After week-long negotiations in Hawaii, trade ministers representing the 12 countries in a proposed Trans Pacific Partnership (TPP) failed to reach agreement on a deal last Friday night.  While reporting they made significant progress across many areas, they were unable to reach agreement in a few key areas including: market access for dairy; auto rules of origin and tariffs; some textile issues; and intellectual property/patent issues for pharmaceuticals, notably new biologic medicines.

No definitive time frames for completing the talks or scheduling the next ministerial meeting were announced.  On agricultural market access issues, it appears from comments made by ministers during the press conference that Canada was unwilling to deal on dairy. New Zealand, Australia and the United States are demanding that Canada open its protected markets for dairy and poultry. Both New Zealand and Australia are asking for increased access to the U.S. market for dairy, which the United States is unwilling to provide in the absence of access to the Canadian market.

Thus, the willingness of Canada to deal on dairy is a key, but the ruling Conservative Party Government of Prime Minister Harper faces a close re-election battle with votes in the key dairy producing provinces of Quebec and Ontario thought to be pivotal.  Many have speculated that the Harper Government will not be able to offer concessions on dairy before elections are held.  On Sunday just two days after trade ministers failed to reach agreement on TPP due to differences on dairy and other issues, the Harper Government did call for elections to be held in Canada on Oct. 19.  So it now will be interesting to see if negotiators will need to wait until after Canadian elections to attempt to close on a TPP agreement.

The failure to reach consensus on TPP last week makes it unlikely for a final agreement to come before Congress this year due to congressional procedure on trade agreements. As such, the U.S may face added hurdles as it tries to pass TPP during the 2016 election year.