The 12th round of negotiations on the Trans-Pacific Partnership (TPP) Free Trade Agreement began on May 8 in Dallas, Texas.  The goal is to have an agreement by the end of the calendar year, but policy differences still exist and more countries seek to join the negotiations.

Nine countries are now part of the talks: Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, the U.S. and Vietnam.  On Nov. 12, 2011 the countries announced consensus on a broad outline of a “high standards” agreement.  It includes traditional issues like industrial goods, agriculture, textiles, intellectual property, technical barriers to trade, labor and the environment.  Also included are regulatory system compatibility, investment in innovative products and services, like digital technologies, and an ensuring state-owned enterprises compete fairly with private companies.  All tariffs among members would be eliminated within ten years.

Three countries continue to seek to immediately join the talks – Canada, Mexico and Japan – without slowing down the speed of the talks for year-end completion.  Canada and Mexico under NAFTA and other FTAs have experience on most of the trade policy issues related to agriculture and should have few difficulties in getting up to speed.  Japan still has a highly protected agriculture and would need time to develop new policies.  Agriculture and automobiles are probably the two biggest issues with Japan for the U.S.  When Japanese Prime Minister Noda met with President Obama in Washington, D.C. on April 30, the TPP FTA was discussed, but there was no indication of a conclusion reached.

U.S. Trade Representative Ron Kirk has indicated that moving ahead with the current nine countries is the higher priority.  The Obama Administration is honoring a provision of the now expired Trade Promotion Authority requiring a 90-day notice to Congress before beginning negotiations on a FTA.  If the Administration gave approval on June 1, a country could not join the talks until September.

U.S. agriculture does not have a lot to gain directly from the FTA, about 5.0 percent of agricultural trade in 2011, unless Japan, 11.0 percent of agricultural trade, becomes part of the current negotiating process.  Australia (1.0 percent), Chile (0.4 percent) and New Zealand (0.2 percent) are major agricultural countries; Australia and Chile have FTAs with the U.S.  Brunei (less than 0.1 percent) has a small population.  Singapore (0.5 percent) has higher incomes.  Malaysia (0.8 percent) and Peru (0.6 percent) have more opportunity, but the U.S. already has an FTA with Peru.  Vietnam (1.4 percent) is a rapidly growing developing country with the most opportunity growth in agricultural trade.