TPPA: What benefits, what cost, and what do we lose?

TPPA: What benefits, what cost, and what do we lose?
Mohd Nizam Mahshar
It comes as no surprise that suddenly the Trans Pacific Partnership Agreement (TPPA) supporters are coming out of the woodwork this week. This is a reaction to Tun Mahathir’s launching of a book by the Malay Economic Action Council (MTEM) last Friday, entitled ‘TPPA: Malaysia is not for sale”.

During the launch, the former prime minister himself said that free trade agreements such as the TPPA are another way to colonise a nation.

We would firstly add that nowhere in our statements throughout this rational and factual debate regarding this agreement have we ever referred to the United States as “the Great Satan”, something which the proponents and cheerleaders of this agreement has done just yesterday in a Malaysian daily.

Furthermore, proponents of the agreement have argued a few points that are constantly unproven. For one, Malaysia would “lose out without the TPPA”.

And yet, nobody bothers explaining why or how Malaysia would lose out. We as a coalition worry that premature judgments are being made without the completion of a cost-benefit analysis.

Is it because we won’t have American conglomerates setting up shop in Malaysia or cheap American products? Of course not, we can choose to let them in and at low tariffs, if we want, without signing the TPPA.
Is it because Malaysian exports will face high tariffs? Malaysia as a member of the World Trade Organization (WTO), already receives zero or low tariffs on its exports to all nations in the TPPA. In addition to this, Malaysia already has free trade agreements with all the countries involved in the TPPA except 4; USA, Canada, Mexico and Peru.

In these countries, the United States imposes on average a three per cent tariff, while Canada imposes an average of 6 per cent. This, of course, excludes the textile industry. However, the US insists on all its FTAs, including the TPPA, having the yarn forward rule. In other words, even with zero or low tariffs on Malaysian textiles, we won’t benefit because Malaysia would have to use expensive American thread to gain access to these lower tariffs, so it would still be uncompetitive.

In addition to this, we would like to remind everyone that Malaysia chose not to sign the Malaysia - US Free Trade Agreement in 2008, and still has an increasing goods trade surplus with the Americans.

So please, enlighten us naysayers just what exactly is this “losing out” that has been constantly mentioned and never explained?

Also, us naysayers here in Bantah TPPA have never said that trade was not important. In fact, we believe in free and fair trade. We believe, instead, that this agreement is the opposite of free trade, and as such should be opposed by those who believe in free market economics. We already have useful free trade agreements (which do not require all the problematic non-trade provisions the US insists on in its FTAs) that allow Malaysian companies to sell to billions already, including India, Pakistan and even China.

What we don’t believe in is when a trade agreement such as the TPPA spans 29 chapters, but only talks about trade for six chapters, while another 23 dictate non-trade requirements.

To put it simply; when trade is no longer about trade but setting up rules that limit only one party, then it is no longer free nor fair.

We would also wish to point out that it was Bantah TPPA which met up with US Trade Representative Michael Froman in April to discuss our concerns with the agreement, particularly our 75 Red Lines. It was during this meeting that the US agreed to have direct engagements with key stakeholders. Bantah TPPA through the Malay Economic Action Council (MTEM) also had a follow up meeting US chief negotiator for the TPPA Barbara Weisel on June 26.

Leaked text from the TPPA intellectual property (IP) chapter shows that the US is exporting its laws that suit it as a net IP exporter, which is contrary to the needs of Malaysia as a developing country which is a net IP importer and needs affordable access to technology, medicines and textbooks.

Furthermore, the United States Congress insists on imposing on us in the form of disciplines and penalties as a ‘currency manipulator’ that it will not be subject to, despite its quantitative easing.

As for our part, we have mentioned that this agreement benefits American corporations instead of their people, and it does not benefit Malaysians as a whole since it will affect their lives in the form of high medicine and textbook prices for longer all the way up to the undermining preferential treatment to local SMEs and even state owned enterprises.

And since we want to keep things rational in order to make an educated decision, we would need a cost benefit analysis (CBA) report to decide whether or not this agreement benefits us.

Proponents of the TPPA, who are academicians and corporate leaders alike still insist on saying that this deal is good without any basis as the CBA or the Economic Impact Assessment (EIA) report for this agreement has not yet been released.

So we ask yet again, would you recommend a legally binding deal enforceable through trade sanctions and the leaked TPPA investment chapter which would allow unlimited monetary penalties and compound interest without knowing its contents, without scrutinising the fine print, without guaranteeing an equitable agreement?

Furthermore, given the leaked texts from the TPPA confirming Bantah’s fears regarding what the United States is demanding and what all countries involved including Malaysia have already agreed to, why has nobody brought this into consideration as part of their “support the TPPA” crusade?

This is what Bantah TPPA is doing by pushing forward our 75 Red Lines, including that there be no stronger intellectual property provisions limiting access to generic medicines, carving out tobacco control and the halal sector from the agreement and ensuring that the preferential treatment of local SMEs are not up for negotiations.

We further recommend that these TPPA cheerleaders would at least read our TPPA book, and see the factual depths of our analysis which “examines the evidence” because it is based on the actual leaked texts of the TPPA and the past USFTAs (which are all very similar due to the US insistence on its template) and their impacts before making any unjustified and unwarranted conclusions merely to be seen as a free trade ideology subscriber or out of fear of a superpower.