TigerTalk  |  JANUARY 26, 2016 3:47AM

Tiger’s two TPPA questions

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tigertalk-cartoon-theme-v3This week Malaysia’s Parliament will debate the TPPA. Tiger believes it boils down to two questions: One, does Malaysia on balance win? And two, how are we going to ensure that Malaysia’s businesses are TPPA ready?

The Trans-Pacific Partnership Agreement (TPPA) 30-chapter jargon fills voluminous text. It is also the most comprehensive trade agreement which has ever been negotiated and will serve as the template for future global trade deals.

For proponents it is a modern trade agreement fit for a globalised world. It sets standards and will dictate a better set of rules for trade and investment. For critics it a trade deal that panders to big business and will ultimately squeeze the small and medium guys. On balance, perhaps there is truth to both those stances.

This, coupled with the fact that there are some ideologically opposed to trade deals of any kind, and you get an idea of how difficult it is to get a holistic picture of the TPPA. All this combined promises to make the parliamentary debate on the trade deal this week interesting and challenging.

The fact the TPPA is being debated in Parliament is in itself historic for Malaysia. This is the first time that it will happen, as the law of the land dictates that the prime minister has the authority to sign trade deals on behalf of the nation without getting Parliament’s stamp of approval.

Nonetheless, the decision to bring this trade deal to Parliament should be commended. Although some have suggested that this is PM Najib Abdul Razak’s way of avoiding having to shoulder the blame entirely if signing on to the TPPA ultimately proves to be a bad call, this Tiger believes that it is good for Malaysia’s democracy for the government to be willing to come and defend its stances and policies.

Bringing the debate to Parliament means more work for the government and it also carries some political risk (especially with some rather unimaginative opponents painting this as a racial issue). Therefore, credit where it is due, this is a brave move and the government, and in particular Ministry of International Trade and Industry (MITI) Minister Mustapa Mohamed, must be praised.

But given the complexities of this trade deal, the question is about the quality of the debate that will take place. Some, like the minister and opposition member of parliament (MP) Wong Chen, come with knowledge of economics and law. Others however, especially the many career politicians, do not.

This debate will not be effective if it descends into an avenue to score cheap political points. Here is hoping that our MPs, contrary to usual form, take this opportunity to have a mature and quality debate on this trade deal.

TPP AgreementThis Tiger believes that the issue of whether Malaysia should be party to trade deals is not up for debate. As a trading nation, agreements that aid trade are useful for all involved. As with any trade or negotiations, there is give and take, towards the aim of mutual benefit.

Therefore Tiger believes that two questions need be answered. The first is whether on balance, Malaysia wins more than it loses.

It is likely that most MPs will fall back to the two cost-benefit analysis studies which have been undertaken – by the Institute of Strategic and International Studies (ISIS) and PricewaterhouseCoopers (PwC) – to get an idea of what works for Malaysia and what does not.

To that end, both studies say that on balance Malaysia gains from being part of the TPPA although there will be adjustment costs.  

ISIS said: “Malaysia’s participation in the TPP is on balance, in the national interest. To be sure, critical domestic issues will have to be addressed and cannot be taken lightly.”

“They will need to be managed politically and through public policies if they are not to be economically and socially disruptive… The realities of global political economic developments, however, mean that Malaysia must secure its future with the necessary institutional frameworks to be able to engage, advance and defend its interest.”

PwC said: “TPPA presents net economic benefits to Malaysia, but there will be adjustment costs to firms… structural reforms and a period of adjustment by firms will be required to maximise realisation of potential benefits and mitigate potential costs.”

“Malaysia’s participation in the TPPA is projected to deliver net economic gains, with gross domestic product (GDP) to increase by US$107 billion to US$211 billion from 2018 to 2027.”

In a nutshell, there are opportunities to be taken from the deal. How well Malaysia capitalises, however, depends on how prepared we are. It is up to us to make full use of the opportunities and also to prepare for the challenges.

Which brings us to the second question: what and how does the government plan to make Malaysia TPPA-ready? The government must have a plan to turn those who stand to lose from TPPA into those who benefit from the trade deal.

During the debates, the MPs should ask about what plans are being put in place so that from the point of signing to ratification (which will likely take about two years), Malaysia’s small and medium players are ready.

Minister Mustapa has said that being party to the TPPA will help Malaysia reach its goal of becoming a high-income nation. But signing on to the deal is only an initial step. How much Malaysia benefits will depend on how ready we are for the new trade environment the TPPA will create.

Tiger believes that this is a question that even those who are supporters of the deal must ask – how can we prepare ourselves to take advantage of the opportunities that the TPPA will offer us? Because those who benefit the most will be the ones who are best prepared.


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