayashi has also campaigned vehemently to protect the nation's agricultural sector and is among a number of politicians and bureaucrats, from whom Abe derives a great deal of political support, who believe the issue of eliminating tariffs would, at a bare minimum, be a constitutional quagmire, with Hayashi stating that Japan's stance on the matter has already been "enshrined" in a parliamentary resolution. A consensus growing among some sources closely connected to the issue is Japan's reluctance to ease the talks forward by making quicker concessions on its tariffs. Abe stated at a Lower House budget committee meeting recently that setting a deadline for the conclusion of TPP talks could allow other countries to take "unfair advantage" of Japan and harm national interests. Other member countries have previously stated that Japan has failed to live up to the "high ambition" of the TPP, as was originally outlined in the 2011 Honolulu Declaration, at which Obama and other leaders pledged a complete elimination of tariffs and flexibility on the matter from all member countries. But some analysts believe that going forward Japan may not abide by the overall principle to scrap all tariffs within 10 years, but look to phase out tariffs on its own terms over a longer period of time, to keep the pact moving forward, while protecting its own interests -- a move widely in contravention of the original TPP tenet. With Japan and the United States at loggerheads over agriculture and automobiles, as well as some other issues, it makes sense for deals between the two be "attempted" over an unspecified period of time on a bilateral basis, while the expectation on smaller member countries to fall in line be maintained within the original timeframe, some sources close to the matter have repeatedly suggested. If such a scenario manifests, as seems to be the case, then the two biggest economies involved in the TPP will be able to protect their own national (economic) and political concerns, while reaping the benefits from other TPP members towing the line as originally outlined. This seems to be the strategy and for Japan's part this limits the fallout from eliminating tariffs on all its sensitive sectors, but ensures it is well-placed to reap the benefits from smaller countries in more economic need of being a part of a free trade alliance in the Pacific area, sources close to the negotiations have said. The TPP negotiations involve Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. The project would account for 40 percent of global gross domestic product and more than 30 percent of global trade if a pact is finalized.