- The Washington Times - Tuesday, July 30, 2013

The top U.S. trade official said Tuesday that he is “cautiously optimistic” about the nation’s ability to complete a major free-trade pact with 11 other key Pacific Rim nations by the end of the year, after the latest round of the talks on the potential Trans-Pacific Partnership (TPP) wrapped up last week in Malaysia.

Michael Froman, who was sworn in as the new U.S. trade representative on June 21, told a U.S. Chamber of Commerce audience that a lot of progress has been made already on the “incredibly complex negotiation,” despite concerns that Japan’s last-minute decision to join the talks could complicate the deal.

Japan’s belated entry into the multilateral trade agreement sparked some opposition from the auto industry over concerns about Japan’s alleged currency manipulation and its “closed” auto market.

Other industries, such as insurance and agriculture, also share concerns over Japan’s participation.

With Japan’s inclusion, the proposed deal would cover 40 percent of the global economy and approximately one-third of global trade.

The next round of TPP negotiations is scheduled for late August in Brunei.

Despite Mr. Froman’s optimism, Heritage Foundation trade policy analyst Bryan Riley said it is unlikely the countries will meet Mr. Froman’s year-end goal, noting that the talks have been “dragging on.”

“Realistically, it looks like that’s unlikely,” Mr. Riley said, faulting what he said was a lack of leadership by the Obama administration to pursue the market-opening deals more aggressively.

The TPP does not include China, a country Mr. Froman said is still working through a leadership transition and figuring out what kind of economic growth to have. But Beijing has started seeking out bilateral trade negotiations, Mr. Froman said. China agreed this month to start talks on a bilateral investment treaty with the U.S., while in June Chinese President Xi Jinping met with President Obama to discuss U.S.-China relations.

“[China] holds the greatest promise and is also the most challenging,” Mr. Froman said, citing potential difficulties in reconciling private, market-driven U.S. standards for goods and services with China’s “quasi-governmental” approach.

Mr. Froman also discussed the White House’s other huge current trade negotiation — the Transatlantic Trade and Investment Partnership (TTIP) between the U.S. and the European Union.

Unlike the Pacific Rim deal, which was announced in 2009, TTIP was first introduced by President Obama in February during his State of the Union address and negotiations are expected to last through the end of 2014.

Mr. Froman said not only will the EU accord address trade barriers such as tariffs, but the two sides will also work to “eliminate unnecessary differences or frictions” to get back on the path to growth. The trade representative also expressed hope a deal would spur new economic growth in the lagging EU market.

Supporters of the proposed trade pact say it is an opportunity to jump-start both U.S. and European economies. According to the Center for Economic Policy Research, the U.S.-EU agreement would create millions of jobs and generate approximately $123 billion and $154 billion per year in the U.S. and the EU, respectively.

But labor groups are skeptical, pointing to potential negative effects on wages, while environmental and food safety groups raise concerns of lowered standards.

Although Mr. Riley, the Heritage Foundation trade policy analyst, acknowledged the importance of bringing both TTP and TTIP to a successful conclusion, he said there was a danger the deals could lead to new government regulations.

“One concern is that trade agreements could be used as a Trojan horse that could lead to new regulations,” he said. “For example, with the negotiations with the EU, we want to have a true free-trade agreement, not an agreement that results in EU-style regulations imposed on the U.S. economy.”