logo logo

Put a hold on FTAs unfavourable to us


Put a hold on FTAs unfavourable to us

By SM Mohamed Idris

15 December 2010

The Malaysian government last week negotiated free trade agreements (FTAs) with the United States of America (via the Trans-Pacific Partnership Agreement or TPP) and the European Union (EU).

These negotiations took place simultaneously in Auckland, New Zealand (from Dec 6-10) and in Brussels, Belgium (Dec 6-9).

The Consumers Association of Penang is deeply concerned about the implications these FTAs might have on various aspects of Malaysia’s development.

The highly problematic bilateral Malaysia-US FTA negotiations were stalled before, but the US will likely demand the same things that they demanded before in spite of renewed negotiations.

Since the bilateral Malaysia-US FTA negotiations begun, the world has experienced its most severe financial and economic crisis since the Great Depression of the 1930s.

Based on past FTAs, opening Malaysia’s economy to foreign companies -including for government procurement- will mean the government would be unable to assist the Orang Asli and other disadvantaged communities.

The EU and TPP FTAs will worsen all crises that we are already facing.

Locking the nation and people into repeating the mistakes of the past is not what a 21st century agreement should do.

For example, the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System, which included Bank Negara Governor Dr Zeti Akhtar Aziz, recommended a series of regulatory measures to be taken to prevent another financial crisis from recurring, and to make it easier to deal with a crisis once it occurs.

Many of these measures, such as the Glass-Steagall type firewalls and capital controls with long periods on inflows and outflows, are unlikely to be permitted, let alone accepted, by the EU and US in these FTA negotiations.

In addition, the recent food crisis has shown the importance of self-sufficiency in terms of food in Malaysia.

However, Malaysia’s farmers will not be able to compete with imported food from the US and EU if they force Malaysia to remove its agriculture tariffs - while they keep their huge subsidies - in these FTA negotiations.

The US and EU are likely to demand a stronger intellectual property protection (IP), in which event farmers might find it more expensive to produce crops and medicine prices might also rise.

When Guatemala implemented its FTA with the US, the data exclusivity type of IP that the US demanded in the FTA caused a medicine to be more expensive by a staggering 845600 percent.

The higher prices predicted for just five medicines in Australia due to IP monopolies being extended for two years under its FTA with the US were more than 28 times greater than the gains estimated by the Australian Parliament’s Senate Committee for the whole Australia-US FTA.

In the case of the TPP, the US is very likely to demand a five-year monopoly from Malaysia.

Last week, the New Zealand government’s position on the IP chapter in the TPP was leaked.

Since New Zealand is a net IP importer, like Malaysia, it recognises that it does not really benefit from greater IP protection and it is also concerned about the impact of increased IP protection on medicine prices in the country, where the government subsidises medicines.

New Zealand has basically said that it is not willing to agree to a stronger IP in the TPP.

Moreover, the US and EU are also likely to demand stronger rights for their investors. These rights would make it more difficult to regulate companies, for example to reduce emissions that cause climate changes, or to take measures to reduce the risk of financial crises.

Based on disputes brought by investors under equivalent investment chapters in other US-FTAs, these investor protections may also prevent Malaysia from implementing environmental and health regulations, such as banning toxic chemicals or implementing tobacco control measures.

For example when the Canadian Government wanted to change its cigarette packaging to discourage people from smoking, Philip Morris threatened to sue the Canadian Government under the North American Free Trade Agreement (involving Canada, Mexico and the USA). After receiving this threat, the Canadian Government never implemented its proposed changes.

Some 10,000 Malaysians are already estimated to die from smoking-related diseases every year, according to our Ministry of Health, which also spends almost half of its budget on treating tobacco-related disease.

How will we be able to stop this trend if we sign such FTAs?

Given the dangers and risks involved in entering into these FTAs, we urge the government not to embark on FTAs that will imbalance and detriment the interests of Malaysia and the general public.

We also call on the government to conduct and make public all quantitative and qualitative studies on the implications and impacts of any FTA it enters into.

SM MOHAMED IDRIS is the president of the Consumers Association of Penang (CAP).