PETALING JAYA: While economists are largely positive on the resurrection of the Trans-Pacific Partnership (TPP), now known as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), Bantah TPPA believes that a renewed cost-benefit analysis is warranted to determine the impact of the amended deal on Malaysia.
According to Bantah TPPA deputy chairman Azlan Awang, the previous report has become irrelevant after the US pullout.
“We should do a new cost-benefit analysis because previously we were told that we will achieve economic gain by having access to the US market, but now (with the US pullout) there is no more benefit there – only cost,” he told SunBiz today.
“The people also need to know what are the benefits that they will get as the US is no longer in the pact,” he said.
The TPP covered 40% of the world economy before US President Donald Trump abandoned the 12-nation deal in January, following through on a promise made during his presidential campaign. It is now left with 11 member countries, namely Australia, Brunei, Chile, New Zealand, Peru, Singapore, Vietnam, Japan, Malaysia, Canada and Mexico.
Over the weekend, it was announced that the TPP has been resurrected as the CPTPP, but some issues remain to be finalised, such as state-owned enterprises (Malaysia), service and investment non-conforming measures (Brunei), dispute settlement (trade sanctions) and cultural exception (Canada).
Asian Development Bank lead economist Dr Jayant Menon said the geopolitical and economic impact could be significantly diminished without the US, but it is unclear by what magnitude.
“The loss of the carrot of improved access to the huge US market is a big disincentive for small, open trading nations like Malaysia,” he told SunBiz in an email reply.
He said for the CPTPP to have a meaningful impact, additional members will have to come on board.
“Countries such as Thailand, the Philippines and Indonesia have indicated interest in doing so, filling some of the void created by the departure of the US, but many more will have to sign up too.”
Affin Hwang Investment Bank Bhd chief economist Alan Tan Chew Leong said in the short term, the impact from the new TPP may not be as positive without the US. However in the long run the revival of TPP will be positive for Malaysia as a pioneer member, with potential of increasing exports to member countries.
Nonetheless, he noted that with Japan leading the pact, it will set a trade landscape or platform that could attract the US.
Sunway University Business School Professor of Economics Dr Yeah Kim Leng concurred, saying any effort to boost the regional trade agreement is positive for an open economy such as Malaysia given the high dependency on trade.
Commenting on the exclusion of 20 provisions, including those in the intellectual property segment, specifically biologics, patent term adjustment and copyrights, Yeah said it is a temporary relief for Malaysia as the nation will not be subject to the stringent requirements, but stressed the need to become ready to meet the stringent requirements in the long term to attract foreign investors. He expects that the terms agreed on state-owned enterprises (SOEs) will remain.
Recall that Malaysia managed to preserve the bumiputra agenda, obtain a minimum five-year grace period to reform SOEs, and gain exemption for Khazanah Nasional Bhd from investor-state dispute settlement provisions for two years after the deal comes into force, as part of the many far-reaching exemptions under the original TPPA.
Azlan is urging the government to take a strong position in demanding the suspension of provisions that he said put the country in a vulnerable position. Among his major concerns are the international convention for the protection of new varieties of plants, investor-state dispute settlement under the investment agreement and investment authorisation chapter, intellectual property, government procurement, as well as the SOE chapters.
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