Top Malaysian Economist Jomo questions TPPA for Malaysia


January 11, 2016

Top Malaysian Economist Jomo questions TPPA for Malaysia

by Adrian Wong Gah Junn http://www.malaysiakini.com Jomo KS

While the Malaysian government is keen to sign the Trans-Pacific Partnership Agreement (TPPA), why countries such as Thailand and Philippines have opted to distance themselves from the treaty?

This is a question leading Malaysian economist Jomo Kwame Sundaram posed to the Malaysian government and public.”Why is Thailand is 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?” he asked reporters, after attending the 2016 TPPA Forum, in Kuala Lumpur, organised by Malaysian Economic Association.

However, according to news agency Reuters, Thailand’s Deputy Prime Minister Somkid Jatusripitak has said Thailand is “highly likely” to seek membership of TPPA, while the Philippines is certain to join TPPA, reported the Manila Times quoting Philippines Department of Trade and Industry (DTI) Secretary Adrian Cristobal Jr.

In the case of Indonesia, Jomo explained, some might argue that the nation has experienced a change of government, coupled with a stronger sense of nationalism, that caused them to pull out of the TPPA.

“As far as Singapore is concerned, they have made more concessions than what is required in the TPPA. So for them, it’s painless, completely painless.Brunei is a small country, it is not trying to develop, it hopes its oil will go forever.In the case of Vietnam, it was at war with China about 35 years ago. It is having a lot of problems with China and is very frustrated with the Chinese government. It has made a strategic decision – embrace the US,” the former United Nation senior official said.

By signing TPPA, Najib government will be abandoning his late father Abdul Razak’s commitment to make ASEAN a ‘zone of peace, freedom and neutrality’ he argued.

Exclusion of China

It is no secret that the main US motivation for TPPA, he said, was to exclude China.”One can understand why Vietnam, an erstwhile US enemy, was keen to join the TPPA, in order to strengthen its hand in its often difficult bilateral relations with its giant neighbour.But why is the Malaysian government so keen to join, considering the dubious economic benefits as well as the huge risks involved?. In response to President Barack Obama’s ‘pivot to Asia’, Prime Minister Najib may want to signal his own pivot to America’,” he said.

Others speakers at the forum included Bank Muamalat chairman Munir Majid, Federation of Malaysian Manufacturers president Saw Choo Boon and Universiti Malaya law professor Prof Gurdial S Nijar.

Munir and Saw were of the view that TPPA would bring more benefits to Malaysia than disadvantages, but Jomo and Gurdial disagreed. Saw pointed out that Malaysia is already working under seven bilateral free trade agreements (FTA) and five regional FTAs, but the domestic market is still small.

Even a one percent growth projection over a period of 10 years, which was one of the scenarios provided by PricewaterhouseCooper (PwC) in its cost-benefit analysis, would be welcome.”The TPPA can’t be worse than what we already have. Even if it is one to two percent growth, we need it. Give it a try. If you don’t like it, you can opt out of it later,” he said.

However, this led to criticism by Jomo. In the “game” of TPPA, countries such as the United States are professionals. Malaysia, on the contrary, is merely an amateur, he said.

The discussions among TTPA proponents, he added, were mainly “one-sided”, which emphasised the benefits without taking the costs into account.

“It’s like saying ‘let’s go in, then we learn how to swim’. That’s not how the world works, it’s very naive.We are going to an unknown territory, whereas these people are very experienced. They have drafted these things many times, and they keep improving each time they draft. Yet we think we are very smart (by signing it),” he said.

Insignificant economic gains

Regardless of what economic model is applied, be it computable general equilibrium (CGE), which was used by PwC in its report, or the UN Global Policy Model (GPM) provided by Jomo, they all led to one conclusion: TPPA brings insignificant economic gains to Malaysia, but the price paid is huge.

According to Jomo, UN GPM finds that:

  • TPPA will generate net GDP losses in some countries, though not Malaysia;
  • Economic gains will be negligible for other participating countries – less than one percent over 10 years for developed countries, and less than three percent for developing countries;
  • TPPA will lead to employment losses in all countries, totalling 771,000 lost jobs;
  • TTPA will lead to greater inequality, with a lower labour share of national income; and
  • TPPA will lead to losses in GDP and employment in non-TPPA countries.

Companies suing governments

Gurdial, on the other hand, analysed the treaty from the angle of investor-state dispute settlement (ISDS).TPPA proponents claimed that the mechanism can protect the government from being easily sued by companies, he said. However, he pointed out that there were still abundant instances of companies suing governments over policies that they claimed interfered with their ability to earn money.

In 2014 alone, he said, there were 608 cases against governments, mainly by American corporations, with 60 percent in developing countries.

“We are now suspending bauxite mining operations because of public health and environmental hazards. Imagine with ISDS, if a foreign company was involved in mining and we stopped them, we could get sued.”

 

6 thoughts on “Top Malaysian Economist Jomo questions TPPA for Malaysia

  1. y signing TPPA, Najib government will be abandoning his late father Abdul Razak’s commitment to make ASEAN a ‘zone of peace, freedom and neutrality’ he argued.

    Children rarely follow the advise of their parents when alive and even learn even less from the wisdom of their parents/elders who have returned to their Makers. The normal justification given is their wisdom is not relevant to changing worlds.
    Just look at the culture of savings which has been replaced with being permanently in debt. The previous generation said ‘SAVE THEN SPEND’ but today’s leadership says ‘SPEND AND BE IN DEBT’ after all the leadership never has to pay the debt but the individuals are left with debts which are then passed on to their children. This generation benefited from the savings of their parents but to-day’s parents will leave nothing to their generation and this may be one reason why to-day’s generation has little if any respect or regard for their parents.
    THIS IS ME FOR ME AND YOU FOR ME GENERATION.

