Besides its potential to be the greatest “free trade agreement” in history, the Trans-Pacific Partnership (TPP) is worth attention simply for the fact that its design and objectives are shrouded in complete secrecy (R. Nicolas, 2013). Since being proposed it has received many positive and negative reviews from the participating countries. I wonder if it’s all for the benefit of the participating countries, why is there a retaliation. So let us discuss further on this matter.
1.0 What is Trans-Pacific Partnership
The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement between the United States and 12 other countries. As of September 2013, the participating countries are Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.
The failure of Doha Development Agenda launched at the Ninth WTO Multilateral Trade Negotiations in November 2001 and the subsequent collapse of talks threaten the credibility of the multilateral trade system and raises attention of countries to Free Trade Agreements (FTAs) (MITI, 2013). Since then, FTAs have played a major role in forming policies in the regional integration. The talks of establishing TPP was done since the year 2001 and because it’s very ambitious, TPP could become the first significant regional agreement since the North American Free Trade Agreement (NAFTA).
In addition, TPP could also possibly become a pathway to the large Free Trade Area of the Asia-Pacific (FTAAP). The foundation of TPP is basically aimed to deepen the economic ties between the participatory nations. In short, TPP is expected to substantially reduce tariff and possible in some cases eliminate them, between member countries and ultimately help to open up trade in goods and services.
Apart from the member countries attempt to foster a closer relationship on economic policies and regulatory issues, TPP is expected to help boost investment flows between the countries and further boost their economic growth. U.S. negotiators and others describe and envision the TPP as a “comprehensive and high standard” FTA that aims to liberalize trade in nearly all goods and services and include commitments beyond those currently established in the World Trade Organization (WTO).
The broad outline of an agreement was announced on the sidelines of the Asia-Pacific Economic Cooperation (APEC) ministerial in November 2011, in Honolulu, HI (Ferguson, Cooper, Jurenas, Williams, 2013). That is why if the aim can be realized, tariff and non-tariff barriers can be eliminated and could be serve as a platform for future trade pact members of APEC and other countries.
Source: TPP Leader’s Statement, Honolulu, Hawaii, November 12, 2011.
To further give a better understanding on the objectives of TPP, I have taken the liberty of including TPP’s official objective from the Ministry of International Trade and Industry Malaysia’s webpage. The objectives can be categorized into three main areas: I. To continue the trade and investment liberalization efforts being undertaken through the WTO and the FTA initiatives of each of the TPP member countries in the region. II. To develop transparent and predictable rules and disciplines with adequate recourse in the event of any disputes. III. To develop a more transparent and inclusive regulatory environment which allows all relevant parties to engage in a meaningful and constructive manner on matters of significant economic impact.
2.0 Evolution of TPP
In the table below I have highlighted the major milestones of TPP: YEAR
EVENTS
2003
The Trans-Pacific Strategic Economic Partnership, as it was originally known was conceived by Singapore, New Zealand and Chile as a path to trade liberalization in the Asia Pacific region 2005
Brunei joined the negotiation
March, 2008
The United States joined the negotiations to conclude the still outstanding investment and financial services provisions. President Bush wanted to alter /negotiate the current Trans-Pacific Strategic Economic Partnership, or the
P4 November , 2009
President Obama engaged with the TPP countries “with the goal of shaping a regional agreement that will have broad –based membership and the high standards worthy of a 21st century trade agreement” 1 October ,2010
Malaysia joined the negotiation
November,2011
The negotiating partners announced a framework for the agreement at the sidelines of the Asia-Pacific Economic Cooperation (APEC) Ministerial in Honolulu, HI. In addition, several months of intense bilateral consultations with each of the current TPP countries took place June, 2012
Mexico and Canada began participating as negotiating partners March 2013
Japan joined the negotiations and the bilateral consultations intensified. August 2013
The 18th round of negotiations have taken place in Brunei
3.0 Why the United States insist on TPP?
U.S. participation in TPP negotiations gives a positive impact in the US trade policy. Ultimately the US trade policy will further continue and expand its strategy that began with the North American Free Trade Agreement (NAFTA) by using FTAs to promote trade liberalization and potentially to spark multilateral negotiations in the World Trade Organization (WTO). With the competitive liberalization implemented by the Obama administration the United States will continue to engage in regional free trade agreement.
