Day 2 of the talks, so not a lot to report, but cos 4 July majority of stakeholders, at least from US, asked not to interfere with 4 July holiday so frontloaded events in round.

I’ll give you a sense of what trying to accomplish, what has been done so far and open the floor.

Day 2 of negotiations. Yesterday we held a very successful series of stakeholder events. We tried to accommodate request for presentations. Majority in Dallas seemed to prefer the new format of tables. Talked to many of you I do not usually get to talk to in Washington, very helpful, hope to continue discussions. Appreciate people who made presentations. Will continue to try to accommodate requests of stakeholders for different types of formats

So far in negotiations, many groups have started to meet. Some started back on Saturday. Have 29 working groups. Limited time, space, so complicated scheduling to fit them all in. Continue through for a week from today.

So far, investment, CBS, GP, telecom, customs, legal issues, IPR, labour, MA and CB have met.

Not a lot to report. Purpose of round is to make progress to eliminating differences and closing gaps on issues. Working hard to meet APEC leaders’ request that we expedite progress toward conclusion of the agreement.

Now well into the negotiations, entering the end game on some issues, on others there is a way to go.

Some more controversial issues will go toward the end. Working closely with many in room to get input on some more controversial issues, would like to close out many as quickly as possible.

Continuing text negotiations at the same time as market access negotiations related to tariffs for industry, agriculture and textiles, services and investment, and GP.

Proceeding at different paces for different issues. Some will fall to later stages at the negotiations. Need all to move forward in tandem so tradeoffs can be made. Links across chapters we need to be cognizant of.

Caroline EFF – IP chapter, specifically TPM provisions: policy choices on TPM, scope and policy on access to info, scientific research etc, WCT and WPPT flexibilities and for civil and criminal liability. What is next step for TPM provisions and limitations, given the placeholder in the text.

BW - Obviously a very sensitive issue, have heard from stakeholders on all sides of the issue US worked with stakeholders in Washington
and input from the country and international. US will be tabling text later this week, send to counterparts first, but will be discussing later this week. Will put something out and respond to requests for discussions. Have spent lot of time listening to people’s views and seeking an appropriate balance.

Copyright limitations and exceptions. ????

Vietnam: very sensitive issue, esp for developing countries like Malaysia, Brunei and Vietnam,
We have listened to stakeholders, much appreciated material from Public Citizen. Like to assure you all comments are taken into account. Want to find a solution acceptable to all sides, taking into account the interest of stakeholders.

Deb, PHA: Where and when is the next negotiating round, what is the timing in relation to APEC summit, and what do you expect from the APEC Summit?

BW: Mid-Sept, dates are being finalised, no venue yet but it will be in the US. Complications are that APEC ministers and leaders are in Russia for APEC immediately preceeding. We have complications with logistics and are trying to work that through with Russia. Will make details available as soon as they are worked out

3M - Welcome Canada and Mexico as new partners. How will they be integrated and expected impact?

NZ – 2 important things in looking at these potential new members at this advanced stage of the negotiation: does that country share the commitment to the ambition levels as set out in Honolulu by the current participants, and can they join without interrupting momentum and process. In re both Canada and Mexico the 9 have worked this through to the point where we understand to all our satisfaction that this is the case, in both respects, for both those countries. They will join in negotiations proper once relevant players have completed any domestic procedures required pursuant to those announcements.

Mr Roland, concerned citizen – in regards to pharmaceuticals, like aids drugs, if you have very strict protection of IP like patent law, you may prevent the availability of generic version of drugs like AZT. Did you consider the insidious effect this may have on aids patients and those people suffering in developing countries where low wages and expensive drugs are not available, whereas US pharma companies are often advocating strict patent laws, meaning generic drugs are not available. Have you considered this in the negotiations?

Chile – of course we have very wide variety of proposals from different countries here. The final result, nobody knows. Chile says we should take into account the reality of each country and social problems that are on the table when talking about pharma and medical programmes. So from our point of view we will fight for a balanced system and will fight to defend rights of our people.

US - Other issues being reviewed in legislature. Not a matter of not considering seriously those issues, a matter of finding balance that the group of 9 thinks is right to meet competing objectives. Nobody in the room disagrees that generics, innovation etc are important. Still working that through. Not yet advanced the issue to the point that we understand what the outcome will be. People recognise the issues.

Jessa, Public Citizen– question about the relationship between pre-existing FTAs and parties to TPP, in particular decisions on coexistence. And how can chapters be completed if that is not sorted? What 10 chapters are expected to be closed out? What does close to finish mean - everything except a few brackets, or all except the most controversial parts?

