We, the undersigned organisations, have consistently raised concerns with successive Malaysian governments about the serious implications for Malaysia of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which merely temporarily suspended 22 of the more than 1000 provisions mostly imposed by the USA in the Trans-Pacific Partnership Agreement (TPPA).
Former International Trade and Industry Minister Datuk Darell Leiking confirmed in his statement on 4 August 2020 that on 29 November 2019 the Cabinet (which included current Prime Minister Tan Sri Muhyiddin Yassin and Datuk Seri Azmin Ali) “agreed that the government had taken a sound step by not ratifying the CPTPP given the negative impacts to domestic industry”. This followed “over a year of reflection and research” from earlier Cabinet decisions on 5 September 2018 and 9 January 2019.
Therefore, the current Government’s position has to be consistent in rejecting the CPTPP.
Datuk Leiking said that Datuk Seri Azmin Ali’s Ministry of Economic Affairs, now the Economic Planning Unit (EPU) found the CPTPP would worsen Malaysia’s trade balance, cause a loss of tariff revenue and increase exposure to investor-to-state dispute settlement (ISDS) which could require the Malaysian government to pay billions of dollars in compensation.
We welcome the Cabinet decision of 31 July 2019 to reject ISDS on principle and its success in getting ISDS removed from the Regional Comprehensive Economic Partnership (RCEP). However, ISDS with all the problems it causes is still in the CPTPP.
Our research and analysis of the CPTPP text includes the concerns mentioned by Datuk Leiking and many other problematic provisions in the CPTPP such as requiring farmers to pay royalties for seeds for 20 or 25 years and prohibiting them from sharing seeds, restrictions on subsidies to fisherfolk, jeopardising small and medium sized enterprises, as well as undermining consumer protection in financial regulations through the e-commerce chapter.
We have long called for comprehensive studies of the impact of the CPTPP and we are glad that additional studies were done.
We also stress that the CPTPP is now out of date. Since the CPTPP was negotiated and signed, the world is in the middle of a pandemic with COVID-19. The World Health Organization’s chief scientist has warned that the COVID-19 pandemic will take four to five years to get under control, and its Director-General tells us that “there will be no return to the old normal for the foreseeable future.” With the economic crisis that already started before the pandemic, the world is now facing unprecedented challenges and so governments are taking unprecedented steps to deal with it.
Governments need maximum policy space to deal with the pandemic and assist the economic recovery. However, the CPTPP severely restricts the policy and regulatory space needed to deal with the pandemic and its crises. For example, a number of the measures the Malaysian government has taken to deal with this pandemic (and may need to take in future) could violate the CPTPP.
Countries which have already ratified the CPTPP such as Australia have already had to violate their CPTPP commitments to deal with the pandemic and its economic crises. Australia now screens all foreign investment even though under the CPTPP it would only screen investments more than A$252 million (about RM760 million)– this is to ensure that in these troubled times foreign investors do not buy up Australian assets.
Even before the pandemic, the costs to Malaysia of ratifying the CPTPP outweighed the benefits. The only chapter Malaysia could be expected to benefit from in the CPTPP is the goods chapter via additional exports of products, but even in that chapter, Malaysia’s trade balance would worsen according to EPU. So there are no net benefits to outweigh the costs of other CPTPP chapters such as investment, intellectual property, services, electronic commerce, government procurement, state-owned enterprises etc.
Given that the costs of ratifying the CPTPP outweighed the benefits even before the pandemic, and in light of the CPTPP’s restrictions on Malaysia’s ability to respond to the current pandemic and its economic crisis, let alone future pandemics and crises, Malaysia must not ratify the CPTPP.
We are shocked that Datuk Seri Azmin Ali, now Minister of International Trade and Industry, who was in the various Cabinet meetings that discussed the CPTPP, and whose Ministry at that time was fully aware of the dangers of the CPTPP, is now willing to bind the country to an agreement that is the last thing we need in these turbulent economic times.
The Malaysian Cabinet’s decision of 29 November 2019 is clear on not ratifying the CPTPP. This has been proven right by the pandemic and affirms the demands made by a broad spectrum of Malaysian civil society groups. The current government and future Malaysian governments must stand by the decision not to ratify the CPTPP.
Consumers Association of Penang, IDRIS Association, Majlis Tindakan Economic Melayu (MTEM), Malaysian Women’s Action on Tobacco Control and Health (MyWaTCH), Positive Malaysian Treatment Access and Advocacy Group (MTAAG+), Padi Rescue, Parti Sosialis Malaysia, PeSAWAH, PT Foundation, Sahabat Alam Malaysia
Letter to the Editor, 7 Aug 2020