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Malaysian civil society’s red lines on the TPPA negotiations

Malaysia Kini | Aug 15, 2013

Based on ’Red Lines’, M’sia mustn’t sign the TPPA

SM Mohamed Idris

The Malaysian government must not sign the Trans-Pacific Partnership Agreement (TPPA) given the ‘Red Lines’ issued by civil society groups are not accepted by the other TPPA countries.

Civil society groups, including the Consumers Association of Penang (CAP), Sahabat Alam Malaysia (SAM) and other environmental, social, health and labour organisations had issued a set of ‘Red lines’ in response to a request by the International Trade and Industry Ministry (Miti) to provide feedback during its open day held on Aug 1, 2013.

The ‘Red Lines’ which covered many subjects of the TPPA including goods, services, investment, financial services, telecommunications, government procurement, competition and state-owned enterprises, intellectual property rights, public health, food safety and labelling, halal products, etc. were sent to all the cabinet Ministers, including the prime minister and the deputy prime Minister on Monday, Aug 12, 2013. (See ‘Red Lines’ document attached.)

The ‘Red Lines’ reflect our key areas of concerns over the adverse impacts of the TPPA on the Malaysian public, given that the TPPA is modelled on the template of other United States Free Trade Agreements (USFTAs).

A comparison of all past US FTAs shows that the US has a strong template and that perhaps only 5 percent of the FTA text it proposes can be changed. Other countries negotiating USFTAs often realise that the inflexible US template does not suit them and, having started the USFTA negotiations, do not complete them.

Of the 63 countries which have started USFTA negotiations, 43 countries had walked away when they realised the provisions the US was insisting on were not in their national interest. Among them are Thailand, Qatar, several Latin American countries and the South African Customs Union comprising Botswana, Lesotho, Namibia, South Africa and Swaziland.

This included Malaysia, which under its former prime minister, Abdullah Ahmad Badawi, decided not to sign a USFTA. According to reports, the cabinet then had 58 Red Lines, based on what the US insisted on.

Malaysia should not sign the TPPA given these Red Lines, as we have grave doubts that the US will accept these Red Lines, as past experience with other countries show.

We therefore urge the government to not sign on to the TPPA. Malaysia should walk out from the TPPA negotiations now, considering that other countries, too, have withdrawn from previous USFTA negotiations.

The Malaysian government’s main concern and priority should be the larger populations’ interest and not to serve corporate/commercial interest. We urge the Malaysian government to withdraw from the TPPA now.

SM MOHAMED IDRIS is president of the Consumers Association of Penang.

Malaysian Civil Society’s Red Lines on the TPPA Negotiations

1 Chapter on Trade in Goods

(a) There should not be elimination of tariff (zero tariff) covering all products. There should be exceptions for sensitive products (whereby if there is tariff elimination or steep tariff cuts, the local producers will be adversely affected). Thus there should be exclusion of rice, other food products, tobacco crop, alcohol, automobile sector and other sensitive industrial products where there is local production.

(b) There should not be a ban or restriction on export taxes. Malaysia depends on export taxes to enable local processing and manufacturing of several commodities, including timber, fisheries, palm oil. Export taxes are also a source of government revenue.

(c) There should not be a “yarn forward rule” in textiles and clothing (whereby clothing producers in Malaysia have to source their yarn only from TPP countries, thereby raising their cost of production).

2 Chapter on Services

(a) The services chapter has to include liberalisation on a positive list basis not a negative list basis as being demanded. In the negative list framework, all sectors are assumed liberalised totally unless placed on a “negative list”. The danger includes that all new sectors (not listed) are automatically opened to companies from other TPP countries; and existing sectors that later the country decides it wants to develop domestically, are also opened up already.

3 Investment Chapter

(a) There should not be an investment chapter.

(b) In case there is to be an investment chapter, Malaysia should not agree to an investor-to-state dispute settlement (ISDS) mechanism or provision as this makes the government vulnerable to claims and lawsuits from foreign investors of TPP countries.

(c) It should not restrict regulation of capital flow; and thus this chapter should not require free movement of capital flows.