Australia – we have been on the record from about 2nd or 3rd round that have agreed TPP will co exist with existing agreements. That approach is well understood. If there are issues of conflict between final TPP agreement and existing ones, they will have to be dealt with in the negotiations. That has been the approach since the start. Have to address these issues and need to look at whether there are conflicts. Oz has overlapping FTAs and there has not been a big issue in relation them, we have had coexistence for a number of years.

As for closing out – traditional parts of FTAs, eg customs, SS TBT, MA text, CBS, which people are very familiar with are easier to address and find common ground. That does not mean all the issues are easy to address, but where we are making good progress. Other issues, such as IP, pharma, public health, are complicated and detailed and know there is a wide variety of views, countries have their own systems, will take longer to find solutions. There is a lot of goodwill to find a way forward to meet all national objectives. All have clear national priorities. Will need to find something acceptable for all 9.

Palmedo – American Univ – wanted to raise the other big IP issue of ACTA, proving very controversial, with legislative setbacks almost every week. Do negotiators considering the Feb 2011 text have a sense it is ringing alarm bells, given that the text is beyond ACTA? My question is whether negotiations since Feb 20122 have tried to address issues that have made ACTA such a complete problem in countries that are supposed to be ratifying it. (Chile smiling)

Chile – IP chapter is very long text, like a book, very difficult to revise it and clear, open and close things. Basically the working group has selected some issues to deal with in each round, different issues, we are advancing discussions, but we haven’t taken important decisions in the text, that is the situation. We have been clarifying and … small details but not fundamental issues like the ones you’ve raised.

Machinists union, US – US number one consumer of the world’s products. US has had a trade deficit in every trade deal, which is detriment to every worker, with jobs going offshore. What are you doing to stop the trade deficit and if one exists how do you plan to rectify it?

Oz view is that a very narrow view on trade deficits or surpluses is not the issue. The matter of trade balances often reflects other economic issues at play. We believe that creating more opportunities for trade is good for all economies and creates jobs. Do not think one country’s particular trade position in relation to another is necessarily the key issues at play in these negotiations. Seeking to open opportunities for exporters but realise in a globalised world means imports are important to exports and vice versa. All are linked together and the combination provides best outcome for your workers. Problems happen irrespective of trade agreements cos of structural changes in our economies. We have a trade deficit with the US, would you like us to ask you to reverse that? There are surpluses and deficits with different countries. Is it correct to say you are doing nothing to correct the deficits?

Vietnam – if we look at trade deficit, Vietnam could have the biggest deficit. That doesn’t prevent us from participating in the negotiation, cos we believe what Hamish said about creating opportunities for trade, not just goods, also services and government procurement? Although you have a deficit in goods, what about services? A lot of US labour moved from manufacturing to services, boom eg in dotcom industry, have a surplus in services. Look at your current account, it is very strong in services.

We have not seen jobs created here.

Chile – we have same position. You can’t study the balance bilaterally from each country. After we signed bilateral agreement with US, changes from +ve balance from Chile to +ve for US. If we analyse US trade policy, you are not making many agreements with the world in the last 5 years or more. So I’m not sure if you can assign the responsibility of the deficit and unemployment to FTAs. May be a competitiveness issue. Must open markets to get advantages.

Jane, NZ - what is the status of the market access negotiations on agriculture between NZ, especially on dairy, given that Prime Minister Key said it is essential for NZ to have substantial dairy access for it to sign an agreement?

NZ – Prime Minister on the need for outcomes on dairy market access out of this negotiation, that is an accurate quote of what the case is. Where are we at? In a negotiation, there is a long way to go, but ultimately the point we need to get to is an outcome consistent with the ambition set out by all leaders at Honolulu.

Barbara Weisel - declined to add.

Jane - Were there pre-commitments on supply management from Canada?

NZ – on Canada – not sure what if any indications Canada might have given any countries on particular policies. But anyone coming into this negotiation must assure all of us to our satisfaction to meet that level of ambition.

Jane – Prime Minister Key said we expect all to be governed by the same rules in relation to investor state dispute settlement. Is that the position of other countries.

You described the situation as it is, obviously it is a sensitive issue, we are having constructive discussions but there is a way to go to conclude.

Chile - point of view, we think should have same treatment for all countries and no exceptions, Could expect a lot of exceptions in the rest of the chapters otherwise.

US Washington Fair Trade Coalition - question about transparency and the letter from Congress and petition signed by xxx. When are you going to release the text to the public and alleviate fears about what not know is being negotiated in our name.

US – we have answered the same question at each round, we do not intend to release texts. We are doing our utmost to provide information to stakeholders about the substance of negotiations. Many in the room know we are prepared to provide as much detail as possible about the respective positions of our countries. Some very sensitive issues. Negotiations cannot be conducted by releasing the text. We are happy to go through in as much detail as possible, US negotiators in room are prepared to talk with you about US positions.

