Malaysian insiders call for graceful exit from TPP-11
August 15, 2018: Professor K S Jomo, a member of new Malaysian Prime Minister Dr Mahathir Mohamad’s Council of Eminent Persons, has publicly called for the new government to decline to ratify the TPP-11, officially titled the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Writing in The Star, Professor Jomo said, “With negligible real trade gains from the original TPP, the US withdrawal has made benefits from the regional agreement even more trivial, with advocates becoming more desperate for US participation.
“Thus, its current proponents are using the CPTPP to try to re-engage the US as hegemon in the region”.
He argued that the TPP-11 has committed Malaysia to further trade liberalisation, accelerating de-industrialisation, besides constraining the growth of modern services, development finance and ‘policy space’.
“Malaysia can eventually opt out of the CPTPP simply by not ratifying it. Such a diplomatic approach should not embarrass Japan, Australia, Singapore and others remaining for geo-strategic or other pretexts,” Prof Jomo wrote.
On the same day, the Straits Times published a longer commentary on the TPP-11 by Martin Khor, adviser of the Third World Network, also arguing against Malaysia’s ratification of the TPP-11.
Khor explained that the TPP-11 obliges Malaysia to abide by many new rules that are not about trade, and would intrude into the freedom and space of the country to formulate and implement policies, laws and regulations. He highlighted the new rules on investment policy.
“Conditions that are sometimes imposed on investments, such as technology transfer and use of local materials, are disallowed or restricted. The foreign investor must be treated at least equally as locals,” Khor said.
“The foreign investors can also sue the government in an international tribunal (usually the International Centre for Settlement of Investment Disputes in Washington DC) if they feel they are not given fair treatment.
“This covers claims that they would lose future revenue and profits if government policies are changed or if contracts are re-negotiated, or if the investor claims his bid for government projects is unfairly treated or his business opportunity is affected by policies favouring citizens”.
Khor emphasised the many difficulties faced by Malaysian society because of inequality between ethnic groups, religious groups, social classes and geographical regions. He said that the TPP-11 rules greatly restricted the many economic tools that the new government would need to use to address these challenges.
“While there are concessions and exceptions provided to these rules, overall these exceptions do not provide comfort that the country will avoid adverse effects on the freedom to choose our its policies.
“It would thus be very risky for Malaysia to implement the CPTPP.
“Malaysia has signed the CPTPP but has not yet ratified it. Government leaders and parliamentarians have to think long and hard whether to ratify or not,” Khor concluded.