THIS is TPPDebate.org’s response to International Trade and Industry Minister Datuk Seri Mustapa Mohamed’s speech on the Trans-Pacific Partnership (TPP) deal at Parliament on Monday.
MUSTAPA said Malaysia decided to join TPP as the nation did not have any free trade agreement (FTA) with the United States, Canada, Mexico and Peru, adding that TPP would pave the way for local companies to penetrate the huge US market.
However, how much of the tariffs from the US, Canada, Mexico and Peru will be reduced by signing into TPP?
This must be compared against the baseline today; the 12 TPP countries are in the World Trade Organisation (WTO).
When doing trade with Malaysia, WTO members are not allowed to raise their tariffs above the level that they are bound at the WTO, even on Malaysian products, even if Malaysia doesn’t sign the TPP. They are locked in.
Legal adviser Sanya Reid Smith from Third World Network said the average locked tariff rate is just three per cent for the US and six per cent for Canada.
They are low already, so there is not much difference going to zero per cent in TPP.
That leaves just Mexico and Peru. If it is really such an important thing to get Malaysian exports into Mexico and Peru, then why not just have a free trade agreement with Mexico and Peru?
MUSTAPA said that the import tax on textile products would be reduced by 70 per cent and it will give a 30 per cent boost to exports of Malaysian textiles.
The textile industry in Malaysia will not benefit. In fact, quite the opposite will happen, because of the Yarn Forward Rule. This rule forces the textile industries in TPP countries to buy yarn from within TPP. The only country in TPP with an economy of scale big enough as to provide the yarn is the US.
However, US yarn is more expensive than Chinese yarn.
Therefore, the end price in the US of the zero-tariff Malaysian product is likely to be higher than the taxed products from competing non-TPP countries, such as China, making Malaysia lose market in textiles exports to the US.
The Vietnamese Chamber of Commerce and Industry has acknowledged that, with this rule, Vietnam gets no benefits from TPP. If Vietnam, with its lower costs in producing textiles than Malaysia, will not benefit, then how will Malaysia?
MUSTAPA said the obligation on labour under TPP is to increase the standard of the labour force, like having the freedom to form workers’ unions, collective agreements, minimum wage, safety and health aspects, as well as abolishing forced and child labour.
These labour obligations are enforceable between only Malaysia and the US, by having each country sue each other.
The Australian government cannot sue Malaysia because of Malaysia’s violation of labour rights. Only the US Government can sue. This is because these provisions are not in the labour chapter itself, but in the side letter, the Labour Consistency Plan, signed between Malaysia and the US.
Why is this a problem? Smith said the US government doesn’t sue over these labour rights.
It has sued only once, Guatemala, after intense pressure from their trade unions. There is a US-Colombia free trade agreement. Trade unionists get murdered in Colombia, yet the US hasn’t sued Colombia.
Only their government can sue; their trade unions, citizens, human rights activists cannot sue. If the US government chooses not to sue, there is nothing we can do to enforce it.
MUSTAPA said Malaysia could leave TPP without having to pay any penalty as stipulated in Chapter 30 of the proposed agreement.
What is interesting about this statement is the contradiction of his statement on why Malaysia must sign in first place. Mustapa had said that by staying in TPP, Malaysia would send the right signal that the country is open, business-friendly, worker-friendly and environment-friendly. “If we stay out, we are sending the opposite signal,” he said.
Politically, it might look a bit unfriendly. No country has withdrawn from a free trade agreement with the US once the agreement has taken effect. We believe this is not by chance.
MUSTAPA said: “There are pros and cons. Compared with the time when the 12-page Pangkor Treaty was signed in 1874 where the nation was sold out (to British imperialism), we are smarter now.”
This comparison is pointless. We are living in different times.
Indeed, Mustapa had said the nation’s sovereignty would not be harmed with TPP, as people were getting smarter and knowledgeable. This looks like dumbing down the issue on how Malaysia could potentially lose its sovereignty to safeguard the interests of the country. The statement is not a proper response to this serious issue.
The irony of it is that one day after his statement, TransCanada Corp launched a US$15-billion (RM63 billion) suit against the US government for rejecting the Keystone XL pipeline.
You can’t get much “smarter and knowledgeable” than the US government. Yet, they were sued.
n LEONARDO LOSOVIZ,TPPDebate.org