Like anywhere in world, whether you are developing domestic legislation or negotiating an agreement, you do not put your playbook on the table during the negotiation or you will not conclude it.

Sabina – comment on potential for Japan to join negotiations and any kind of commitments would have to make? Overall timeline of negotiations?

Sanya – purports to be leaked investment chapter with proposal still in brackets re SOES, can negotiators say how plan to do due diligence that plan to do about what such an obligation might mean for your country?

Daniel – (Vietnam smiled) not in a position to comment on the authenticity of the text. Any leak is of course a very significant concern if that were an accurate statement. On the more general issue the US position is well known, you can see in Obama administration’s recently released 2012 model BIT, and negotiated outcomes of all our past 10-15 year FTAs. The issue is not unusual, similar to the approach taken in many of our agreements. What is being proposed is simply an explicit position, parallels the background rule of attribution under customary international law articles eg in International Law Commission discussion on state responsibility. The approach in the model BIT is consistent with and in our view does not go beyond customary international law, and would and has been applied by tribunals even in context of investment treaties without any such language, as it is viewed as a background customary international law rule that would apply anyway.

Celeste, AFLCIO – questions on the inter-relationship of labour and environment chapters. Will restrictions on cap controls allow delay through non-discriminatory application of laws relating to tax, social security, severance pay etc. We understand that Australia, NZ and ASEAN have that in some of their agreements.

Also some of the most controversial chapters are labour and environment, cos of US ambitious proposals. Have you considered whether it might make some of those countries reluctant about them more comfortable by making those chapters exempt from challenge under investment chapter?

US – re capital controls, we know it is important for countries in this and many negotiations and for stakeholders. US approach in our view is a balanced approach to provide significant protection for investors’ right to freely transfer capital, and protects host countries so the only way they can attract investors if they can transfer money and out, also include significant flexibilities, including in many or all the areas identified, be likely to take the view that what have in BIT not impede governments abilities or would be covered by exceptions. Also well know that there are public statements when opposing views presented, letter from Secretary Geithner clear statements that US government takes a balance approach on this issue. Other governments may have different views.

Also take a view on the second issue, important to seek to strike a balance in investment text, look very carefully at this analysis in TPP and Model BIT. None of the rules have intention to effect of preventing legislation in public regulation in area of labour and environment. Could have a detailed discussion about how it is crafted in our public positions to achieve that goal, and not to provide greater substantive rights for investors from abroad than from domestic investors.

Singapore – On japan – TPP not a trade agreement just among 9, or 11, could be pathway to FTAAP, so Japan as 3rd largest economy would add economic weight to agreement. In that context would welcome it. On timing, it is very much an issue which Japan has to decide themselves, they have indicated their interest, but yet to take formal decision on whether seeking to join negotiation. Very intensive domestic consultations, have some other national priorities to get through eg consumption takes, reactivating nuclear plants. We are ready when Japan is ready. We have been actively in consultation with Japan to share with them as much as possible about what they would need to do if they were to join TPP, in the context of ensuring they know what they are getting into that have to sign up to certain level of ambition. There are not strictly preconditions, only that they share same level of ambition and come in where we are now in the negotiations so that we can continue.

Matt, machinists – I was on the environmental regulatory board to regulate ingredient in gasoline and we were sued, California state spent millions defending the position successfully. How do you deal with the David and Goliath problem. If that law suit had been brought against a small country or county in US, doesn’t ability to sue have a chilling effect on sovereignty. (Vietnam nodding),

US – assume you are talking about Methanex. Note that ultimately the US won, and state officials were involved, the government expends the resources. We often point to the context of the case, and how clear it is on the idea that government regulation, esp in areas like that it is not reasonable to expect that regulations might not change. We say to colleagues who sometimes raise questions about investment rules, note that outcome. For US and every country it takes more resources to be involved in cases than not be involved (Vietnam is nodding vigorously). We do engage with colleagues on discussions on how to address those types of concerns. There wise of the picture is need to provide protections and remedies for investors. Out and prevailing perspective is this type of DSM is best type of remedy on this issue.

Sierra club – what consideration are you taking vis a vis climate change and trade negotiations. Are you even dealing with this serious planetary problem?

Peru –from Peru’s perspective, we are said to be one of the countries most affected in the near future. Concerns of the Peru authorities mean we have some proposals among the 9-11 countries to cooperate and find possible solutions to fight against that problem. We are trying to introduce those proposals with other countries that are part of the negotiations. We have received good feelings and comments, and a counter-proposal, we are trying to put something together to deal with that important issue.