Prioritise consumers in TPPA deal


  • Thinking Liberally
  • Tuesday, 19 Jan 2016

AS we get closer to the Parliamenta­ry Trans-Pacific Partnership Agree­­ment (TPPA) debate next week, the anti-liberalisation campaigners have upped their ante to oppose the mega trade deal.

I disagree with their anti-liberalisation views but I admire their tenacity in mobilising a vocal campaign. The movement is spearheaded by Bantah TPPA.

It is fascinating to watch how they work. They have been so efficient that many look to them for objective views.

But they are far from objective. Their sole purpose of existence is to oppose the TPPA and they will be silent about anything good.

By being persistently vocal and by starting their campaign early, they created the false impression that they are objective observers. Today they have a created a groundswell and you can expect politicians to follow their lead.

When Bantah TPPA started their campaign in 2013, I almost signed up too. As an advocate of unilateral liberalisation, I am ideologically driven to oppose the bilateral and multilateral nature of free trade agreements (FTAs).

I prefer unilateral liberalisation because it allows you to drive your own reform agenda. The multilate­ral nature of the TPPA, just like all other FTAs, dilutes the impacts you can gain from liberalisation.

There is even the risk that it will create a new bloc that makes it difficult for member countries to trade with non-members. That is what has happened to the European Union today.

But colleagues at work reminded me that as researchers we must focus on facts. We cannot operate like ideological activists who announced two years before even seeing the real TPPA text that they oppose it. I have written before that that is a sign you are driven by blind ideology and not facts.

One of the critics of the TPPA is DAP Member of Parliament Charles Santiago. He believes that the TPPA’s provision for stronger protection of intellectual property rights will increase the price of medicine. Recently he said after Jordan signed an FTA with the United States in 2000, the price of medicine there went up by 20% and the generic drug industry was wiped out.

He is being selective. Since signing the FTA, there were 78 new innovative product launches in Jordan, more than doubling the rate of launches of innovative drugs, thus helping to facilitate Jordanian consumers’ access to medicines. Plus local Jordanian companies such as Jordan Pharmaceutical Manufacturing Company and Triumpharma actually had more new products under the FTA.

Globally respected Malaysian eco­­nomist Dr Jomo Kwame Sun­daram has joined the bandwagon. Last week he said “Why is Thailand not interested? Why is the Phi­lip­pines, which is very close to the US, not interested? Are there are so many benefits that the Philippines and Thailand can’t see?”

Jomo is misleading the public if he is implying that these two countries do not want to be in the TPPA.

On Nov 27, 2015, Thailand Deputy Prime Minister and economic tsar Somkid Jatusripitak said, “Thailand is highly interested in joining TPP. Chances are high that Thailand will seek to join TPP.”

And back on June 25, 2015, Phi­lippine Trade Secretary Gregory Domingo said, “I want to state clearly and irrevocably that we want to join TPP.”

Jomo made a more substantial comment when he criticised the computable general equilibrium (CGE) model that has been used by several researchers to project the benefits of the TPPA. He prefers another model – the United Nations Global Policy Model (GPM) – because according to him it offers more realistic macroeconomic projections, and it considers changes in employment and inequality and their impacts on economic growth.

What Jomo is doing here is taking the debate to a most academic level by challenging the models and assumptions used by other resear­chers, in order to elevate his own preferred model. If we were to use Jomo’s approach, then anyone with some knowledge of economic mo­­delling could also argue that Jomo’s GPM is flawed too.

The GPM is a macro model that does not include information at the sector level and it does not include data on tariffs. It assumes that international trade is only good if exports expand more than imports, which is of course a flawed assumption because in reality both imports and exports are good.

If I want to sound cleverer than most I would add that the GPM is further weakened because it cannot calculate the tariff equivalent of a reduction in trade costs and its impact on international trade.

But that is just a tactic to confuse the lay public rather than help in the discussion. When it comes to economic modelling, every resear­cher has to make assumptions and choose a model.

Many researchers, including those at the UN, use the CGE model that Jomo dislikes. In this case Jomo chooses one model and it allows him to highlight the points he wants to highlight.

I am sure more critics will appear as we get closer to the parliamentary vote. I wouldn’t be surprised if our GLCs start opposing too.

For example, the majority of Khazanah’s investments are in companies domiciled in Malaysia. They have reasons to oppose the TPPA because it increases the risks for their investments. But for us common people, our parameters are quite straightforward. The TPPA will enable cheaper products of higher quality to enter the market.

As businesses are forced to compete, we will have more choice. If we stop looking at the vested inte­rests and business owners, and start focusing on common consu­mers like you and me, it is clear that the Government is right is wanting to sign the TPPA.

Do we want to protect the vested interests who are worried about competition, or do we want to champion the welfare of poorer consumers who are struggling to cope with the rising cost of living?

Wan Saiful Wan Jan is chief executive of the Institute for Democracy and Economic Affairs (www.ideas.org.my). The views expressed here are entirely the writer’s own.


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Opinion , Wan Saiful Wan Jan , columnist

   

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