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 U.S officials have ruled out a major announcement on the ambitious
12-country Trans-Pacific Partnership (TPP) in Beijing, where Obama
will attend the Asia-Pacific Economic Cooperation (APEC) forum and
hold talks with Chinese President Xi Jinping.
But business leaders attending the APEC forum have been looking for
signs of progress on the TPP, especially as China is pushing for a
separate trade liberalization framework called the Free Trade Area
of the Asia Pacific (FTAAP).
Obama said the TPP, in a deadlock largely due to disagreement
between the United States and Japan over how widely Japan will open
its doors to farm exports, had the potential to be an "historic
achievement".
"During the past few weeks our teams have made good progress in
resolving several outstanding issues regarding a potential
agreement. Today is an opportunity for us at the political level to
break some remaining logjams," Obama said at a meeting of TPP
leaders at the U.S. embassy.
"What we are seeing is momentum building around a Trans-Pacific
Partnership that can spur greater economic growth, spur greater jobs
growth, set high standards for trade and investment throughout the
Asia-Pacific."
 Some see a proposed study on the FTAAP plan, which will be presented
to APEC leaders for approval this week, as a way to divert attention
from the TPP, which excludes China.
TPP leaders said in a statement issued after the meeting that they
remained open to including "other regional partners that are
prepared to adopt its high standards".
Xi said FTAAP "does not go against existing free trade arrangements
which are potential pathways to realize FTAAP's goals", state news
agency Xinhua reported.
FTAAP can be an "aggregation" of existing free trade agreements, Xi
said, adding that the aim was to consolidate regional integration
and define long-term goals.
In a concession by Beijing, two sources with direct knowledge of
negotiations said the APEC leaders' declaration to be issued on
Tuesday had been revised to drop a deadline for the completion of
FTAAP negotiations, initially set at 2025.
Also, the declaration would call for a "collective strategic study"
on FTAAP to be conducted within two years instead of a "feasibility
study" which would have marked the start of FTAAP negotiations, the
sources told Reuters.
Asked if this was a setback for China, one source said: "It's too
strong a word. They have to compromise ... find consensus. It's part
of a process." STRIKING A BALANCE
Obama arrived in China seeking to show renewed commitment to his
administration's much-touted strategic "pivot" toward Asia, widely
seen as an effort to counter China's rising influence. The TPP is at
the economic core of that rebalancing effort.
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His challenge will be to overcome scepticism among some Asian allies
as to whether the United States can fully engage with the region at
a time when it is preoccupied with global crises ranging from the
fight against Islamic State militants in Iraq and Syria, the spread
of Ebola and the conflict in Ukraine.
At the same time, the drubbing Obama's Democrats took in last week's
midterm congressional elections will hardly strengthen his position
in talks with China or with allies in the region. Many may see him
as a diminished leader on the world stage in the final two years of
his presidency.
Although negotiations on the TPP have been slow-moving, one of the
areas where a new Republican-controlled Congress might actually help
Obama is by easing passage should a trade deal be reached.
Some trade experts note that reaching agreement before U.S.
presidential electioneering picks up next summer could be crucial to
avoiding U.S. domestic political hurdles.
The TPP would establish a free-trade bloc stretching from Vietnam to
Chile and Japan, encompassing about 800 million people and almost 40
percent of the global economy.
Obama's focus on Asia business ties on the first day of his visit
underscored his efforts to strike a balance between seeking deeper
economic cooperation with a rising China while also challenging
Beijing with the U.S. pursuit of the TPP.
For his part, Obama comes to China boasting a resurgent U.S.
economy. This could give him added economic clout as he attends
regional summits in Beijing and Myanmar and a G20 summit in Brisbane
this week, even if his political capital at home appears to have
waned.
(Additional reporting by Benjamin Kang Lim, Writing by Michael
Martina; Editing by Raju Gopalakrishnan and Nick Macfie)
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