By Rupa Damodaran
Kuala Lumpur: International Trade and Industry Minister Datuk Seri Mustapa Mohamed has pledged to safeguard and uphold the core policies of Malaysia, including the interests of the Bumiputera community during the last leg of Trans Pacific Partnership talks.
As negotiations are poised to wind up in Hawaii, it is also the stage when countries have to make hard decisions as well as concessions.
“But the government has taken a firm stand in the TPPA, to safeguard and uphold the core policies of Malaysia,”he said in a statement from Hawaii where he is attending talks with 11 other trade heads to conclude the TPP this Friday.
The other countries are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, US and Vietnam.
“Our negotiators have successfully managed to include in the draft clauses that protect our sovereignty and national policies regarding the Bumiputera agenda, government procurement and state-owned enterprises.”
A clear and open attitude is needed for a trade-dependent economy like Malaysia in its pursuit as a high income nation.
Mustapa explained that Malaysia’s entry into the TPP grouping was led by the pursuit of better market access for the goods and services. Malaysia, which ranks as one of the top 25 trading nations in the world, has concluded 13 free trade agreements, 12 of which are being implemented and the FTA with Turkey, its latest FTA partner, will come into force on Saturday.
Market access into the US, Canada, Mexico and Peru will see tariffs cut for between 2000-4000 tariff lines of products including electrical and electronics products, timber and timber products, textiles, plastic and plastic products, palm oil and palm oil related products.
He pointed out that unlike the other FTAs, the TPP is comprehensive and covers wider areas such as government procurement, labour, environment and state-owned enterprises.
“These new issues are likely to be an integral part of future agreements and in the Regional Comprehensive Economic Partnership (RCEP) some countries are already injecting these elements,” he added.
The TPP will also provide wider choices for consumers and cheaper inputs for the industries. On sticking points like the Investor State Dispute Settlement (ISDS) which Malaysia has upheld its view about the need for safeguards, he said it is not new for Malaysia.
There are 74 bilateral investment treaties or BITs and eight FTAs which contain ISDS provisions. ISDS cuts both ways.
“Malaysian investors abroad will have the same protection mechanism in the TPP countries they venture into and the stock of investments overseas has risen (RM474.2 billion in the fourth quarter of 2014).”
One of the areas which Malaysia is pushing in Hawaii is flexibilities for the state-owned enterprises like Khazanah Nasional and Petronas to enable them to continue with their vendor development programmes to assist Bumiputera and small and medium entreprises (SMEs).
As for the general fear about rising cost of medicines arising from the TPP agreement, Mustapa explained the current patent protection clauses are not different from Malaysia’s current regulations.
“Our laws provide patent protection for 20 years while in the TPP countries will only be required to extend patent protection if there is delay within the regulatory approval process.”
Prices of drugs are also not determined by patent protection as there are other factors such as currency fluctuations, cost of R&D, marketing budgets and current procurement practices.
“The government has taken a stand that would balance the access to drugs with incentives for new drugs to be brought into the market.”
The 12 countries have also committed to the Doha Declaration on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and public health.
Some of the fears that existing policies would be removed are unfounded, he pointed out.
For instance, the livelihood of rice farmers will be affected by the imports of rice from the US and that the position of Islam would be threatened particularly halal requirements.
On the threat of jobs displaced for Malaysians, he said the TPP contains clauses promoting welfare of workers, including clauses relating to minimum wage levels.
“It is now more important than ever that Malaysia continue to attract Foreign Direct Investments (FDIs) that are high-value, technologically advanced and commensurate monetary compensation for Malaysians,” he said, adding that multinational corporations also have strong linkages to the SMEs.
US dominance in the TPP has been top criticism but Mustapa also reminded that as at 2014, there are more than 700 US-based companies based in Malaysia with investments in excess of RM70 billion and have created over 200,900 jobs.
“We need to be aware that in the negotiations, decisions are made collectively and not solely by the US.”
As to attempts to sideline China, Malaysia’s leading trading partner, he said Malaysia already has a preferential trading arrangement with China by way of the ASEAN-China FTA.
Can Malaysian companies penetrate the US market? Mustapa acknowledged while there may be challenges for some companies to gain access, the government is committed to working with the business community in penetrating the market.
But the costs for Malaysia not joining the TPP would be high if investors in the TPP partner countries take advantage of the preferential market access facilitated by the agreement.
“Our Malaysian corporations may decide that the TPP member nations provide a more conducive climate for business than in Malaysia.” Joining at a later date would also mean Malaysia would lose out to the competitors who are part of the TPP.