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 Trade ministers from the 12 nations negotiating the Trans-Pacific
Partnership, which would stretch from Japan to Chile and cover 40
percent of the world economy, fell just short of a deal at talks on
the Hawaiian island of Maui but were confident an agreement was
within reach.
"The undergrowth has been cleared away in the course of this meeting
in a manner that I would say is streets ahead of any of the other
ministerial meetings that we have had," New Zealand Trade Minister
Tim Groser said.
"You can see clearly that there are one or two really hard issues,
and one of them is dairy."
Australian Trade Minister Andrew Robb said the problem lay with the
"big four" economies of the United States, Canada, Japan and Mexico.
"The sad thing is, 98 percent is concluded," he said.
Failure to seal the agreement is a setback for U.S. President Barack
Obama, given the trade pact's stance as the economic arm of the
administration's pivot to Asia and an opportunity to balance out
China's influence in the region.
The talks, which drew about 650 negotiators, 150 journalists and
hundreds of stakeholders, had been billed as the last chance to get
a deal in time to pass the U.S. Congress this year, before 2016
presidential elections muddy the waters.
 The TPP seeks to meld bilateral questions of market access for
exports with one-size-fits-all standards on issues ranging from
workers' rights to environmental protection and dispute settlement
between governments and foreign investors.
The result frustrated negotiators who had toiled through the night
to cross off outstanding disputes. U.S. Trade Representative Michael
Froman said resolved issues included protection for regional food
specialties.
Japan's Economy Minister Akira Amari said that TPP member nations
could reach a deal if they meet one more time, and his understanding
was that the ministers aim to get together again by the end of
August.
STICKING POINTS UNCHANGED
Despite the progress made, issues pegged as sticking points going
into the talks were still blocking a deal after four days of
discussions.
New Zealand has said it will not back a deal that does not
significantly open dairy markets, with an eye to the United States,
Japan and Canada, as well as Mexico.
John Wilson, chairman of the world's largest dairy exporter, New
Zealand dairy cooperative Fonterra <FCG.NZ>, arrived to attend the
talks late on Thursday to press home the case.
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Ministers also remained apart on how long to protect data used to
develop biologic drugs.
U.S. drugmakers want 12 years protection, but Australia has only
five and Chile has none at all. "For us it's vital to have an
agreement that balances public policy goals for intellectual
property in medicines," said Chilean vice minister for trade, Andres
Rebolledo.
"The U.S. was on one side of the issue, while practically every
other country were on the other side," a source from a non-U.S.
negotiation nation said.
"Neither side was prepared to move and all claimed it as a red line
issue."
Japan and the United States had largely agreed on the rules of
origin for cars, which determine when a product is designated as
coming from within the free trade zone and therefore not subject to
duties. But they ran into problems trying to get buy-in from Canada
and Mexico, which are closely tied in to the U.S. auto industry.
Mexican Economy Minister Ildefonso Guajardo said Mexico was the
world's fourth-biggest auto exporter and he made no apologies for
standing up for his country.
Japanese automakers source many car parts from Thailand, which is
not a member of the TPP, and strict rules would upset existing
supply chains.
(Reporting by Ami Miyazaki and Krista Hughes; Additional reporting
by Dave Graham, David Ljunggren and Kaori Kaneko in Tokyo; Editing
by Ken Wills and Jeremy Laurence)
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