International Trade and Industry Minister Datuk Seri Mustapa Mohamed (sixth left) and other ministers from countries participating in the TPPA during a joint press conference with 11 other signatories to the deal. Reuters File Photo
KUALA LUMPUR: After five years and 19 rounds of negotiations, the Trans-Pacific Partnership Agreement (TPPA) has failed to see the light of day.
This comes after the new U.S President Donald Trump signed the Executive Order backing out of the agreement on Jan 23.
Trump abandoning the 12-nation partnership agreement hardly comes as a surprise as he had promised to do so since his presidential campaign last year.
However, the decision has certainly left the other 11 nations, including Malaysia, in a lurch.
The agreement was considered the most comprehensive in history. After it fell through, many started to question the implications on member countries namely Australia, Brunei, Chile, Canada, New Zealand, Japan, Malaysia, Singapore, Mexico, Peru, US and Vietnam.
Among the issues raised were what comes of the incentives promised under the TPPA for local small and medium enterprises (SME) which joined the international markets.
However, many also heaved sighs of relief as they are strongly opposed of the deal. They view the agreement as unfair competition between the big fish and small fry that could possibly end up in the death of small and medium industries due to their inability to survive in the global markets.
MORE POSITIVES
After the U.S decided to drop out of the agreement, Prime Minister Datuk Seri Najib Tun Razak reassured that Malaysia’s economy remained strong, dynamic and filled with potential. There is also plenty of opportunities with current trade partners, even without the TPPA.
Several quarters have opined that the failure of the TPPA would not stunt the country’s trade growth. Instead, it has availed Malaysia to deeper involvement in other regional deals such as the Regional Comprehensive Economic Partnership (RCEP), which is Malaysia’s next trade platform.
A senior lecturer at Universiti Utara Malaysia’s Centre for International Studies Dr Nurhaizal Azam Arif said there were pros and cons to U.S’ decision to pull out from the agreement.
“The downside of the U.S. backing out from the deal is that Malaysia and other TPPA member countries lost a market opportunity to a country with US$17 trillion in GDP (gross domestic product). This can be considered a huge loss.
“On the bright side, it reduces the US hegemony over others in deciding the direction of the TPPA. This is a good thing considering the seemingly extreme protectionism measures taken by Trump ever since he took office. It is therefore not impossible that he would take such drastic measures to protect the country’s interest if the U.S. continues with the TPPA,” he said to Bernama.
Nurhaizal Azam, who is also an International Business lecturer, believed that those who strongly supported the TPPA and hoped that it would help expand their business were in the minority.
In fact, the majority of SME entrepreneurs did not view the TPPA as a healthy platform for business survival.
“There may be those who think that the TPPA would create high competitiveness among member countries, but the fact is many local businesses view the agreement as hegemonic threat by giant multinational corporations. They believe that an open market will result in unfair competition against the SMEs.
“So when the TPPA fell through, I believe that it was a relief, not only for local entrepreneurs but the general public as well,” he said.
CONTINUED COOPERATION
However, the SME Advisor of Persatuan Anak-Anak Terengganu (PESAT) Datuk Dr Sharifuddin Musa disagreed with the sentiment.
The former head of the Malay Chamber of Commerce in Kuala Lumpur said the other countries needed to carry on with the TPPA even without its main proponent, the U.S.
This is because he believes that Malaysia should capitalise on its good relationship with the remaining 10 countries and strengthen it for international trade.
“Palm oil and rubber exports will be profitable under the TPPA due to the country’s position as the world’s second largest palm oil producer and one of the world’s largest producer of rubber.
“If the cooperation between Malaysia and the other 10 TPPA countries ceases, there would be stiff competition in the oil palm industry between Malaysia and Indonesia,” said Sharifuddin, who is also the Managing Director of Federal Malay Holding Sdn Bhd.
This is entirely possible because as the Second Minister for International Trade and Industry Datuk Seri Ong Ka Chuan had previously said, Malaysia and other TPPA countries could go ahead with the agreement by just amending a few related clauses.
The former Secretary General of the International Trade and Industry Ministry Tan Sri Dr Rebecca Fatima Sta Maria in a statement had also agreed that it was not only the U.S. that was capable of spearheading the TPPA.
Sharifuddin felt that continuing with the TPPA would at the same time allow Malaysia to continue playing its important role in the process of economic integration that was rapidly taking place in the Asia Pacific region.
“It also gives the country the chance for greater market access through the free trade agreement (FTA) preferential tariff which covers important trade partners like Canada and Mexico. This contributes to the increase in the country’s economy, productivity and benefit for local entrepreneurs,” he said.
REPLACING WITH RCEP
It is said that the failure of the TPPA to come through will speed up negotiations to finalise the RCEP.
Nurhaizal Azam believed that was the way forward as RCEP was seen as a fairer alternative for regional free trade.
However, he said, the emergence of new superpowers like China and India needed to be taken seriously as they had sophisticated “game plans”.
“Sensitive and important industries will continue to be protected by the respective governments and this may disappoint other member countries. However, RCEP will provide vast trade opportunities that at the same time may threaten local companies,” he said.
RCEP is an FTA between 10 ASEAN countries namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam and six countries that have FTA with ASEAN namely Australia, China, India, Japan, South Korea and New Zealand.
The negotiations on the proposal was launched at the ASEAN Summit Conference on November 2012.
The TPPA was expected to contribute 40 percent to the global GDP and 20 percent to world trade. In contrast, the prospective of RCEP member countries with a total of 3.4 billion in population is US$21.4 trillion (US$1 = RM4.43) in GDP, which accounts for 30 percent of the global GDP. – Bernama