TPPA: Don’t sign away our future, cautions CAP-SAM

We refer to the letter by Tan Sri Ramon Navaratnam, chairman of Asli Center of Public Policy Studies, calling on the Malaysian Government to sign the Trans-Pacific Partnership Agreement (TPPA). It is regrettable that Ramon and some members of the business community fail to comprehend the serious implications for our people and nation subsequent to signing the TPPA.

He warns that if we do not join the TPPA there will be “dire consequences” – no access to a new free trade area with a Gross Domestic Product (GDP) of over RM101 trillion; unable to break out of middle income trap; capacity to innovate, attract foreign direct investments, high technology, incomes, employment and quality of life will be seriously affected.

Individuals who have not analysed the TPP text in detail must be pragmatic and not call on the government to sign onto this agreement. Paul Krugman, an economics Nobel laureate, has called the economic case for the TPP weak, and if it does not happen it will be no big deal.

An article in Financial Times dated October 6, 2014 titled Trade deals: Toxic Talks aptly states: “There is also a legitimate question over just how much investment treaties – and investor protection clauses – do to lure foreign investors. Neither Brazil nor China has many treaties in place, yet both have attracted enormous amounts of foreign direct investment.”

For the reasons stated below, we believe that the “dire consequences” will come from joining the TPPA rather than staying out of it. Major countries in the region – China, India and Indonesia with a total population of over 2.5 billion – are not involved in the TPPA process. As recommended in a recent Khazanah report, we should focus our efforts on strengthening our trade relations in the region rather than dream of TPPA’s pie in the sky.

We need to understand that TPPA is for the benefit of Multi-National Corporations (MNCs) from the developed countries. MNCs from the United States are the initiators and drivers of the negotiations for the TPPA. The text of the agreement was prepared by their legal experts, and kept as a secret away from public view for fear of opposition to it. Although it is called a “free trade” agreement, the TPPA is not mainly about trade. Of TPPA’s 29 draft chapters, only five deal with traditional trade issues.

In the U.S. itself, the secrecy surrounding the negotiations has come under strong criticism from lawmakers. Senator Sherrod Brown criticised it saying: “This continues the great American tradition of corporations writing trade agreements, sharing them with almost nobody, so often at the expense of consumers, public health and workers.”

The twin aims of the TPPA are facilitating the penetration of our markets by MNCs to the detriment of our economic and social interests and the promotion of U.S. geo-political interests, e.g. containment of China. It has not been convincingly demonstrated to the public what benefits we would derive from an agreement that would have serious implications on public health, socio-economic policies and our sovereignty.

The TPPA entitles foreign corporate investors to sue our government for actions that undermine their “expectations” and hurt their business. Business “expectations” should be no concern of the state but of the risk-taking investors. If measures taken by the state to protect and promote the interest and needs of its people affect the “expected” profits of the investors why must the people be made to compensate the “expected” but unrealised losses?

In free market ideology, businesses are supposed to shoulder their risks. Local businesses cope with such risks without government assistance. Why must large foreign corporations be insulated against business risks at our cost?

Some future policy/legislation of the government to protect the environment, improve healthcare or promote social justice may be challenged by MNCs and we may have to pay billions of dollars in damages and the policy/law nullified. Why must we take this risk? There are enough examples of such challenges.

Under the Netherlands- Czech Republic trade agreement an investor company sued the Czech government for falling to bail out an insolvent bank in which it had an interest and was awarded $238 million compensation. Philip Morris has sued Uruguay and Australia for taking measures to discourage smoking which has been proved to cause serious health problems. Eli Lilly & Co, an American global pharmaceutical company, is challenging before an Investor-State Dispute Settlement (ISDS) tribunal the invalidation by the Canadian courts of patent extensions for new uses of two medicines originally developed in the 1970s.

The Investor-State Dispute Settlement (ISDS) provision allow foreign corporations to bring claims before private arbitrators, not local courts, against the state for alleged adverse impacts on their investments due to government actions. The arbitrators are not independent but rotate between being arbitrators and representing big corporations in their claims.

More than 100 legal scholars, in a letter to the U.S Congress, stated: “ISDS threatens domestic sovereignty by empowering foreign corporations to bypass domestic court systems and privately enforce terms of a trade agreement. It weakens the rule of law by removing the procedural protection of the justice system and using an unaccountable, unreviewable system of adjudication.”

The effect of TPPA investor protection provisions is to limit the power of Parliament to pass legislation in the interest of our people and protection of the environment because of the need to make it TPPA compliant. It would be unconstitutional to allow ISDS tribunals to override laws enacted by Parliament. It amounts to handing over a legislative veto power to ISDS over laws enacted by Parliament.

Civil society organizations in other TPPA negotiating countries have also raised their concerns. An independent health impact assessment of the TPPA negotiations conducted by Australian academics and non-government organisations, published in February 2015, found the ISDS clause presents a significant threat to health policy [ ].

Other governments are opposing the Investor-State Dispute Settlement (ISDS). Public Citizen based in USA has compiled official government statements and actions against ISDS (

Besides the ISDS, there are many issues that are contentious in the TPP such as intellectual property, environmental and labour standards, financial regulations, copyright laws, the treatment of state owned enterprises, government procurement.

Our lives and future are at stake and we are not prepared to let the government sign the TPPA on our behalf without even showing us the contents of the agreement. We reiterate our call to the government to withdraw from the negotiations of an agreement in which costs far outweighs the purported benefits. Do not sign away our future.

Letter to the Editor, 14 April 2015