Badan Bertindak Bantah TPPA, a coalition of people-based organisations[1] - wishes to highlight issues and concerns which we fear will materialise if the Trans-Pacific Partnership Agreement (TPPA) is signed.
1. National Sovereignty and Policy Space of TPPA Countries: Various provisions proposed especially within the Investment and Regulatory Coherence chapters of the TPPA will restrict the policy and regulatory space of our government. We would be obliged to bring our existing and future laws and policies into compliance with extensive standards set forth in the 29 proposed TPPA chapters. These include domestic policy on financial, healthcare, energy, telecommunications, and other service sector regulation; patents and copyrights; food and product standards; land ownership and use (e.g. Tanah Adat, Malay reservation, forest reserve, etc.) and natural resources; professional licensing and immigration; government procurement, and more.
Failure to comply would subject us to lawsuits before an international tribunals – empowered to impose sanctions on us until our laws and policies are changed accordingly.
Under similar U.S. free trade agreements (FTA) provisions, billions of dollars of ‘compensations’ have been awarded by these international tribunals to various investors over toxic waste dump permits, logging rules, bans of toxic substances[2] and more. Currently, there are over $20 billion in pending corporate attacks on environmental, public health and tobacco policy under the existing U.S. FTAs —and the proposed TPPA would similarly expose us to such ruthless and expensive litigations.
Under the provision of ‘fair and equitable treatment’, all laws and policies may be frozen (standstill) to ensure investors will not be subjected to a regulatory environment different from that in place at the time they committed to their investments.[3]
Claims that our constitution, current laws and policies will not be affected by TPPA is unsubstantiated and have been disproven. Governments have been challenged by corporations for purportedly harming (expropriating) their investments through such non-compliance. Ultimately, compliance with the content of TPPA will entail amending our constitution, laws and policies.
2. Elimination of Tariff and Non-Tariff Barriers: The TPPA is about the complete liberalisation of goods, services and investments, with extremely few – if any – exceptions for Malaysia’s ‘sensitive’ goods such as its automobile industry and rice. In addition to limited export gains for Malaysia (due to such provisions as the Yarn Forward Rule, which favours the US yarn industry), the maintenance of subsidies by many TPPA countries for their domestic industries (such as dairy and soya) and the comparatively greater tariff cuts that Malaysia would have to concede, the immediate impacts of such extreme liberalisation would be felt by local producers and farmers who would face the onslaught of cheaper, subsidised goods from TPPA countries and lead to the loss of market share or even the eventual closure of some sectors.
Moves by TPPA countries to eliminate export taxes, on the other hand, would deprive the government of an important instrument for industrial development and trade policy, provide governments with additional revenue, improve terms of trade, ease inflationary pressure, compensate for devaluation and tariff escalation and most importantly preserve domestic raw materials for local processing to develop high-value added industries.
Similarly, the US has taken the position of insisting that all TPPA countries open all of its services to companies from their TPPA partners.
3. Government Procurement & SOE: Under this provision the government has to allow companies from the TPPA countries to participate in government tenders beyond certain thresholds and without imposing offsets. It was announced on 1st August by MITI that the thresholds[4] have been agreed at about RM23 mil for construction projects and at about RM 600,000 for non-construction bids in the long run. Beyond the thresholds we will be prohibited from allowing preferences for locals or set aside for Bumiputera or to otherwise pursue other socio-economic and national objectives.
There are no provisions for thresholds for Malaysian state-owned enterprises (SOEs or government-linked companies). Thus, all procurements by SOEs would have to be opened to all foreign companies from TPPA countries. To illustrate this, Petronas for example, will have to open every single tender for both construction and non-construction services to foreign companies from TPPA countries, and will thus not be allowed to exercise preferential treatment for local and/or Bumiputera vendors, suppliers, etc.
The concept of National Treatment – which requires all foreign investors to be treated no less than local companies – would be in force. Consequently, SOEs and EPPs (companies and projects under the ETP) which invariably are recipients of some form of Government’s assistance (grants, soft-loans, subsidies) may be penalised for such assistance when in competition with foreign companies from TPPA countries.
4. Labour Rights: The TPPA would prohibit governments from imposing conditions on the nationality of senior management personnel and members of boards of directors – thus, restricting governments from being able to implement affirmative action policies in general, and the recruitment and/or training of labour from groups or communities perceived to be in need of such affirmative action. In the financial sector, such policies have been crucial to the presence and participation of Bumiputeras in the domestic and international banking and finance.
Furthermore, there are proposals for the TPPA that have the potential of prohibiting governments from introducing new laws to give greater protection or promote workers than provided for in current laws. Even though there appears to be merits in the TPPA requirement for Malaysian labour laws to comply with the international labour standards, the reality is that such requirements would be overridden by provisions contained in other chapters. The labour chapter would thus appear to be toothless given the overriding priority given, for example, to the Investment Chapter.
Joint Statement: There may be provisions to stop governments from requiring greater protection (such as over minimum wage, health or safety standards) to workers in Malaysia than they currently do and prohibiting the imposition of training or employment requirements on foreign companies.
