KUALA LUMPUR: A former senior United Nations official and economist Jomo Kwame Sundaram said that while there are benefits to signing the Trans Pacific Partnership Agreement (TPPA), the cost of such an agreement must also be made known to the public.
He said at the 2016 TPPA Forum organised by the Malaysian Economic Association that gains from signing the TPPA in terms of economic growth were only “very modest” because Malaysia was already an open economy.
“These were also based on very questionable assumptions. Having more trade does not mean more economic growth. You have to note that having more trade may mean you export more but the country will also import more. So the (net) trade gains are very modest and the economic growth (accrued) is very very low,” Jomo said.
“However, there are huge risks involved because this is not just a trade agreement but more of a partnership agreement and most of the other requirements of the TPPA will introduce many constraints on the ability of Malaysia and others to catch up and accelerate growth and to develop the economy,” he said.
He said while there were various models to stimulate the outcome of the TPPA on the country, there was no disagreement among the different models that the increased trade benefit in terms of economic growth were only very modest.
“There will be increased trade but the benefits in terms of economic growth will only be realised only after 10 years and some countries may not even benefit in terms of growth,” Jomo said.
Jomo also said that there will be some impact on local companies that will face challenges because there will be fewer constraints on international companies.
However, the chief negotiator from the Ministry of International Trade and Industry Datuk J Jayasiri said that there will be gains for small and medium enterprises (SMEs) if they have enough capacity.
“SME Corp is helping in the upgrade of local SME’s capabilities while Matrade is promoting SMEs extensively to capitalise on the opportunities overseas,” Jayasiri said.
Jomo said that there should be an objective discussion on the matter noting that the gains were being described in such as way that the benefits were being presented without talking about the cost.
“We need to go into any deal with our eyes wide open and to be fully aware of the risks and cost as well as the potential benefits and the likelihood of achieving those benefits. So we have a slightly one-sided picture of what we do get from the TPPA,” he said.
“For people to say that we can pull out of this TPPA after six months of being in it is very deceptive. That is not the way the world works and is a very naive assumption. Say if somebody here doesn’t swim we cannot throw him into the deep end of the pool and say he will learn how to swim,” he added.
On another matter, Jayasiri said that Malaysia will be able to maintain export duties that will be imposed from the TPPA.
“For us in the Ministry, we feel that any market opening measures mean that exporters will have opportunities to go into new markets. If markets are closed it will be difficult for exporters to go into those countries,” Jayasiri said.
“Say if we are out of the TPPA, and our competitors are in the TPPA then it means our exporters will be at a disadvantage so it means we have to be in the TPPA to enjoy the preferential treatment through this,” he added.