In the TPP talks, don't forget China

The Trans-Pacific Partnership (TPP) is a multilateral free trade agreement that is currently being negotiated by 12 countries with a combined market of 793 million people and gross domestic product of US$27.5 trillion (RM90 trillion).

The 12 countries are Singapore, Malaysia, Brunei, Vietnam, New Zealand, Australia, the United States, Mexico, Peru, Chile, Canada and Japan. The list of participating countries is able to expand to include any other Asia Pacific region country even after the TPP Agreement is created.

TPPA would eventually be the largest free trade bloc in the world, and participating countries include some of the world's most robust economies representing more than 40 per cent of global trade. Malaysia joined the TPP negotiations in 2010 and the agreement is now scheduled to be completed by October this year.

The idea of free trade is important to a trading nation like Malaysia. The possible main benefits of a comprehensive free trade agreement for the Asia Pacific region for Malaysian companies are when they seek to expand market access opportunities, and for Malaysia to attract foreign investments. However, the government needs to ensure that the costs to Malaysia will not outweigh the benefits.

Some of the private sector's main concerns include the confidentiality of the talks. The content of TPPA's text is confidential and negotiations are held behind closed doors.

There is no cost and benefit analysis made available. It is reported that 14 out of 29 chapters have been concluded but there is no available information on what has been discussed and agreed in the negotiations.

A restrictive approach of Rules of Origin may exclude products manufactured from a non-TPP country, particularly China.

Aggressive Intellectual Property provisions like longer patent and copyright terms would discourage innovation, limit the access to affordable medications and affect access to knowledge, such as books and digital information.

The Investor-State Dispute Settlement provision may limit government sovereignty in public policy-making and the power to amend or pass any new laws so as to ensure a constant regulatory environment.

There are also concerns about the impact on Asian integration. East Asian economic integration has been market-driven and not institution-driven. Currently there are several models of economic integration being pursued in the Asean region. All these efforts may be impacted by the advent of the TPPA.

TPPA may affect the future development of infant industries where developing countries may not be able to compete with developed countries in areas like innovation and technology.

The government should consider the following factors when negotiating TPPA:

Fairness

Malaysia should take part in TPPA if it creates a real free-trade regime that puts public interest first, with the views of ordinary citizens given as much weight as those of corporate interests in order to strengthen the economy and improve social well-being. The TPPA should also include the provision of Special and Differential Treatment as provided under the World Trade Organisation to increase trading opportunities for developing countries.

Transparency

The government should conduct consultative sessions with all national level chambers of commerce and affected stakeholders so as to obtain feedback before concluding the negotiation under TPPA. Perhaps a system similar to the cleared corporate Advisory Committee in the US can be set up so that meaningful consultation can take place.

National interest to take priority over commercial interests

As far as non-trade-related issues are concerned, such as financial regulation (e.g. capital control), investments, government procurement and intellectual property, Malaysia's national interest must take priority over commercial interests.

TPPA should include China

TPPA should complement other FTAs in order to build a promising free trade environment in the Asia Pacific region. TPPA could interfere with the efficient supply chain developed in Asia if China remains outside of TPPA.

August 15, 2013

Source: NST.com.my