5. Environment Chapter: Similarly, the potential contained in the Environment Chapter to raise the standards of environment protection and promotion in Malaysia would be overridden by provisions contained in other chapters of the TPPA. Demands are being made on TPPA countries to agree, for example, to pro-industry, ‘self-regulated’ environmental laws; to prevent or make the transfer of climate-friendly environmental technology more difficult; and to investment protection measures that would expose Malaysia to the same challenges that in other countries have seen corporate interests trump environmental policies.
6. Access to Medicines: The US has proposed text, if accepted into the TPPA, that would make it easier for big pharmaceutical corporations to get medicine patents and obtain longer (beyond the standard 20 year-period) patents, which would also render it more difficult for ordinary Malaysians to access more affordable generic medicines such as for cancer, HIV and other essential medicines. Proposals to introduce data exclusivity (D.E.) in all TPPA countries, for example, would considerably delay the availability of information necessary for the production of cheaper generic medicines. Eighty percent of all government-supplied medicines are generic.
7. Capital controls, economic policies: There are concerns that the TPPA would limit the ability of TPPA governments to deploy capital controls, even during times of financial and economic crises. Capital controls were among those policy instruments that saved Malaysia from the worst excesses of such crises, as seen during the Asian Financial Crisis of 1997, and is an instrument that would undoubtedly be critical in addressing the next crises. While even the IMF has admitted to the advantages of maintaining safeguards on capital inflows and outflows to prevent or mitigate financial crises, the US have consistently opposed such restrictions.[5]
8. Small-and-Medium-Sized Enterprises: The TPPA aims, among other things, at trade liberalisation and the lowering of tariffs which may cause drastic losses in jobs in all sectors (except perhaps one) identified for tariff removal. This will drive down workers’ wages and result in increased income disparity gap. Tariff reductions will impact on agricultural products, particularly. The more than 90% of Malaysian companies that are in the agriculture sector are SMEs will, therefore, face unfair competition from agricultural exporters from TPPA countries such as US, Canada, and Japan which will not reduce in the TPPA their significant subsidies to their farmers. Malaysia faces the spectre of suffering the same fate as Mexico, which – following the signing of the North American Free Trade Agreement with Canada and the US – saw the loss of three million out of ten million agricultural jobs.
9. Impact on Tobacco control and Public Health: TPPA has provisions that may prohibit or restrict any regulation on tobacco use and the tobacco industry. Such provisions conflict with the WHO Framework Convention on Tobacco Control (FCTC) – a treaty Malaysia already a party to. To ensure public health policy space on tobacco is protected, tobacco must be excluded/carved-out from the TPPA, and no provisions apply to tobacco and tobacco products.
Similar measures and standards should be applied to other issues that have adverse public health repercussions.
10. Access to Knowledge: Just as the TPPA’s intellectual property protection measures will make medical treatment more expensive for ordinary Malaysians, TPPA countries’ educational and research activities could be harmed – and made more expensive – due to the more stringent copyright laws proposed, including for the ‘digital commons’ such as the Internet.
The TPPA is straddled unevenly between the hopes of a relatively small circle of multinational corporations whose commercial interests stand to benefit the most from the proposals, on the one hand, and the fears of peoples’ organisations in all 12 TPPA countries involved that their welfare and future are under threat, on the other.
In fact, the TPPA is not about fair trade, nor even about free trade, but about ensuring the protection and prioritisation of corporate interests above those of public welfare and safety and the socio-economic interests of Malaysians. . The language and substance of proposals for the TPPA seek the greatest role for multinational corporations, while rolling back the space for governments to act in the interests of their citizens and the formulation of regulations and policies. We welcome the commitments by the Minister of International Trade and Industry over the concerns raised by Malaysian civil society and other stakeholders. Yet, it has been acknowledged that there is much room for improvement and for further engagement with the issues at hand.
Bantah TPPA hereby calls upon the members of the Cabinet to suspend Malaysia’s involvement in the TPPA negotiations unless and until:
an impartial and comprehensive cost-and-benefit-analysis, a comparative advantage study, and human rights, legal, environmental and social impact assessments ha carried out, disclosed and publicly debated by all stakeholders in Malaysia;
the texts are examined, scrutinised and assessed by a Parliamentary Select Committee to verify the TPPA as negotiated is indeed in Rakyat’s favour and interests;
a comprehensive, transparent and meaningful consultation with all stakeholders; and
all concerns expressed by civil society organisations and other stakeholders, particularly those concerns raised herein, have been incorporated into Malaysia’s positions and proposals for the TPPA in the form of the Government’s non-negotiable Red Lines.
The undersigned,
Badan Bertindak Bantah TPPA
[1] List of the CSOs affliated to Badan Bertindak Bantah TPPA shown in Appendix 1
[2] Renco vs Peru
[3] RDC vs Guatemala (2012)
[4] GP/SOE & Bumiputera Issues Breakout Session briefing (MITI TPPA Open Day on 1st Aug 2013)
[5] See Letter (dated 28 February, 2012) ‘Promoting financial stability in the Trans-Pacific Partnership Agreement’, signed by more than 100 prominent economists.
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