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COMMENT | The Trans-Pacific Partnership Agreement (TPPA) originally involved 12 countries on the Pacific rim, including the US, which joined and then mainly drafted the 6,000-plus page pact.

Early last year, newly elected US President Donald Trump withdrew from it, effectively killing it. Since then, Japan and Australia have worked hard to keep it alive, hoping to bring the US back into the deal, almost at any cost.

The resulting Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be signed in Santiago, Chile, on March 8. After that, at least six countries must ratify it for the deal to come into effect. Incredibly, no details of the new agreement will be released until after the signing, and not a single consultation has been held by the Malaysian government despite promises to the contrary.

While cabinet approval will presumably be secured, Malaysians must surely wonder why the government is proceeding with such stealth and secrecy as some other governments have been more consultative. Unlike the two reports it commissioned to justify participating in the TPPA, nothing has been done this time around. All knowledgeable observers recognise that CPTPP losses, costs and risks are almost as great, while actual gains are more trivial.

Some minor changes have been made to the original TPPA. The new CPTPP Preamble can only guide its interpretation, and cannot replace problematic TPPA provisions. Some TPP11 countries, but not Malaysia, have secured ‘side letters’, exempting them from some provisions.

Several onerous TPPA provisions have been suspended, leaving well over a thousand unchanged. Some provisions greatly extending the scope and duration of pharmaceutical patents have been suspended. The 22 suspended provisions are likely to be restored if the US rejoins the TPPA, as suggested by Trump at Davos in January. After all, the agreement was largely drafted by US corporations during Obama’s presidency.

Nevertheless, many onerous TPPA provisions remain, not challenged by Malaysian or other negotiators. Malaysia has committed to comprehensive trade liberalisation over the next 16 years, extending its two-decade-long deindustrialisation, while constraining the emergence of modern services. Meanwhile, only a few development finance institutions are allowed to promote development.

Contrary to advocates’ claim that the TPPA would improve governance for a market economy, government-linked companies can still give preferential treatment to certain local enterprises for up to 40 percent of their annual procurement budgets while Mara, Teraju and Ekuinas are completely exempted. The government also reserves the right to require ‘syariah compliance’, ‘decency standards’, FGV preferential treatment for Felda settlers, and measures to develop the pension system for up to three years.

However, the CPTPP may inadvertently encourage Malaysian businesses to operate from abroad. The investor-state dispute settlement (ISDS) provisions will allow investors from other TPP11 countries to sue the Malaysian government in a special international tribunal. Such firms may also be taxed less while enjoying other incentives. Already, foreign ownership of the Malaysian economy has risen in recent years to levels reminiscent of the late 1960s.

‘Kissing up’ to the US

To make the case for the TPPA, its advocates greatly exaggerated its negligible trade benefits. US government studies projected very modest gains, even with the US in, contradicting poorly substantiated claims by TPPA advocates. Yet, despite the US absence, CPTPP advocates have not hesitated to make even more extravagant claims about its ostensible benefits.

With trade gains already negligible in the original TPPA, US withdrawal has made such gains from the CPTPP even more paltry, causing the TPP11 to become more desperate for US participation. For the Japanese and Australian prime ministers and some others, the CPTPP will draw the US back into a stronger anti-China regional coalition.

Trade liberalisation is double-edged, with costs often almost as much as benefits, with both never going together. Such research has offered better understanding of the Brexit referendum outcome and Trump’s election following a campaign in which all major candidates were opposed to the TPPA, reflecting popular sentiment against ‘globalisation and its discontents’.

Despite his 2016 campaign promises, post-election rhetoric and policy interventions, at the Davos World Economic Forum two month ago, Trump asserted that he “would do TPP if we were able to make a substantially better deal”. US demands in the ongoing North American Free Trade Area (Nafta) renegotiations suggest this would involve stronger pharmaceutical patent protection, easily achieved by reinstating the suspended TPPA provisions.

However, in line with Trump’s ‘sovereigntist’ approach of putting ‘America first’, the US is likely to insist on removal of ISDS provisions from the TPPA.

Given PM Najib Razak’s humiliating White House visit as supplicant half a year ago, Malaysia and other TPP countries are likely to give in quickly to new Trump demands to ‘make America great’ again. Trump can then use this as ‘proof’ that he is a much better negotiator than Obama, whom he is clearly obsessed with putting down.


ABU JIHAD is a retired civil servant concerned about the future of our country.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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