(Adds comment from Japan)
By Ami Miyazaki and Krista Hughes
LAHAINA, Hawaii, July 31 (Reuters) - Pacific Rim trade
ministers failed to clinch a deal on Friday to free up trade
between a dozen nations after a dispute flared up over auto
trade between Japan and North America, New Zealand dug in over
dairy trade and no agreement was reached on monopoly periods for
next-generation drugs.
Trade ministers from the 12 nations negotiating the
Trans-Pacific Partnership, which would stretch from Japan to
Chile and cover 40 percent of the world economy, fell just short
of a deal at talks on the Hawaiian island of Maui but were
confident an agreement was within reach.
"The undergrowth has been cleared away in the course of this
meeting in a manner that I would say is streets ahead of any of
the other ministerial meetings that we have had," New Zealand
Trade Minister Tim Groser said.
"You can see clearly that there are one or two really hard
issues, and one of them is dairy."
Australian Trade Minister Andrew Robb said the problem lay
with the "big four" economies of the United States, Canada,
Japan and Mexico. "The sad thing is, 98 percent is concluded,"
he said.
Failure to seal the agreement is a setback for U.S.
President Barack Obama, given the trade pact's stance as the
economic arm of the administration's pivot to Asia and an
opportunity to balance out China's influence in the region.
The talks, which drew about 650 negotiators, 150 journalists
and hundreds of stakeholders, had been billed as the last chance
to get a deal in time to pass the U.S. Congress this year,
before 2016 presidential elections muddy the waters.
The TPP seeks to meld bilateral questions of market access
for exports with one-size-fits-all standards on issues ranging
from workers' rights to environmental protection and dispute
settlement between governments and foreign investors.
The result frustrated negotiators who had toiled through the
night to cross off outstanding disputes. U.S. Trade
Representative Michael Froman said resolved issues included
protection for regional food specialties.
Japan's Economy Minister Akira Amari said that TPP member
nations could reach a deal if they meet one more time, and his
understanding was that the ministers aim to get together again
by the end of August.
STICKING POINTS UNCHANGED
Despite the progress made, issues pegged as sticking points
going into the talks were still blocking a deal after four days
of discussions.
New Zealand has said it will not back a deal that does not
significantly open dairy markets, with an eye to the United
States, Japan and Canada, as well as Mexico.
John Wilson, chairman of the world's largest dairy exporter,
New Zealand dairy cooperative Fonterra FCG.NZ , arrived to
attend the talks late on Thursday to press home the case.
Ministers also remained apart on how long to protect data
used to develop biologic drugs.
U.S. drugmakers want 12 years protection, but Australia has
only five and Chile has none at all. "For us it's vital to have
an agreement that balances public policy goals for intellectual
property in medicines," said Chilean vice minister for trade,
Andres Rebolledo.
"The U.S. was on one side of the issue, while practically
every other country were on the other side," a source from a
non-U.S. negotiation nation said.
"Neither side was prepared to move and all claimed it as a
red line issue."
Japan and the United States had largely agreed on the rules
of origin for cars, which determine when a product is designated
as coming from within the free trade zone and therefore not
subject to duties. But they ran into problems trying to get
buy-in from Canada and Mexico, which are closely tied in to the
U.S. auto industry.
Mexican Economy Minister Ildefonso Guajardo said Mexico was
the world's fourth-biggest auto exporter and he made no
apologies for standing up for his country.
Japanese automakers source many car parts from Thailand,
which is not a member of the TPP, and strict rules would upset
existing supply chains.