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 Marathon talks during U.S. President Barack Obama's state visit to
Tokyo last week yielded progress — hailed by the two sides as a "key
milestone" — but the two sides stopped short of announcing a deal
vital to the Trans-Pacific Partnership (TPP), a 12-nation bloc that
would extend from Asia to Latin America.
The upbeat tone, however, was a contrast to the emphasis on "gaps"
after previous rounds of talks on a bilateral deal that has been
stalemated by differences over access to Japan's agriculture market
and both countries' car markets.
"What Obama's visit produced after many lengthy negotiations was a
common ground on which the two sides believe we can continue to work
to find a mutually acceptable solution," the senior Japanese
official told Reuters. He declined to be identified because of the
sensitivity of the talks.
"We no longer have to worry that the lack of a Japan-U.S. pathway is
going to block negotiations with other countries. This is a very
important landmark Obama was able to produce," he said. But he added
he was "not optimistic" that Washington and Tokyo could work out
remaining issues "in a month or two".
Negotiators from the 12 TPP countries are to meet in Vietnam in
mid-May, followed by a gathering of Asia-Pacific trade ministers in
China on May 17-18. Obama and Abe will likely meet next at an
Asia-Pacific summit in China in November.
Both Obama and Abe have domestic constituencies keen to see their
leaders stick to rival stances: a U.S. demand that Japan scrap all
tariffs and Japan's pledge to protect politically powerful farmers
in five sectors including rice, beef and pork.
TOTAL PACKAGE
Yet both leaders are keen for a deal — Obama because TPP is central
to his "pivot" of military, diplomatic and economic resources to
Asia and Abe because he has touted the trade deal as a key element
of reforms needed to generate economic growth.
Japan's Yomiuri newspaper reported over the weekend that the two
sides had in fact reached a "basic agreement" in last week's talks,
but that Tokyo wanted to avoid announcing it for fear of hurting the
ruling party's prospects in a Sunday by-election for a seat in
parliament's lower house.
Obama faces opposition from a wary Congress and farm good exporters
worried that Washington will settle for "TPP-Lite".
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Commenting on the Yomiuri report, the Japanese official said both
sides had offered significant compromises, with the United States
dropping insistence on scrapping all tariffs and Tokyo offering
bolder market access improvements than previously.
But he said no deal would be reached until all elements were in
place.
"Nobody is dreaming that we have concluded everything," he said.
"All professional trade negotiators know that unless everything is
agreed, everything is open," he said, adding stakeholders in both
countries had to be brought on board.
Among the issues yet to be thrashed out are the period of time over
which tariffs will be reduced and what sort of steps Japan can take
to soften the blow on farmers.
"There are a lot of uncertainties we need to resolve, either
technically or politically," the Japanese official said.
Both sides expressed optimism that progress on a U.S.-Japan deal
will breathe momentum into the push for a regional pact covering 40
percent of the world economy and creating a rule-based framework
that could entice Asian giant China to join.
The Japanese official echoed that view but said there was no
timetable set for when exhausted U.S. and Japanese negotiators would
meet, nor could he predict when a long-delayed broader deal would be
reached.
"That part is not in sight right now," he said.
(Additional reporting by Krista Hughes in Washington;
editing by Kim Coghill)
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