Consumers Association of Penang

Giving voice to the little people...since 1970

Malaysia should withdraw from the TPP, according to CAP

Given the new developments regarding the Trans Pacific Partnership (TPP) agreement, Malaysia should withdraw from the agreement.  It should also stop implementing changes in domestic laws and policies designed to comply with the TPP. Also, the government should not rush into negotiations with the US on a bilateral trade agreement.

President Donald Trump’s executive order to withdraw the United States from the TPP has effectively killed the TPP itself.

However, according to media reports, some TPP members like Australia are trying to save the TPP by asking the remaining 11 TPP countries to continue with the TPP and have the agreement come into force without the US.

Malaysia should not agree to such a proposal, as it would be definitely against our country’s interest to join the same TPP and especially without the US.

In the TPP, Malaysia was hoping to reap benefits from having better market access for our exports, mainly in the US market, as the US is by far the biggest economy among TPP countries.

In exchange for this, Malaysia was willing to take on many heavy obligations that have negative effects for our economy and society.    It would be irrational and unacceptable to remain in the TPP and take on the bad obligations when there is no benefit of access to the US market to compensate for these bad obligations.

These negative obligations include taking on much stronger intellectual property laws that curb Malaysians’ ability to have generic medicines that are much cheaper, and agreeing to foreign investors taking cases in an international tribunal against the government to get compensation for future losses they claim to suffer for any changes to government policies.

Other obligations include opening up the huge market for government procurement to foreigners as preferences for local companies would be ended or restricted compared to the present system; and also restrictions placed on the operations of companies and entities which the government owns or has a stake in.

On top of these, Malaysia has to open up its markets to the other TPP countries, which may cause the inflow of cheap imports that damage the livelihoods of the farmers and the business of some of our companies, especially the small and medium enterprises.

It is well known that the US was the main country pressurising the others, including Malaysia, to take on all these heavy obligations such as intellectual property, investment rules, investor-state dispute system, government procurement and state owned enterprises.

These rules in the TPP are designed to benefit the big corporations of the US and other developed countries like Japan, and are detrimental to Malaysian consumers, farmers and local companies.

Yet Malaysia was willing to take on these heavy obligations in order to have access to other markets, predominantly the US market.

It would be illogical and extremely detrimental if Malaysia were to join the TPP without the US.  This means continuing to accept and to suffer the very damaging components of the TPP that the US demanded, without even having the benefit of better access to the main market, which is the US.

The TPP was in any case a lop-sided agreement that did not favour Malaysia, so there would not be any net loss to Malaysia by not joining the TPP. Even in the area of trade in goods, studies showed that there would be a net loss in the trade balance for Malaysia, as its imports would increase more than its exports under the TPP.   If the non-trade issues are included, there would be serious overall damaging effects on Malaysia.

According to President Trump, he will now pursue one-to-one bilateral trade deals with some TPP countries.  Malaysia should not enter into negotiations with the US for a bilateral trade agreement as it will be heavily lop-sided against the country’s interests, given the extreme demands the US will make on the non-trade issues, with only limited gains in terms of market access to the US. The dangers are even more obvious with President Trump’s “America First” trade strategy under which the US can be expected to maximise its exports while minimising its imports with regard to its partners in an FTA.

Another important question is, what will happen to the changes in the laws and policies that the government has prepared, in order to comply to the rules of the TPP?

In our view, it is urgent for the government to suspend all its moves to make these changes since the TPP will no longer exist. Most of these changes would have serious negative social and economic effects.

In particular, changes to our domestic laws and policies relating to intellectual property would prevent or make it difficult for Malaysians to obtain medicines at cheaper prices.   It would also harm the interests of farmers who will face new restrictions on their ability to save and re-use seeds. It would further restrict access of the public to publications and scientific knowledge.

It would be ridiculous and against the public interest to change laws and policies that would make Malaysians worse off just to comply with the TPP when in all likelihood the TPP will no longer exist.

CAP calls on the government to confirm that it will no longer join the TPP and  instead withdraw from the TPP, given the new situation of the US withdrawal; that it will not rush into negotiating a bilateral FTA with the US; and that it will stop its measures to implement changes in laws and policies that were planned to implement the TPP.

The withdrawal of the US from the TPP is a good opportunity for Malaysia to rethink its approach to trade and investment agreements.  While trade is an important part of the Malaysian economy, free trade agreements are not automatically good for the country and we need to take part only in agreements that are in the interests of the public.

Letter to the Editor, 26 January 2017