Joining CPTPP will help economy recover, Putrajaya told

The signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in Santiago, Chile, in 2018. (AFP pic)

PETALING JAYA: The effect of Covid-19 on the economy has made it urgent for Malaysia to override trade union concerns and join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), two economists have argued.

Laurence Todd of the Institute for Democracy and Economic Affairs (IDEAS) said Malaysia was now in dire need to join a free trade pact.

“Clearly, trade and investment are suppressed at the moment,” he said, adding that “the CPTPP presents an opportunity for Malaysia to be more competitive, which is even more important in a culture of suppression”.

Shankaran Nambiar of the Malaysian Institute of Economic Research (MIER) said the current circumstances called for a more serious look at the CPTPP.

Laurence Todd.

“There is an urgent need to re-stimulate the economy, and that can come from the liberalised trade environment that the CPTPP can provide,” he said.

Local unions oppose the agreement’s lack of protection for local workers at a time when jobs are scarce.

Malaysia and 10 other countries signed the pact in March, but the Malaysian parliament has yet to ratify it.

When fully implemented, the CPTPP would create the third largest free trade area by GDP in the world after the US-Mexico-Canada Agreement and the European Single Market.

Todd said the pact would improve Malaysia’s appeal as an Asean manufacturing hub and that this could serve the many multinational corporations looking to restructure their supply chains in response to the pandemic.

“The agreement is potentially important for some countries in Asean because it provides a platform for integration that can then facilitate regional or global value chains,” he said.

While the current economic climate may mean the immediate returns are not substantial, Todd is confident the long-term gains will be worth it, with early estimates pegging the CPTPP to increase Malaysia’s GDP by a full percent.

Shankaran Nambiar

“There aren’t that many things the government can do to increase the GPD that don’t cost a lot of money, but implementing the CPTPP is potentially one of those things,” he told FMT.

“Covid-19 should not make permanent changes to economies. Once the economy gets back to where it should be, then I would expect the benefits of the CPTPP to improve.”

Nambiar said signing but not ratifying the CPTPP was “not a signal that foreign investors would find endearing”.

He said there would still be a need for efforts to increase foreign investment and trade if the agreement was rejected.

Malaysian Trades Union Congress (MTUC) general secretary J Solomon has reaffirmed his organisation’s opposition to the CPTPP, saying “it poses a significant threat to workers’ rights and puts a large number of jobs at risk under the guise of free trade” without effective safeguards in place.

“Many of the chapters in the agreement are framed to benefit major corporations rather than the people,” he said.

Solomon cited the section on Investor-State Dispute Settlement as a particular issue, noting that it would allow foreign companies to “sue CPTPP governments for ostensible loss of profits due to policy changes, even if the changes are in the national or public interest”.

He said the human resources ministry must address MTUC’s concerns or alternatively “seek or initiate other multilateral trade deals that uphold the protection of worker rights”.

“The government has not yet presented a convincing case that would suggest it is in the interest of our workers, our economy and our society to join the CPTPP,” he said. - FMT