ATLANTA, Oct 4 (Reuters) - Talks between a dozen Pacific
nations in Atlanta on a free-trade deal, extended to a fifth day
on Sunday, hinged on resolving a dispute over how long a
monopoly pharmaceutical companies should be given on new biotech
drugs.
The issue pits the United States, which argues for longer
protections to encourage innovation, against Australia and five
other delegations who say such measures would strain national
healthcare budgets and keep life-saving medicines from patients
who cannot afford them.
The United States offers 12 years of exclusivity for the
clinical data used in developing drugs like cancer therapy
Avastin, developed by Genentech, a division of Roche ROG.VX .
Australia has argued for five years of protection.
"You know, just splitting it down the middle is not the
answer, and we've had to try to work through that," Australian
Trade Minister Andrew Robb told the Australian Broadcasting
Corp. "If we don't, it will have a major impact on whether we
conclude or not."
Japan's Kyodo news agency reported on Sunday that the United
States and Australia had reached a compromise on granting
protection that would amount to eight years. Reuters could not
immediately confirm the report.
Negotiators have been trying to broker a deal on the Trans
Pacific Partnership, or TPP, which would lower tariffs and set
common standards for 12 economies led by the United States and
Japan, which together account for 40 percent of global output.
U.S. President Barack Obama has pushed for a deal as a way
to open markets to U.S. exports, including financial services
and pharmaceuticals. U.S. officials have also promoted the deal
as a counterweight to China and that rising power's vision for
Asia.
After more than five years of negotiations, delegates were
due to meet for a fifth day in Atlanta on Sunday after the talks
were extended by 24 hours. Officials involved in the talks said
the set of remaining politically charged issues that could
scuttle a deal had been sharply narrowed.
By Saturday, the United States and Japan had reached
agreement in principle on trade in autos and auto parts in talks
that had also included Canada and Mexico. That agreement is
expected to give U.S. automakers, led by General Motors (NYSE:GM) GM.N
and Ford F.N , two decades or more of tariff protection against
low-cost pickup truck imports from Thailand or elsewhere in
Asia, people briefed on the talks have said.
A separate bilateral deal between Washington and Tokyo would
also pledge an opening of Japan's market and a reduction in the
non-tariff barriers that U.S. officials and auto industry
representatives have said kept imported vehicles to less than 10
percent of the Japanese market for decades.
But the TPP deal taking shape would also give Japan's auto
industry, led by Toyota Motor 7203.T , a freer hand to source
parts from Asia, including from plants outside the TPP-zone like
China, on vehicles sold in North America.
A "rule of origin" would stipulate that only 45 percent of a
vehicle would have to be sourced from within the TPP, down from
the equivalent ratio of 62.5 percent under NAFTA, officials have
said.
AMARI ULTIMATUM
With Japan's crucial issues largely resolved by Saturday,
Japanese trade minister, Akira Amari, set an ultimatum for the
TPP negotiators: find a deal on biological drugs by Sunday or
risk having the talks break down with an uncertain timetable for
resumption.
"I told them that now is not the time to be playing games.
Now is the time to be negotiating in good faith," a visibly
irritated Amari told reporters just after midnight Sunday after
a meeting of ministers to assess progress.
New Zealand Trade Minister Tim Groser warned that failing to
reach a deal in Atlanta would have worrying long-term
implications for efforts to bind countries together through
trade and investment.
New Zealand wants to ensure its dairy industry, dominated by
Fonterra FCG.NZ , the world's largest dairy exporter, comes out
as one of the clear winners in a TPP deal. It wants to open
markets like Canada, Mexico, Japan and the United States for
dairy products.
If U.S. Trade Representative Michael Froman, who is chairing
the Atlanta talks, manages to steer them to a conclusion on
Sunday, that would mark the start of a political fight to get
the deal approved in the United States.
The Obama administration relied on Republican votes to win
fast-track trade negotiating authority from Congress in July,
setting up a straight yes or no vote on any deal.
Many Democrats and labor groups have raised questions about
what the TPP would mean for jobs in manufacturing and
environmental protections. Meanwhile Republicans, including Sen.
Orrin Hatch, the powerful chairman of the Senate finance
committee, have urged the administration to hold the line on
intellectual property protections, including for biologic drugs.