Press Gaggle by Deputy National Security Advisor for International Economic Affairs Mike Froman, 11/12/2011

Hale Koa Hotel
Honolulu, Hawaii

11:12 A.M. HAST

MR. FROMAN: Well, the President this morning, as you know, convened a meeting of the nine TPP countries. This was a follow-up meeting to the one that he convened last year in Yokohama at the APEC leaders meeting. And it was a terrific meeting in a number of respects. First, the leaders agreed on the broad outlines of an agreement on TPP -- and I think you have seen the various documents that USTR has put out, leaders statement and various summaries of what’s been agreed to so far.

They set an aggressive timetable of trying to complete the TPP over the course of 2012, and they discussed both the standards that they wanted to maintain for TPP and the need to make sure that it achieves its objectives of being a high-standard agreement, an ambitious agreement. And they also discussed how to address the expressions of interest by additional countries in TPP, including Japan, among others.

I think there was broad agreement in the room that the leaders see the TPP as an open platform that they hope to expand and have other countries join, provided that we can maintain that high-standard agreement and the high level of ambition. And they look forward to initiating consultations with Japan and other countries of interest to determine whether or not those countries could engage in what’s expected of a TPP country.

So a very good meeting, broad agreement, really a lot of enthusiasm for this. I’d say a number of the leaders reflected on the fact that what made this meeting important and this process special is that there is clearly a lot of political will behind getting this done, and the importance of political will and political commitment to furthering these trade negotiations.

I think you all have the fact sheet on TPP. But this is an important set up countries. It’s almost 200 million consumers. We currently trade over $200 billion with these countries; that trade is growing significantly. Our exports to these countries are growing by almost 23 percent, from 2009 to 2010, and cross machinery, aircraft, medical instruments, as well as agriculture, and supporting over 500,000 jobs. So it’s an important set of countries.

And then most importantly, not only is it this country and this market, but it’s the potential the PTT has for being a platform for further expansion and for setting new standards for trade agreements, generally, through the region and elsewhere.

Q Could you just clarify a little bit what exactly the President wants to see over the next year, and then participation of other countries, like Japan? You don’t expect Japan to be -- to sign on at the end of this year to the legal framework?

MR. FROMAN: Over the course of the next year we would -- the leaders would hope that they could complete the legal text of the agreement and make as much progress as possible on the schedules, the tariff schedules, and the other specifics of the agreement.

I think, in parallel, this process of consultations with Japan and other potential interested countries will start. And I should say the President will be seeing Prime Minister Noda in a couple of hours, looks forward to discussing this with him, with the Prime Minister. And we’ll have a better idea of Japan’s intentions, I think, following that meeting.

So on one hand, we’re putting a lot of emphasis and energy around an ambitious timetable for the trade negotiators; on the other hand, beginning these consultations with new entrants, and to determine whether -- what is necessary for them to meet the standards of TPP and address outstanding trade issues with the TPP countries.

Q So there are two parallel tracks? You don’t expect Japan to necessarily be part of that legal framework in a year’s time?

MR. FROMAN: Well, we’re going to start on two parallel tracks and see where that takes us.

Q Are there other people who have -- are there other parties that have expressed interest, as significantly as Japan, that are major factors on the radar right now?

MR. FROMAN: Japan is the only country whose leader has made a public announcement. There are other countries that have indicated to us, privately, their interest in joining the TPP, but I would leave it up to them to make public announcements.

Q What do you see as the biggest barriers for Japan? And what will the President be raising in that regard with Noda?

MR. FROMAN: I think obviously there is a long history here of trade issues with Japan. I think what’s noteworthy and historic, potentially, about Prime Minister Noda’s announcement is the debate that’s going on in Japan over reform of key elements of their economy, including the agricultural sector, services, and the manufacturing sector, including non-tariff measures. And I imagine it will be that collection of issues that will be on at least the U.S. agenda, and I think the agenda of other TPP countries in their dialogue with Japan.

Q During yesterday’s gaggle, someone mentioned that the President might raise the issue of TPP with Chinese President Hu. And also yesterday we heard in the press conference that a Chinese official complained that they didn’t receive any invitation. So will President Obama send out an invitation or statement from the President during the bilateral meeting on the TPP?

MR. FROMAN: TPP is not something that one gets invited to. It’s something that one aspires to. So I think with regard to China, or any other country, it is up to them to determine whether they are ready to consider the high standards that are required of a TPP partner -- and that would be the most important piece of additional countries joining the TPP.

Q But during the bilateral meeting, will they discuss this issue?

MR. FROMAN: There is a broad agenda to be discussed, and I wouldn’t prejudge what will come up. But there's a lot of issues -- broad set of issues, both economic and security issues, that are likely to be discussed.

Q What are some of the major things that China would have to do in order to meet those high standards? Because I’m sure there’s lots of things, but could you tell us what the first ones are that come to your mind?

MR. FROMAN: I’m not going to comment on any particular country and their specific challenges. I would say that TPP seeks to be an agreement that goes beyond the standard comprehensive free trade agreement, the sort of thing that we’ve negotiated other countries like South Korea, and deals with issues around competition and leveling the playing field between state-owned enterprises and private enterprises; addressing innovation and making sure that it’s market-based and market-driven innovation; issues around subsidies, new technologies and very much non-tariff measures and the sort of barriers to trade that have traditionally been more difficult to get at because they’re behind-the-border barriers.