”The Trans-Pacific Partnership is perhaps the most ambitious trade negotiation underway in the world. It will break new ground on important issues from the challenges of state-owned enterprises, to ensuring the free flow of data across borders, to enhancing regional supply chains, to ensuring transparency in cutting red tape. We’re also working to strengthen protection for labor and the environment…Our goal is for high standards for the Trans-Pacific Partnership to enter the bloodstream of the global system
and improve the rules and norms.” -Vice President Joseph P.Biden, April 5,2013.
The United States has a number of objectives in the proposed TPP agreement. These include: achieving a comprehensive and high standard regional FTA that eliminates and reduces trade barriers and increases opportunities for U.S. trade and investment; allowing the United States to play a role in developing a broader platform for trade liberalization, particularly throughout the Asia-Pacific region;4 and providing the United States with an opportunity to establish new rules on emerging trade issues, such as regulatory coherence, supply chain management, state-owned enterprises, and increasing trade opportunities for small- and medium-sized businesses.
List of benefits that the US would get if TPP agreement were to realize:
1. TPP would create established an economic partnership involving the United States. 2. TPP would promote deeper integration in the Asia Pacific2 3. TPP would provide a model for consolidating existing trade agreements. 4. TPP increases the playing field for US exports to the Asian Market and thus it would help to increase US exports.
5.0 Implication of TPP
Eventhough they are many benefits received by member countries, but they are also implications. Those implications are quite severe until it has ignited anger among locals of the countries especially the Americans. Below are some of the implications of TPP: 1. Lack of transparency
The TPP agreement is being kept secret from everyone except for the 600 corporate advisers who can read the text on their computers as it is being created, and help the US Trade Representative draft the language. The media and public have only seen sections that have been leaked. Before President Obama took office all latest updates on trade agreements is informed to the media. However now the whole situation has changed.
TPP is such an ambitious agreement and would require a great deal of change in the countries administration if it were to become a reality. Thus to be kept out of the dark for such important matter is not gravely appreciated by other people. 2. IP Chapter
IP chapter would have extensive negative change for users’ freedom of speech, right to privacy and due process, and etc. Short to say that there are no such thing as privacy in the social media world. 3. Expand copyright terms
The TPP could extend copyright term protections from life of the author + 50 years, to Life + 70 years for works created by individuals, and either 95 years after publication or 120 years after creation for corporate owned works (such as Mickey Mouse) (Eff, 2013).
It is not wrong for the inventors to protect their copyrighted items but variety need occur. Take flu medicine for example, it was a copyrighted under a company in the US. Some Malaysian scientist have develop a better batch but they can’t take credit as the basic of the product is copyrighted under the US company. Imagine what a waste would that be?
4. TPP criminalizes small-scale copyright infringement
With the enforcement of TPP, downloading music off the internet is a crime. Jail time is necessary if found guilty. This rule would be imposed in all participating countries. Imagine no free music. Websites like 4shared.com , Torrentz.com, MP3skull.com would become history. 5. TPP can remove user of the Internet
Under TPP, receiving 3 infringement accusations will get you kicked out of the internet. To summarize the implication section we can see that the foreign government has to adopt the unbalanced laws in order to gain FTA . According to the Public Knowledge website on TPP, the US IP chapter does not export the limitations and exceptions in the US copyright regime like fair use, which have enabled freedom of expression and technological innovation to flourish in the US. It includes only a placeholder for exceptions and limitations. This raises serious concerns about other countries’ sovereignty and the ability of national governments to set laws and policies to meet
their domestic priorities (PK, 2013).
6.0 Why Malaysia should join TPP?
In my opinion, Malaysia should commit into TPP because:
1. International trade is an important contributor to Malaysia’s economic growth and development. With TPP, it provides a vast market access opportunity, further enhances our competitive advantage and ultimately builds confidence in foreign investors which can increase our foreign investments. 2. Malaysian products have met world standards and are able to compete at the global level. However it requires a proper platform in order to penetrate the globalized market. In addition many Malaysian companies are becoming global investors these days and they might require a certain level of transparency and predictability that can only be guaranteed through agreements like FTAs. In short, local companies need something concrete to sustain them and TPP might be the answer.
