KUALA LUMPUR: The Trans-Pacific Partnership Agreement (TPPA) will eventually be accepted as a trade framework, where long-term benefits outweigh short-term adjustment costs, despite initial strong opposition to its implementation.
Oxford Business Group regional editor for Asia, Paulius Kuncinas, said the TPPA was a voluntary agreement with nations given the chance to negotiate their entrance.
"As a trading nation, Malaysia cannot afford to stay outside as it will lose its competitive edge and drift towards pointless isolationism.
"At the same time, there is a strong case for taking time to agree on favourable terms and not rush it," he told Bernama in an interview on Wednesday.
The key message is for companies to enhance their competitiveness and look towards exploring the regional export market with a consumer base in excess of 650 million people.
The TPPA is a trade pact among 12 Pacific Rim countries on a variety of matters of economic policy, on which an agreement was reached on Oct 5, 2015 after seven years of negotiations.
Kuncinas pointed out that a key stumbling block for the TPPA was the protection of intellectual property, which gives greater protection to pharmaceutical companies, leading to harder distribution of generic medicine.
However, he noted that the sensitivity could be addressed by negotiating longer transition periods.
Like in any trade deal of that magnitude, Kuncinas said, there was an immediate cost of entrance, with some sectors suffering from increased competition and new regulations.
"In countries that faced similar difficulties, the state undertook to absorb some additional cost through medical insurance and subsidy schemes," Kuncinas noted.
He said the TPPA is expected to generate additional economic activity and tax revenue from imports and exports for the government, adding that additional revenue derived from them would be more than enough to offset additional costs of medicine.
"I agree this particular item needs to be carefully examined and managed to avoid an unnecessary price shock to consumers," he said.
Kuncinas highlighted that to argue that the TPPA would somehow create unfair competition was untrue.
He said national governments retained a great degree of control through compliance regulation to ensure a fair playing field for local and foreign companies.
"Unlike less advanced countries, Malaysia has had plenty of years to prepare to face international competition.
"Protectionism in the end leads to a decline in national competitiveness. It is good to allow greater competition as it ultimately leads to productivity gains and better value for end users," he added. - Bernama
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