Obama calls for finalisation of trade deal before US election

United States President Barack Obama wants the Trans Pacific Partnership free trade and investment deal finalised in a year's time - before he faces election for a second term.

He also welcomed confirmation from Japanese Prime Minister Yoshihiko Noda that Japan wanted back into the talks with the nine other countries taking part.

Japan had been in the midst of deciding whether to commit to TPP talks in March this year when the devastating earthquake and tsunami hit, delaying consideration.

Mr Obama, hosting Apec in Hawaii, yesterday met representatives and leaders of countries involved in the deal, including Deputy Prime Minister Bill English filling in for Prime Minister John Key.

The President said later there were still plenty of details to work out, but he was confident it could be done. "So we've directed our teams to finalise this agreement in the coming year. It is an ambitious goal but we are optimistic that we can get it done."

Mr English said last night that there was interest in Japan, as the world's third largest economy, joining the talks if it was willing to deal with its "sticky issues" - a reference to its heavy protections for agriculture.

"But the countries who are currently involved are pretty wary of allowing the whole process to be slowed down by Japan just jumping in," Mr English said.

"They would need to be ready to sign up to a pretty high level of openness to their economy, and that's not clear yet."

Mexico and Canada, which has a heavily protected agricultural sector, have also expressed interest in joining at some point.

TPP papers were released yesterday giving a broad outline of the agreement, but they did not throw much more light on what has been agreed so far in confidential negotiations.

However, it is clear that nine countries will agree to a single schedule of tariff reduction - meaning while different goods will have a different timetable of reduction, each country will follow the schedule simultaneously for the same category of goods.

It also suggests that the final agreement will include an arbitration process for disputes between companies and states - of the sort that arose between Philip Morris tobacco company and the Australian Government when it moved to introduce plain packaging on cigarettes.

The paper says "the investment text will protect the rights of the TPP countries to regulate in the public interest".

It says it will be a "living agreement" that will be updated as new issues arise.

It is already widely accepted that the way that the Government's bulk drug buying agency Pharmac works - in secret - will be on the table for negotiation in coming rounds.

But Mr Key again said yesterday the agency would not be bargained away.

"We have said we think the Pharmac model works very well and we're not about to trade away that model just to get a free trade agreement with the United States and the other members of TPP.

"We always look at the balance of benefits, and there's always a bit of give and take in any free trade agreement, but I'm confident that the benefits we've enjoyed from Pharmac will be maintained if we sign the TPP."

Mr English said he did not believe the finalised deal would affect New Zealand's investment laws very much. "I think it unlikely because our overseas investment rules are fairly open and I don't imagine there would be significant change to them."

He said the mood among the 21 Asia Pacific economies of Apec was"significantly different" to the IMF meeting he attended in Washington a few months ago, which was focused on the eurozone crisis.

"The view is more balanced between the potential threats of Europe on the one hand and the opportunities for growth in the Asia Pacific region on the other hand."

There were any number of countries in the region growing at 6 per cent to 8 per cent a year compared with European countries at one or two per cent.