  2. A much respected Economist, we should hear more from him – wonder why he had gone into silence for over a decade , but he should make a come-back for us to savor his thoughts in this all important subject for some of us, keen to know the reality of the depth in this mind-boggling quagmire our Nation has been facing under PM Najib –

    Most of us have felt dissatisfied about the 1MDB debacle….

  3. TPP may turn out to be the worst trade agreement in decades. It’s aimed at countering China’s growing economic influence. Obama is fighting an uphill battle selling it to the Republican congress and all the leading Democratic presidential candidates have weighed in against it. Bernie Sanders called it a “disastrous trade agreement designed to protect the interests of the largest MNCs at the expense of the workers, consumers, the environment and the foundation of American democracy.” The way Obama argued forTPP showed how out of touch with the emerging global economy his administration is. He repeatedly said TPP would determine who would write the 21st century’s trade rules, America or China. Correct approach is to arrive at such rules collectively, with all voices heard, and in a transparent way. Obama sought to perpetuate the rules governing global trade and investment written by US corporations for US corporations. This should be unacceptable to anyone committed to democratic principles.

  4. /// As far as Singapore is concerned, they have made more concessions than what is required in the TPPA. So for them, it’s painless, completely painless. ///

    I think that is the nub of the matter – pain. Any FTA will entail pain to economies which are not open and are protected; economies that are not competitive.

    Any multi-lateral FTA is better than no FTA. With FTAs, countries are forced to dismantle all kinds of barriers and forced to be efficient. Thailand, Philippines and Indonesia (and many other economies outside TPPA) are unwilling to join now because of the pain. Although ASEAN Community came into being this month, several countries still have not fulfilled its requirements.

    Let me advocate the devil. Malaysia should join TPPA. It will force Malaysia to remove its barriers and all kinds of shenanigans that hobbles its economy. Yes, joining TPPA is very painful, more painful than removing the opium of NEP crutches. Better to bite the bullet now and be done with. Instead of forever falling further and further behind. The world does not owe Malaysia a living. Its oil will run out sooner rather than later. Then what? Impose the NEP on the world so that Malaysia can compete?

    /// LaMoy January 12, 2016 at 9:57 pm
    TPP may turn out to be the worst trade agreement in decades. ///

    LaMoy – agreed. But no FTA is even worse if most countries began to erect all kinds of tariffs and non-tariff barriers. Just as Winston Churchill said about democracy being the worst kind of government, except for all the others.

    My only beef with the TPPA is that it is used by the US to contain China.

  5. Dr Jomo posed the question ”why countries such as Thailand and Philippines have opted to distance themselves from the treaty?” The answers he gave was about why these countries can’t join TPPA at the moment rather than why they don’t want to:
     Thailand is “highly likely” to seek membership of TPPA,
     The Philippines is certain to join TPPA,
     In the case of Indonesia, Jomo explained, some might argue that the nation has experienced a change of government, coupled with a stronger sense of nationalism
    My comment: So it’s not that they don’t want, they just can’t. As ‘The’ commented Jan 139.33 a.m. and I quote “any FTA will entail pain to economies which are not open and are protected; economies that are not competitive”. “With FTAs, countries are forced to dismantle all kinds of barriers and forced to be efficient. Thailand, Philippines and Indonesia (and many other economies outside TPPA) are unwilling to join now because of the pain.”
    Jomo then voiced concerns of UNGPM with which he is associated. He claimed TPPA brings insignificant economic gains to Malaysia, but the price paid is huge. These poor gains are:
    a) Malaysia will get an increase in GDP ( but some countries won’t. Pity them)
    b) Economic gains will be 3% for Malaysia but only 1% for US, Japan and Canada (again pity them)
    c) TPPA will lead to employment losses in all countries,
    d) TTPA will lead to greater inequality, with a lower labour share of national income;
    My comment: It was true for US when joined NAFTA (read http://www.epi.org/publication/nafta-legacy-growing-us-trade-deficits-cost-682900-jobs/ ). Their companies moved operations to Mexico leading to loss of jobs in US. Malaysia can take a different stand. Use the expanded market to export goods manufactured or grown in our country. Instead of unemployment we will probably have to import more migrant labour. ? We will be inundated by cheap goods. Where are they going to come from? I can see them coming only from Vietnam.
    e) TPPA will lead to losses in GDP and employment in non-TPPA countries (again pity them for not being able to join TPPA).
    Where is the huge price. “Najib government will be abandoning his late father Abdul Razak’s commitment to make ASEAN a ‘zone of peace, freedom and neutrality’ he argued.” Where is the “threat “?. Ah, the exclusion of China at the behest of US will make it angry and retaliate.There is an ASEAN free trade zone, for heaven’s sake. Also ASEAN and China also have trade agreements.
    TPPA was not mooted by USA. It was an initiative of Brunei, Singapore, New Zealand and Chile in 2005. US showed interest only in 2008. TPPA is open to all Pacific Rim countries (and also Bangladesh and India). China can join if it wants to and may join but just not at the moment. Unlike, Malaysia it is not sure what TPPA will bring. (read https://en.wikipedia.org/wiki/Trans-Pacific_Partnership )

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