3. TPP will allow Malaysia to be an integral part of the deepening economic integration plus also enable Malaysia to engage with big trading partners like US, Canada and Mexico. Besides that, Malaysia will also be able to participate as an important link and thus gain from the whole regional supply. 4. TPP will provide such an opportunity to a seamless market with preferential access, far beyond our population and also provide investment opportunities globally and also regionally. 5. TPP will bring benefits of lower cost of goods and more efficient production by taking advantage of the competition and economies of scale. Products like cars, electronic gadgets and etc will affordable to the locals. Thus with this development, we can aim to open up new market opportunities and horizons for Malaysians to take charge at the international market.
In conclusion, TPP has its negative implications regarding taking up unnecessary laws. To avoid a chaos, the Malaysian government should ensure that the government will protect Malaysia’s interest in TPP. We should not sacrifice the rights of the people in order to pursuit economic growth. “The prime minister and cabinet directed negotiators to continue ensuring that Malaysia’s sovereignty is defended in the course of the TPPA negotiations ….They are unanimous in reinforcing Malaysia’s position that we will only agree to the TPPA on terms that are most favourable to our country.” – International Trade and Industry Minister Datuk Seri Mustapa Mohamed, August 2013
7.0 Challenges for Malaysia in the TPP
1. Competition
– TPP will level the playing field and in the process we will have to make a conscious effort to invest in Research and Development (R&D) to ensure that we produce an equivalently or better product. Before TPP, Malaysian companies have blossomed in their comfort zone without seeing the need to invest in making their products better or more attractive.
Thus, low research grants are given to companies because firstly no company wants to do R&D and secondly only the rich companies can afford it. Therefore with TPP it will certainly give the local companies a challenge as it bring a wave of creative destruction. Malaysia desperately need his boost in order to climb the economic ladder and become not only a high income nation by 2020 but also a forefront of technological innovation and sophistication
2. Malaysian Consumer
– With TPP, Malaysian will have access to greater choice of food products, clothes, footwear, automobiles, branded goods and etc. These good that are coming in Malaysia is duty free and so there is a singe of worry among the local companies on whether can their product hold out. Without TPP, Malaysian consumer still prefers to buy branded or overseas product because of its brand and quality despite the high price. Now with the tax wiped off, the product is much cheaper. Therefore the question arise on whether which product will the Malaysian consumer choose.
3. Bumiputra status
– The bumiputra status still remain a concern and he government must ensure that it will not be compromise on any way. In the Minister latest interviewed he commented that there will be a large carve outs in the field of government procurement to ensure that the interest of bumiputra community are well guarded. Besides the status being guarded, TPP will also allow local bumiputra firms to compete for projects in other TPP member countries. Hence, it is vital for the government here to develop some sort of strategy to protect the bumiputra companies so that their businesses are not adversely affected by TPP.
8.0 Conclusion
The potential Trans-Pacific Partnership agreement may have a large impact on the member countries, but much of its substance and its future remain undecided. Due to this level of ambition, however, achieving such an agreement may be difficult. Differences in opinion are bound to exist, both domestically and among the negotiating partners.
However if its pulled off, this will be among the greatest regional integration to ever been done since NAFTA. Some say this is bigger than NAFTA!. Hence, I truly believe that TPP brings more harm than good to the member countries. Malaysia should not miss this boat or else we will be isolated and suffer economically as our main competitor Singapore and Vietnam is part of TPP.
9.0 Biliography
Trans-Pacific Partnership. (2012, February). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Trans-Pacific_Partnership TPP: What is it and why does it matter? (2013, March 14). Retrieved from BBC News: http://www.bbc.co.uk/news/business-21782080 Trans-Pacific Partnership Agreement. (2013). Retrieved from Electronic Frontier Foundation : https://www.eff.org/issues/tpp Beifus, K. (2013, May 10). Why the TransPacific Partnership Is a Scary Big (Trade) Deal. Retrieved from YES! Magazine: http://truth-out.org/opinion/item/16295-why-the-transpacific-partnership-is-a-scary-big-trade-deal C. Fred Bergsten, J. J. (2010, January 2010). Submission to the USTR in Support of a Trans-Pacific Partnership Agreement. Carrier, M. A. (2013). SOPA, PIPA, ACTA, TPP. An Alphabet Soup of Innovation-Stifling Copyright Legislation and Agreements, 14. DAMODARAN, R. (2013, August 16). ‘Malaysia to join TPP only on terms favourable to us’. Retrieved from New Straits Time: http://www.nst.com.my/nation/general/malaysia-to-join-tpp-only-on-terms-favou
