TOWARDS the end of an interview with a Thai television network last week, Tun Dr Mahathir Mohamad (pic) was asked his position on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The Prime Minister’s reply was like music to the ears of Malaysian negotiators.
“After the US pullout from the Trans-Pacific Partnership, the condition which allows companies to sue governments is no longer something we need to fear. Also, there is less overwhelming dominance of America over the other countries.
“The previous (Malaysian) government had already signed to become a member. We can’t withdraw without losing credibility, so we will have to go ahead with the CPTPP,” Dr Mahathir said.
An official in an immediate response said the Prime Minister’s reply was a long-awaited reaffirmation of Malaysia’s commitment to the CPTPP and it will clarify Malaysia’s trade policy under the Pakatan Harapan government.
Malaysia together with 10 other countries signed the free trade agreement (FTA) in March. The next step before the FTA comes into force is when six of the 11 countries ratify the agreement.
The ratification question seems to be uppermost on the minds of Malaysian officials in recent weeks after several rounds of briefing to the Prime Minister and his Cabinet.
It is understood that several Pakatan ministers are for the FTA while others have their reservations.
“Perception seems to dominate their thinking, not facts,” said an official.
The CPTPP is a rebranded Trans-Pacific Partnership Agreement (TPPA) that “collapsed” after the United States withdrew in January 2017 under President Donald Trump.
The other signatories are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam.
Japan took the lead to salvage the mega FTA and together with Australia, hosted several meetings and later renamed it the CPTPP.
With the United States out of the picture, Malaysia and other like-minded partners seized the opportunity to suspend some of the provisions agreed in the TPPA.
Unlike other FTAs that Malaysia has signed, the TPPA is the first one that went beyond traditional ones.
Instead of just focusing on goods, services and investment, it also involved chapters on government procurement (GP), investor-state dispute settlement (ISDS) mechanism, state-owned enterprises, environment, intellectual property rights (IPR), labour and competition policy.
These provisions were seen as contentious and critics argued that countries like Malaysia did not get a good deal.
After five years of hard-fought negotiations to conclude the TPPA in 2015, Malaysia again hit the negotiating table last year and succeeded in getting the suspension and flexibility in IPR, GP and ISDS chapters into the CPTPP.
So far Mexico, Japan and Singapore have ratified the CPTPP. Australia and Chile have indicated that they will follow suit by year-end.
Once the Cabinet gives the go ahead for Malaysia to ratify the CPTPP, the relevant ministries need to amend their legislations and should use the next parliament sittings to complete the task, as the FTA is expected to enter into force in the first quarter of 2019.
But what if Malaysia does not ratify it? It will remain a signatory country, but will not be part of the decision-making process to accept new members.
“Legally we can’t be involved in further discussion as Malaysia just signed and has yet to ratify the FTA,” said an official familiar with the deal.
That means Malaysia will lose its advantage and rights as one of the original members.
Thailand, Indonesia, South Korea and Colombia are waiting in the wings to join the CPTPP.
Why should Malaysia withdraw from the agreement when we are in a very attractive spot to decide on the conditions along with 10 other countries? The cost will be greater if we withdraw and decide to join later.
“Just look at the United States. Once out, they won’t be able to get what they want as it all depends on the partners,” said an official.
The myopic view of a few should not discourage the Malaysian government from making the move to ratify the CPTPP.
The CPTPP promotes good governance and there is also a chapter on transparency and anti corruption. Are these not values the Pakatan government believes in too?
Within Asean, Vietnam is Malaysia’s closest competitor and this year Hanoi has already signed an FTA with the European Union, known for its tough laws.
Malaysia should not be lagging behind and instead should be strengthening its competitive edge.
As a trading nation with a comparatively small domestic market of 32 million people, it is imperative for Malaysia to continue adopting an open trade and investment regime to promote economic growth, provide opportunities for skilled employment and technology transfer.