A review of TPPA handbook published by MITI

TPPA Handbook published by Ministry of International Trade and Industry (MITI)

Ministry of International Trade and Industry (MITI) highlighted the advantages of TPPA within its published handbook without disclosing a single clause. The handbook was full of hanging statements due to non-direct disclosure. Can’t tell for sure the actual content of TPPA since no clause was disclosed. No critique or commentator could proof them false but yet none can proof them true neither since nothing is disclosed. Fortunately Office of The United States Trade Representative had disclosed the TPPA full context at https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-full-text

Media registration counter @ MITI

Ministry of International Trade and Industry (MITI) had conducted a meeting on clarifications on Trans Pacific Partnership Agreement (TPPA) at MITI building recently on January 11. Malaysia Critique was at the location to gain further info on TPPA where attendants received a handbook with a simplified explanation on the agreement.

TPPA membership decision would be debated and signed if approved by the parliament.

Page 10 of TPPA handbook published by MITI stating that TPPA signatory would go through Parliamentary approval

Page 27 of TPPA handbook published by MITI stating that TPPA signatory would go through Parliamentary approval

Page 14 of TPPA handbook published by MITI showing the 30 Chapters content within TPPA

The TPPA text contains 6350 pages. Divided into 3 parts. The first part are the 30 main Chapters which covers 595 pages. The second part are the Appendix which contains access schedule for 12 member countries of TPPA, schedules linking government own company and localization laws all covered in 5755 pages. The agreement also consists of multiple side letters on mutual agreement on specific issues between member countries. (MITI, 2016)

One of the main highlights of the handbook would be Chapter 21 Cooperation and Capacity Building where the entire chapter focuses on assistance between member countries on strengthening cooperation and capacity building activities. The agreed assistance that will be provided may include but not necessarily limited to;-

1. agricultural, industrial and services sectors;
2. promotion of education, culture and gender equality
3. disaster risk management

By going through the actual context of Chapter 21 https://ustr.gov/sites/default/files/TPP-Final-Text-Cooperation-and-Capacity-Building.pdf . Malaysia Critique is able to identify that the promised form of assistance within the agreement is mainly on technology sharing especially on the agricultural sector. Does not matter which country is more technologically advanced on the listed sector, all the technological advantage are to be shared whereby no advantage for the advanced party on the listed industry. Furthermore should one of the parties achieve a new technological discovery within the listed sector, they are not allowed to dispute any settlement of exclusion to their advantage. Malaysia Critique sees this form of assistance as double edged as in the scenario where another party discovers a new more efficient method Malaysia would benefit from it for free but at the same time if Malaysia discovered a more efficient method, the inventor would not be able to solely monopolize and take complete advantage of the new discovery. After all this is maybe why TPPA is called a Partnership ‘perkongsian’ rather than just a free trade agreement as it requires member countries to share certain aspects.

Page 23 of TPPA handbook published by MITI titled as concerns but only points out on the benefits of TPPA

MITI honestly admitted that within their consideration of TPPA membership it comes with both advantages and disadvantages, however they only decided to reveal only the advantages while leaving the disadvantages uninformed despite admitting that there are disadvantages. The advantages to TPPA would be market access, better macroeconomics integration, increased investments, increased income & job opportunities, and wider consumer choices.

Page 31 of TPPA handbook published by MIT showing the benefactor industries and new FTA market access

MITI identified some of the few industries which Malaysia would benefit from TPPA. These Industries are Textile & Clothing, Electrical & Electronics (E&E), Chemical & Petrochemicals, Timber based products, and Rubber based products. It is estimated that exports of the listed industries to Canada would increase by 100%, to USA increase by at least 90%, to Mexico by at least 60%, and to Peru by at least 13%.

MITI however did not mention the industries that are negatively affected by the agreement such as the automotive industry. Will Proton be able to compete when Toyota sells Vios at the same price of Saga? As we all know, part of the TPP agreement involves free competition therefore there will no longer be any protection policies specified to protect any member country’s industry. Yes they did mentioned in a small hidden unnoticeable paragraph on page 48 stating that USA automotive would not significantly impact Malaysian automotive industry but at the same time they tried to hide the facts that Japan is also a TPPA member. On page 50 PowerWaterHouseCoopers (PWC) mentioned that the automotive industry would boom under TPPA however it did not mention which country the booming automotive industry belongs to.

PWC also mentioned that the retail industry is the most unaffected industry by the agreement as written on page 52. Palm oil is also a non-benefactor of TPPA due to a wide range of direct competition with vegetable oil, canola oil, soybean oil, and corn oil from other TPPA countries.

Page 38 of TPPA handbook published by MIT points out on SME benefiting from TPPA

MITI also mentioned that TPPA would benefit Small and Medium Enterprise (SME). However for reasons Malaysia Critique could not understand is why the examples of SMEs are a bunch of established large cooperation such as Oldtown White Coffee, Hup Seng, Mamee, Marrybrown, Julie’s, Brahim, Bangi Kopitiam, and Ramly. Other than Marrybrown, none of those examples are categorized as SME. What is more shocking would be Oldtown White Coffee a public listed franchise chain is somewhat considered an SME in the eyes of MITI.

A report by PWC on page 52 states that unaffected SME are those in the retail industry which may include but not limited to hypermarket, warehouse, sale warehouse, specialized shop, franchisee, and multipurpose store.

What is learnt from going through TPPA handbook published by MITI, is that the handbook should be renamed as “Benefits of Free Trade Agreement between TPP countries” rather than TPPA itself as it does not covers the “Partnership” part of the agreement and there is still a huge chunk of left uncovered. For example, why Thailand, Philippines, and China choose not to join TPP? Because unlike a traditional free trade agreement (FTA), TPP is a conditional FTA. It is basically a gentleman’s agreement between advanced economies to provide duty free trade in exchange for equal competition where none of the member countries have an unfair advantage such as cheap labor or weak industry regulation. It is basically a meritocratic FTA where everyone competes on innovation and quality rather than on cheaper cost or weak regulation.

In Malaysia Critique’s opinion it is good for Malaysia to join TPPA as would act as a stepping stone towards becoming a high income nation as envisioned by the Prime Minister Dato Seri Najib Razak. It is undeniable that many companies may go bankrupt under TPPA however those whom would fall are the uncompetitive, unproductive, and lacks value adding which isn’t even beneficial for the economy in the first place.