America's ambitious trade agenda is running into fierce resistance in Asia, but negotiators say a draft Pacific free-trade deal that papers over some differences may be ready by the time U.S. President Barack Obama visits the region in April.
A central element of Obama's strategic shift towards Asia, the Trans-Pacific Partnership (TPP) could accelerate global economic growth, boost U.S. exports and level the playing field between emerging and rich nations in one of the world's biggest trade pacts, covering about one-third of global trade.
The White House had hoped to complete the deal, which aims to cut tariffs and set common standards on other issues, last year. But that didn't happen and negotiators fly into Singapore on Saturday for three days of talks on the 12-country pact.
Significant challenges remain, including U.S. frustrations over Japanese protection of sensitive agricultural products, such as rice, and U.S. automakers' fears of increased competition from Japan.
At the start of U.S.-Japan working-level talks this week, a Japanese cabinet minister said Tokyo could make concessions on tariffs on some sensitive farm products, but negotiators said big gaps remained between the two sides.
Japanese Prime Minister Shinzo Abe, who took office 14 months ago pledging to revive the world's third-largest economy, has made the trade pact a key part of a growth strategy known as the "Third Arrow" of his "Abenomics" recipe. The other two "Arrows" are hyper-easy monetary policy and fiscal spending.
"Abe has told international society he would go ahead with TPP so he has to make progress," said a Japanese official familiar with the matter. "It is not so easy to accept failure."
While the United States and Japan agree on many issues, they remain at odds over politically sensitive sectors for both countries. Washington has been pressing Tokyo to scrap all tariffs in the five categories of rice, beef and pork, dairy products, wheat and sugar. These include 586 product lines.
Japan wants the United States to set a timeline for scrapping tariffs of 2.5 percent on imports of passenger cars and 25 percent on light trucks.
"The negotiations present extremely high hurdles for Japan, and considerable gaps remain between Japan and the U.S," Economy minister Akira Amari, in charge of Japan's delegation, told reporters on Friday before flying to Singapore. But he said Abe had told him to do his best to reach a deal.
An agreement between the United States and Japan would set the tone for the other countries engaged in the TPP: Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.