DAUSTR BELL'S AUSTRALIA MEETINGS: TPP, WTO, AND

C O N F I D E N T I A L SECTION 01 OF 03 CANBERRA 001111

NOFORN
SIPDIS

STATE PLEASE PASS USTR/BELL AND USDA

E.O. 12958: DECL: 11/03/2018
TAGS: ETRD ASEAN AS
SUBJECT: DAUSTR BELL'S AUSTRALIA MEETINGS: TPP, WTO, AND
FTAS

REF: CANBERRA 903

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Classified By: Acting Econcouns W Albright, reasons 1.4 (B) and (D)


1. (C) Summary. DAUSTR Doug Bell visited Canberra October
19-21 for meetings with Australian trade officials and to
discuss the Trans-Pacific Partnership (TPP). Australia has
begun its internal processes to gain formal approval for
joining the TPP, which should be concluded by the end of the
year. An adviser to Trade Minister Simon Crean said Crean is
interested in exploring the possibility of a WTO ministerial
at the end of the year to hammer out modalities. The GOA
remains pessimistic about prospects for concluding FTAs with
Japan and China. End Summary.


2. (SBU) Deputy United States Trade Representative Doug Bell
met with the full range of senior Australian trade officials
in Canberra October 20-21, focusing on the Trans-Pacific
Partnership and our bilateral trade relations. Bell met with
George Mina, Adviser to Trade Minister Simon Crean, and at
the Department of Foreign Affairs and Trade (DFAT) with
Deputy Secretary David Spencer, Tim Yeend (First Assistant
Secretary, Office of Trade Negotiations),Bill Tweddell
(First Assistant Secretary, Americas Division),Ric Wells
(Head, China FTA Task Force and Japan Task Force),and
Michael Mugliston (Head, Asia Trade Task Force).

TRANS-PACIFIC PARTNERSHIP


3. (C/NF) Bell, making his first visit to Canberra since
assuming the Australia portfolio, briefed on current progress
in the Trans-Pacific Partnership (TPP),following up on
USTR's October 17 meeting with David Spencer in Singapore on
the margins of an APEC meeting. Spencer and Yeend said the
GOA was making progress on its internal procedures to
formally join the TPP process. Mid-December was the latest
they expected to have final approval. However, Spencer said
he thought it would be good if Australia and Peru could both
announce they are joining the TPP during the APEC Leaders
Meeting in Lima in late November; the GOA will try to meet
that deadline. Politically, Spencer said, Australia has "no
problem" in agreeing to join the TPP; it is seen as
"strategically sensible." He said that some other GOA
agencies had raised the practical concern of having to manage
"another resource-intensive FTA", but Spencer said this would
not stop them from agreeing. (Spencer also pressed Bell on
the November 15 financial summit, urging the US to invite all
G-20 members; septel.)


4. (C/NF) Organizationally, Yeend said TPP falls into his
portfolio in the Office of Trade Negotiations. Consultations
among other GOA agencies are already underway. The US
decision to join was key for Australia, which had been
watching the P4 and thought it was a "good place to start".
He sees this as great opportunity; a quality TPP FTA could be
a real building block to broader regional economic
integration, possibly a path to FTAAP. Yeend said TPP could
allow Australia to stop conducting bilateral FTA negotiations
by directing interested parties to the TPP instead. Yeend
noted the P4 agreement is good but has some deficiencies,
such as a very short chapter on IP. Bell noted the US had
Qsuch as a very short chapter on IP. Bell noted the US had
done detailed analysis of the existing TPP covering issues
like rules of origin, IP, and market access and told the P4
that if the US was to join in, work to upgrade parts of the
P4 agreement would be needed; the P4 agreed.

OTHER ISSUES


5. (SBU) In meeting with the Americas Division, in addition
to discussing the TPP, Bell flagged US interest in
cooperating with Australia on illegal logging, noting the US
program in Indonesia and the Australian program in Papua New
Guinea. First Assistant Secretary Bill Tweddell thought
greater cooperation on this made good sense. Bell also
stressed US interest in the Australian government review of
its quarantine arrangements which is expected out shortly,

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and said we would follow it closely and be interested in
discussing in the future.

