Trade Deals are hard work…

What can we learn from the failure to reach a conclusion to the TPP negotiations over the weekend? Well….trade deals are actually hard work.

negotiators

A mentor once told me the best trade deals are those where everyone goes away hurting a little. On this measure, it looks like the TPP is on track for genuine movement forward across its markets.

The lead up to this supposed final round of negotiations in Maui felt like many others. Trade Ministers from around the world fly out with optimistic press releases; journalists deem the outcome inevitable and start distributing leaked highlights; conspiracy theorists distribute warnings about impending global destruction at the hands of a secretive elite.

So to our great surprise, we woke on Sunday to the news that the negotiations had broken down over a key set of issues.

What are the key sticking points?

Here is what we think are the most significant remaining issues – and the respective electoral deadlines:

From Canada’s perspective: defensive on access into its dairy market, in particular to NZ. Keen to secure enhanced access to Japan’s heavily protected beef and pork markets. The parties had better be quick – an election is expected to be called within days. Next General Election: within weeks.

From US’ perspective: The US is particularly keen on securing preferential access to Japan’s auto and agricultural market. U.S. drug firms also want 12 years’ protection for data that leads to new medicines. Australia, which currently has 5, would have to significantly rewrite their laws if it concedes the point. The overall deal already faces stiff resistance domestically, with the US Congress begrudgingly passing ‘fast track’ approval – which allows a ‘yay’ or ‘nay’ vote, but not a re-negotiation. Next General Election: November 2016

From Japan’s perspective: Japan will want to see major automatic and other industrial breakthroughs it if is to compromise on tariff protection for its so-called ‘sacred’ agricultural sectors: rice, wheat, beef & pork, dairy and sugar. Next General Election: 2018

From Australia’s perspective: Australia, already partnered with most of the TPP countries through existing FTAs, is looking for enhanced outcomes on sugar and dairy into the US. Many are still upset at what they see as a less-than-fair deal out of the 2005 Australia-US FTA. Next General Election: possible before Christmas.

From NZ perspective: dairy, dairy & dairy. In particular, looking for deep commitments from the US, Japan, Canada, and Mexico. Next General Election: by Nov 2017

What will happen next?

The opportunity to secure a big trade deal is really a slim chance in a short window in time. There is so much at stake approaching final negotiations, that deals often seem inevitable. But they are not.

With no further formal discussions scheduled, negotiations can drift. Difficult compromises are bound to get caught up in electoral cycles.

We should all be watching the call of the next Canadian election, due within days, which could scupper the timing for everyone.

Yep, trade deals are hard work.