D-day for controversial trade agreement in Malaysia

The move by Miti to reveal more information on the Trans-Pacific Partnership Agreement is to quell the growing unrest and protests such as this, over the terms of the agreement. This protest took place in Kota Kinabalu last week. The Malaysian Insider pic, August 1, 2013.Today is D-day for the controversial Trans-Pacific Partnership (TPP) agreement when Putrajaya has a sliver of a chance of persuading an increasing number of doubters that the 12-nation trade pact is good for Malaysia.

The Ministry of International Trade and Industry (Miti) is having an open day to explain the pact that potentially covers an 800 million-strong market across 12 nations when it is completed as early as this October.

The Malaysian Insider understands that non-governmental organisations and also activists are expected to gather at the Matrade building in Jalan Duta to listen to explanations about the TPP, which has been shrouded in secrecy despite the 18th round of talks in Kota Kinabalu, Sabah, last week.

But Miti put out a frequently asked questions (FAQ) pack last night that marked a first for the ministry which has so far keep silent about the pact despite pressure from various groups.

"Every country is equal in the TPP negotiation and the negotiations are also based on the principle of a single undertaking, - “nothing is agreed until everything is agreed”, it said in allaying fears of a lopsided pact.

The lack of clarity and disclosure on the part of Miti had resulted in the TPP agreement to be maligned with controversies especially in the areas of the nation’s affirmative action policy and cost of drugs which were said to rise if the agreement was concluded.

"FTAs (free trade agreements) would enable Malaysia to have access to more markets. Malaysia’s products will be more competitive compared with the countries which do not have FTAs with these countries," Miti said in the FAQ, referring to the number of free trade agreements (FTAs) signed thus far.

It said that Malaysia’s trade with countries under FTAs have improved, citing the pact with Japan helped improve trade from RM112.8 billion in 2005 to RM145.3 billion in 2012, with a major portion being palm oil from Malaysia.

"The successful conclusion of the TPP will form a huge duty free market of 800 million people with a combined GDP of US$27.5 trillion. 

"This far surpasses Malaysia’s limited domestic market of 29.5 million people and a GDP of US$300 billion," it added.

The ministry also disclosed some of the major issues being discussed and the country's stand to ensure fairness to domestic businesses, among them being government procurement, Intellectual Property Rights (IPR) and to safeguard Bumiputera businesses.

On safeguarding the interest of Bumiputera and small and medium enterprises (SMEs)

"The Government has taken a conscious decision to address SME concerns in all areas under negotiations. These concerns, such as increased competition, are addressed through longer transition periods for liberalisation.

"It is also addressed in the form of carve-outs for government procurement and through thresholds," it said.

On Investor-State Dispute Settlement (ISDS)

"Malaysia has already signed 74 Bilateral Investment Treaties (BITS) since 1959, which contain provision on ISDS. To date, only two cases have been brought against Malaysia under the ISDS; one was decided in favour of the Government while the other was annulled.

"While Malaysia is committed to protect foreign investors and their investments, these investors are required to adhere to domestic rules. Furthermore, the ISDS does not prevent the Government to legislate and to regulate," the ministry said.

On government procurement (GP)

"The Government will ensure that the extent of market opening is guided by our stakeholders’ interests and concerns, including to ensure that there is adequate levels of protection for our SMEs. 

"The thresholds decided in our offers (i.e., the value of bids that will be open for bidding by companies from TPP Members) will be decided in consultations with our GLCs. Areas of interests to the Bumiputra business community and SMEs have been excluded from Malaysia’s offers," the ministry promised.

On Intellectual Property Rights (IPR) and higher cost medicines

"The current proposal related to patents would have an impact on cost of drugs and healthcare. Malaysia has made it clear that the Agreement MUST NOT have a negative impact on the healthcare of Malaysians. 

"Malaysians must continue to receive quality healthcare and have access to affordable medicines, including generic drugs.  The TPP will have to work around these priorities," it said.

On State-Owned Enterprises (SOE) in TPP negotiations

"Malaysia is seeking flexibilities in the agreement that will allow the continued participation of such entities in our economy and provide public and social goods and services," the ministry said.

On Capital Controls

"Bank Negara Malaysia, which leads the negotiations on financial services, has been mandated to ensure that any provision on capital management would not limit Malaysia’s policy space in introducing and/or maintaining such controls in the future. 

"Protecting Malaysia’s interest would remain the highest priority in the on-going TPP negotiations," it said. Malaysia averted a currency crisis in 1997 after it imposed capital controls to quell the fall in the Ringgit.

One interesting clarification that Miti made in its update was that if Malaysia were to withdraw from the TPP agreeement at this juncture, everything agreed under the agreement between its members would not take Malaysian interest into account.

It also cautioned  that Malaysia would stand to lose if China and Indonesia become TPP members in the future.