(d) There should not be a provision on “fair and equitable treatment”.

(e) There should not be an expropriation provision. At the least, there should absolutely not be a provision on expropriation that includes “indirect expropriation”.

(f) There should not be restrictions on performance requirements beyond those at the WTO

(g) It should not bind state and local governments as a number of investment disputes have already required national governments to pay monetary damages for the violations of the investment protection provisions by state/local governments.

4 Government Procurement

(a) There should not be any government procurement chapter.

(b) If there is to be such a chapter, it must have provisions or effective exceptions that allow for freedom for Malaysia to maintain policies allowing preferences for locals, and for set asides for specific local communities, as according to national objectives.

(c) If there is a chapter on Government Procurement, it should have high enough and adequate threshold levels.

(d) It should also allow for offsets that are adequate.

5 Intellectual property (IP)

(a) There should be no intellectual property chapter.

(b) If there is an IP chapter, it should not go beyond the World Trade Organiaation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

(c) Most importantly, there should not be any extension of patent term.

(d) There should not be any provisions requiring data exclusivity, linkage between patent status and medicine registration, patents on new uses or ban on pre-grant patent opposition, etc.

(e) There should be no copyright term extension.

(f) There should not be provisions requiring patents on plants, animals and naturally occurring microorganisms. (This would go against our Patent Act 1983.)

(g) There should not be any provision requiring Malaysia to join the International Convention for the Protection of New Varieties of Plants 1991 (UPOV Convention). (Malaysia already has the Protection of New Plant Varieties Act 2004 which should not be amended by the TPPA).

(h) There should not be any provision requiring Malaysia to join the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1977), as amended in 1980.

6 Competition and State-Owned Enterprises

(a) There should be no competition chapter.

(b) If there is a competition chapter, it should not be enforceable via state-state dispute settlement.

(c) There should not be any provisions or section on state owned enterprises, as these would restrict their operations or viability.

7 Financial Services Chapter

(a) This chapter should not require Malaysia to liberalise its financial services or bind its level of financial openness.

(b) It should not in any way reduce the ability or policy space of Malaysia to regulate the financial sector, especially for the purpose of financial stability.

(c) Malaysia should not be prevented from having maximum policy space to introduce or strengthen capital controls over the inflow and outflow of funds.

(d) The chapter should not require Malaysia to open up to the establishment or spread of new financial instruments, especially introduced by foreign institutions, since the risks of this are little known.

8 Telecommunications

(a) There should be no telecommunications chapter.

(b) Any telecommunications chapter should not have additional obligations aimed at ‘major suppliers’ such as Telekom Malaysia (otherwise Telekom Malaysia’s profitability and ability to achieve social objectives may be severely harmed)

9 Food Safety and Labelling

(a) There should not be any provisions [for example in a chapter on technical barriers to trade (TBT) or sanitary and phytosanitary (SPS) ] that restrict the ability of Malaysia to regulate in favour of food safety; in particular the TPP should not require changes to our existing laws (i.e. Biosafety Act 2007 and Food (Amendment) Regulations 2010) that require the identification and labelling of genetically modified organisms (GMOs) and products of such organisms, including GM food.

10 Public Health

(a) The TPPA must not contain provisions that reduce the ability of patients and government to obtain medicines at affordable prices.

(b) It should not have any provisions that discourage or prevent the viability and growth of production and use of generic medicines.

(c) Tobacco control measures (such as regulations on cigarette packaging, and on advertising of tobacco products) should be explicitly excluded from the TPP.

(d) The TPP must not restrict the ability of government to require quantitative ingredient declarations or health warning labels on alcohol in as large and prominent manner as desired, for consumer/health reasons.

11 Halal Products

(a) The TPP should not reduce the ability of government to regulate halal products. Therefore there should be a carve out (exception) from the TPP for regulations on halal products.

12 Exceptions

(a) The exceptions chapter should have effective exceptions needed (e.g. for financial crises, health, environment, consumer protection, halal etc.) that apply to all chapters.

 source: Malaysia Kini