By William Mauldin 

ATLANTA--The U.S. and 11 countries around the Pacific inched

closer Sunday toward a deal on a sweeping trade agreement that would lower barriers to goods and services and set commercial rules of the road for two-fifths of the world's economy.

Senior officials from the 12 countries had sought to wrap up the Trans-Pacific Partnership in just two days of high-level talks, but a final deal was delayed by a fight between the U.S. and Australia over intellectual-property protection for biologic drugs that in turn prevented New Zealand and other countries from resolving another sensitive issue--tariffs and quotas for dairy products.

A third dispute--about rules for automobile assembly--is essentially resolved, according to officials and people following the talks.

U.S. officials expressed optimism Sunday morning that officials could close the remaining gaps and reach an agreement before leaving Atlanta. Japanese Economy Minister Akira Amari is set to leave the talks Monday, suggesting an agreement or a collapse of the talks could come in hours, an official said.

"My sense is there will be a close today," said Tami Overby, senior vice president for Asia at the U.S. Chamber of Commerce. "I don't think it's going to be a perfect deal, but I hope it's going to be a very good deal, " she said, saying the details would have to be analyzed with members.

While officials said the U.S. and Australia have all but eliminated their differences on the drug spat, Chile, Peru and other countries remain concerned about adding to the price of drugs through long exclusivity periods that slow generic imitations. Still, a pathway to settle the medicine dispute may allow New Zealand and the U.S. to work out differences over the dairy trade, New Zealand's No. 1 export.

Canada and Japan are expected to increase access to their tightly controlled dairy markets, but New Zealand wants the U.S. to provide significant access, too. Sen. Ron Wyden (D., Ore.) and Rep. Paul Ryan (R., Wis.), two key lawmakers overseeing trade policy, have insisted on significant new access to Canada for dairy producers in their states. American lawmakers don't want to provide too much access to New Zealand because it could threaten the business models of less-competitive U.S. dairy farms.

An agreement would be a major victory for President Barack Obama, who has touted the TPP as part of his administration's rebalancing of foreign policy toward fast-growing economies in Asia, though the president still faces a steep challenge in the months ahead winning approval for the deal in a deeply divided Congress.

Legislation designed to speed passage of the agreement through Congress passed very narrowly early this summer, and a variety of factors, including the pressures of the 2016 presidential campaign, could make the final deal a harder sell. Lawmakers from both parties have expressed reservations over provisions in the deal in recent days, including a number who voted in favor of earlier legislation to move the pact forward.

"If a final agreement is announced, I will carefully scrutinize it to see whether my concerns about rushing into a deal before meeting all U.S. objectives are justified," said Sen. Orrin Hatch (R., Utah), chairman of the Senate Finance Committee, in a statement.

Commercial regulations in the pact--including intellectual-property rules and arbitration that lets investors challenge governments--are meant to put pressure on China and other developing countries with lax standards for trade and investment.

Mr. Obama spoke with Australian Prime Minister Malcolm Turnbull on Thursday about the Trans-Pacific Partnership, or TPP, and foreign diplomats say senior U.S. officials have pressed their counterparts abroad in an effort to win support among the 12-nation group for rules that would provide a long-term period of exclusivity for biologic drugs, protecting the name-brand products against generic imitators.

The U.S. has been pushing for up to 12 years of exclusivity for biologics, with Australia insisting on five years of protection, plus another year while regulatory steps are completed. Officials in Atlanta were discussing a complicated compromise that would provide eight years of exclusivity for biologics in some circumstances, according to people following the talks.

Dozens of protesters descended on downtown Atlanta during the talks, including a cancer patient who said she has taken three biologic drugs and wants less exclusivity for major drug makers so she can have access to cheaper generic alternatives. The protesters was arrested and charged with trespassing after she declined to leave the hotel hosting the talks.

Protesters screaming "stop TPP" burst into the hotel again on Sunday, unveiling a sign in the lobby before security removed them. Minutes later, protesters on an upper floor dropped leaflets calling the TPP a "corporate power tool" into the lobby of the Westin Peachtree Plaza hotel in downtown Atlanta.

U.S. labor unions and their allies among consumer and environmental groups are among the biggest critics of the TPP. The left-wing opposition has prevented Mr. Obama from getting many fellow Democrats on board his trade policy.

If officials reach a deal, it would have to be approved by the U.S. Congress and other parliaments. A handful of Democrats support Mr. Obama's trade policy, and Republican support is unpredictable in the 2016 election year, depending on the stance of presidential candidates and new leadership in the House of Representatives.

 

(END) Dow Jones Newswires

October 04, 2015 12:19 ET (16:19 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.