WTO


6. (SBU) In a meeting with Trade Minister Crean's adviser
George Mina, Mina urged the US to consider a ministerial
meeting on modalities in between the late November Indian
elections and the seating of the new US Congress in early
January. Mina said Crean thought progress could be made that
would make it clear the Doha Round is still viable. He also
urged the US to be more open on agricultural reforms for the
"demonstration effect" it could have on countries such as
Japan. Mina said Crean was positive on the TPP, and thought
it represented "the most viable" path to an eventual FTAAP.

JAPAN


7. (C/NF) Ric Wells, the head of the FTA Task Forces for both
China and Japan, was pessimistic about both. Wells said he
has a "jaundiced view" after 18 months of negotiating with
Japan, where good progress has been made on goods market
access but no progress at all has been achieved on
agriculture - and Wells can't imagine how any movement on
agriculture will be forthcoming without sweeping changes in
Japan's Ministry of Agriculture, Forestries, and Fisheries
(MAFF). Wells admitted that Australia may not have clearly
thought through the prospects when FTA negotiations were
proposed. The GOA's positive experiences in negotiating its
earlier FTAs with the US, Thailand, and Singapore may have
led them to be overly optimistic about prospects with Japan.
He noted that political considerations may have been a factor
in deciding to proceed on both sides. In any case, Japan was
certainly aware that Australia and China were negotiating an
FTA and was likely a factor in their thinking. METI and MOFA
are serious about trying to find ways to resolve the FTA, but
MAFF has given no ground at all. The initial Japanese offer
excluded 80% of Australia's agricultural exports - "they
didn,t try at all". Now Australia is waiting for Japan's
elections, but Wells admitted that neither side really knows
how to conclude this FTA.


8. (SBU) In response to Bell's question about non-tariff
barriers in Japan, Wells said Australia's experience was
different from that of the US. Agricultural NTBs have been a
problem - but many Australian agricultural producers have
developed new products specifically for the Japanese market
that meet Japanese standards. Australian manufacturing
exports to Japan have never been large, and Australia,s
services sector has "given up" on Japan (although the pension
funds management sector, with extensive domestic experience,
is trying to get into Japan) and is focused on China.


9. (C/NF) As for Japan and the TPP, Wells said it was hard to
believe Japan would be seriously interested in participating
in the TPP, given agriculture and the low quality of Japan's
bilateral FTAs. It would take external pressure - for
example, Korea joining - to overcome its reluctance and make
Japan feel it has to "do something" to avoid being isolated.
In general, it is a good time to push Japan; they are more
aware that something has to change in their system. There is
Qaware that something has to change in their system. There is
more support in Japanese industry for reform, and an
Australia-Japan FTA could be a channel for that. But again,
MAFF "doesn't give a stuff", and remains focused on their
main job, delivering votes to the ruling party.


10. (C/NF) On China, Wells noted there was interest on both
sides in restarting talks, but he didn't see any prospect of
immediate progress. Australia has given China a list of NTBs
and is trying to negotiate on them. China is "being
obdurate" and insists that NTBs and standards shouldn't be
covered by an FTA. Wells touched on the issue of Chinese
state-owned enterprises investing in Australia. There has
been concern about that - but now, with the global financial
turmoil, that is the only investment coming into Australia,
so concerns have lessened. Overall, Australia is trying to

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conclude as many FTAs in Asia as possible to preclude being
excluded by the ASEANs from any new regional architecture.

MALAYSIA, ASEAN


11. (SBU) Bell and Michael Mugliston traded updates on the
status of our respective FTA negotiations with Malaysia.
Mugliston said Malaysian trade minister Muhyiddin and Simon
Crean had agreed earlier in October to resume talks. DFAT
trade consultant Phil Sparkes noted that Malaysia has a poor
track record in actually concluding FTAs.


12. (SBU) Mugliston described the economic cooperation MOU
that will be signed at the same time as the Australia-New
Zealand-ASEAN (AANZFTA) in December (ref A). DFAT and AUSAID
worked on an A$20-25 million work program to help the ASEAN
secretariat implement the provisions of AANZFTA. Malaysia
has asked for similar assistance as part of the bilateral
FTA, but they are not eligible for ODA from Australia.
Mugliston suggested Bell speak to the New Zealand trade
negotiators - they had a narrower focus than Australia in
AANZFTA, and didn't push Malaysia much in negotiations.

MCCALLUM