So there will be a whole array of issues that TPP looks at that cut across our new issues on the agenda for any country to come to deal with it.

Q So do you think -- is it a fair statement that they’re a long way away?

MR. FROMAN: -- with any particular country. They have not expressed interest. There are other countries that have expressed interest, and I think they’re looking at what the TPP framework is all about.

Q And do you think -- you said that there was a lot of work to get to the framework that you’re at now. Could you talk a little bit what -- or some of the things that the U.S. gave up as part of those negotiations, and maybe what some of -- a couple of examples of something that other countries compromised on?

MR. FROMAN: Well, I think the objectives we set out for TPP, as I said, was it to be a comprehensive agreement but also a 21st century agreement -- an agreement that dealt with new trade issues on the agenda. So issues like regulatory coherence and bringing regulatory systems into a situation where they’re more compatible with each other and reduce barriers, particularly for small- and medium-sized enterprises -- that’s an issue that’s never been dealt with before in a traditional trade agreement; issues, as I said, around new technologies including digital technologies, or around ensuring state-owned enterprise being on a level playing field with commercial enterprises -- these are all issues that the U.S. put on the agenda.

The U.S. being among the most open economies in the world will have to -- countries may have demands on the U.S., but we are among the most open economies in the world. And so the discussion will have to be around what each country has to offer.

Q Did China come up at all this morning in the discussion among the leaders in the meeting?

MR. FROMAN: No.

Q It wasn’t mentioned at all?

MR. FROMAN: No.

Q Is there a firm date for the deadline? We’re hearing it’s July.

MR. FROMAN: No, there’s no firm deadline. I think there’s a goal of -- there was agreement to direct trade ministers to aggressively work to complete the agreement and they’re working in the course of 2012 and working as quickly as possible in the course of 2012 to try to --

Q So July is not --

MR. FROMAN: There is no firm deadline. There is a --

Q Was July brought -- was that month mentioned in the meeting?

MR. FROMAN: There are a series of milestones throughout 2012, including traditionally there’s an APEC trade ministers meeting somewhere halfway through the year. So I imagine, as was the case this year, there will be an opportunity for TPP ministers to get together at the margins of those meetings.

But rather than setting a firm deadline, it was made clear that we want to move as quickly as possible, provided that we can achieve the high-standard agreement in doing so.

Q Can I ask is there a sense -- is there any discussion about the Doha Round, whether expanding an agreement like the TPP is preferable than trying to reshape the global agreement?

MR. FROMAN: I think there was some discussion about the state of play in the multilateral trading system. And I think there is a broad agreement -- and you saw it at the G20 last weekend as well -- about the importance of the multilateral trading system, the importance of strengthening that system and of making -- of pursuing innovative, new, fresh ways of trying to make progress in negotiations there.

And so this is not seen as an alternative to making progress in the multilateral trading system. But among the ways that trade liberalization may be pursued are these plurilateral agreements, multilateral agreements, bilateral agreements. And this is one where there clearly is political will and political momentum to make progress -- and that stands out.

Q I don’t mean to get stuck on the date, but the Malaysian Prime Minister was quoted saying, “We also achieve broad agreement that July should be the deadline.” So is that --

MR. FROMAN: I think it was said that we should try and get it done as quickly as we can; that we saw no reason why, as trade ministers put a lot of hard work into this, that we couldn’t finish a legal text for them to review by their trade ministers meeting. But no firm deadline in terms of we will have to have an agreement then, or not. We’ll have to see where we are on the negotiations and whether the status of negotiations is such that we could achieve a high-standard agreement by that date.

Q We know that Taiwan and South Korea also want to join the TPP. But Taiwan, it is a special case because it’s not considered itself a state. So will Taiwan get a chance to join TPP?

MR. FROMAN: We had no discussion among the leaders about Taiwan or South Korea. So that was something that would have to be discussed in the future.

Q Did they discuss any other specific potential members other than Japan?

MR. FROMAN: There were other countries mentioned that had expressed interest. And I’d say that, again, the consensus view was very much that they want TPP to be a platform that can expand and include new members. They look forward to engaging in the consultation process that we all went through in joining TPP, and that they don’t want the expressions of interest of potential new members to either delay or dilute the path that we’re on.

Q Is the idea here that if new members join either in the next year or after that, that basically the agreement is there, they can get on board with what there is, or that they can come in and then try to negotiate something specific that they might want for their country? As new numbers come in, do they get to renegotiate little pieces that they need or want, or is a take it or leave it, this is the agreement?

MR. FROMAN: I don't think it is likely that with new entrants the TPP parties are likely to reopen agreed-upon texts. Obviously each country is unique and brings its own circumstances to the table, and those will have to be addressed in the process of countries joining TPP. But I do not believe that the leaders view this as a process where the work that gets done to complete the basic framework agreement gets reopened with each new entrant.

Q Does that, then, suggest that the U.S. does not want new people to come in over the course of the next year because it will just make negotiations more difficult to have one more member?

MR. FROMAN: As I said, I think we will direct -- the leaders will direct the trade ministers to work as quickly as they can to finalize the agreement, and at the same time, in parallel, engage in these consultations with potential new members and see where that process leads us.

Q Thank you.

END
11:29 A.M. HAST