"Malaysia’s trade policies and agreements need to be reviewed urgently. But, they have not received the attention they deserve because a trade minister has not yet been appointed. There was a lot of discontent amongst the public when Malaysia signed the Trans-Pacific Partnership Agreement (TPA). But soon Trump assumed office and the US pulled out of the treaty. The agreement then had to be reworked by the remaining 11 countries. The new agreement, now known as CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) has also been signed by Mayasia."

Malaysia’s trade policies and agreements need to be reviewed urgently. But, they have not received the attention they deserve because a trade minister has not yet been appointed. There was a lot of discontent amongst the public when Malaysia signed the Trans-Pacific Partnership Agreement (TPA). But soon Trump assumed office and the US pulled out of the treaty. The agreement then had to be reworked by the remaining 11 countries. The new agreement, now known as CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) has also been signed by Mayasia.

Lack of transparency and liberty

Much like its predecessor, the CPTPP too proposes to setting up an investor-state dispute settlement (ISDS) system, whereby foreign investors can sue the government in international tribunals in case of unfair treatment or loss of future profits due to a change in government policies. But there is a high probability of the system being misused by foreign investors who might claim to have received unfair treatment from the member countries. Countries such as Indonesia, India and South Africa have therefore, pulled out of their treaties.

Secondly, the agreement restrains local industry and markets with foreign firms and contractors of CPTPP countries being awarded projects at lower costs resulting in loss of business for local companies. Thirdly, state-owned enterprises should be phased out so that the local companies obtain more market share in the domestic industry.

Loss of local markets

The CPTPP also requires Malaysia to sign an international treaty, UPOV 1991, under which Malaysian farmers would be obliged to pay for the seeds they use if these are protected, instead of being able to save their own seeds to plant in the next season. This would increase costs for farming, and it would also overthrow the existing good Protection of New Plant Varieties Act.

Since Malaysia has to reduce all its tariffs to zero, local firms and farmers will face stiff competition from cheaper imports, and a number may lose market share or even close. Given the serious issues involved, it is wise for the government to review its participation in the CPTPP.

Meanwhile, the 18 changes to the laws that are being prepared to enable the country to implement the CPTPP should be withheld as Malaysia is currently negotiating many other trade agreements, including the Asian regional treaty RCEP (Regional Comprehensive Economic Partnership), and a Malaysia-European Union FTA. These should also be reviewed.

Need to review policies

Meanwhile, Malaysia should assess the implications of its proposals in current negotiations to introduce new topics like e-commerce and domestic regulations, and take positions accordingly. As trade negotiations are no longer just about trade per se, it is important for a review to be made on trade agreements and negotiations from a strategic perspective that includes development policy overall, industrial development, services, agriculture, the interests of local firms and farmers, the rights of consumers and workers, jobs and livelihoods, and healthcare costs.

Decisions on whether to sign the agreement should be the concern of a high level inter-ministerial committee or council, preferably chaired by the Prime Minister instead of being left to one or a few ministries alone. Moreover, decision making process should also involve the parliament and state governments.