The TPP is alive
And it’s a new deal – one that Malaysia wants to iron out on its own terms.
WHEN an official announcement was made that the remaining 11 Trans-Pacific Partnership countries agreed to push ahead with the free trade agreement without the United States, Malaysia’s chief negotiator Datuk Seri J. Jayasiri tweeted: “The TPP is alive.”
As Vietnam Trade and Industry Minister Tran Tuan Anh and his Japanese counterpart Toshimitsu Motegi faced the media in Danang on Nov 11 to announce the details, Jayasiri sat quietly at one corner, observing the event.
It was a long week in Danang for him and his lead negotiators.
Prime Minister Datuk Seri Najib Tun Razak told the media that International Trade and Industry Minister Datuk Seri Mustapa Mohamed and the TPP negotiators were working until 3am to salvage the deal which was thrown into doubt after Canadian Prime Minister Justin Trudeau’s no-show at the TPP-11 leaders meeting.
Prior to the Danang episode, TPP’s future was already in tatters following the US withdrawal in January.
Malaysia kept its options open and decided to join on board discussions how to bring the deal forward.
Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, known as TPP-11, decided to give it another try minus the United States.
This time Japan took the lead, hosting the first meeting in July.
With the United States no more in the picture, several countries including Malaysia saw an opportunity to suspend some of the provisions agreed as they were aware this is not another negotiation to renegotiate the TPP.
These provisions were seen as contentious and critics had long argued that countries like Malaysia did not get a good deal; harsher ones alleged Malaysia was bullied into agreeing to some of the provisions in the original agreement.
The TPP aims to eliminate tariffs on industrial and farm products. It has provisions for protecting everything from labour rights to the environment to intellectual property — one of the main contentious points. Malaysia and other partners went into the TPP-11 meetings with their list.
At first the countries sat together to identify and discuss areas where the United States had interest – the idea was to “rebalance” the TPP agreement.
“Any country can propose a list for provisions to be suspended, some countries did not have a list at all which means they are opened to keep the TPP-12 intact.
“Some countries because they lose market access, they propose certain things. The list was first discussed during the Sydney round and again in Tokyo,” a negotiator recalled.
The TPP is now known as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The new agreement will incorporate the original TPP agreement but suspend 20 provisions, 11 of which are related to intellectual property. It will come into force 60 days after six of the 11 members sign it, unlike the original TPP agreement which needed a minimum of six countries accounting for 85% of the combined GDP of the 12 members.
Under intellectual property chapter, Malaysia successfully negotiated and received support for several provisions to be suspended.
This includes suspending Article 18.46 of the original TPP document where pharmaceutical companies are able to extend their patents for five additional years as compensation should there be an “unreasonable delay” in the registration of patent by the granting authority.
With this provision suspended, Malaysia does not have the obligation to replace the “unreasonable delay”.
NGOs have criticised the Government on this provision, saying the delay of the entry of generic drugs into the market will keep prices higher for longer period until the patent expires.
Another contentious provision suspended was biologics which had the NGOs up in arms over the requirement of five or eight years of biologics data exclusivity.
For “biologics” (Article 18.51), a new and expensive group of medicines for treating cancer, diabetes and other conditions, there is at least eight years of exclusivity or five years if other measures are taken.
“We don’t have protection for biologics but under the TPP we need to have protection for biologics. Under the new deal, we suspend that obligation,” said an official.
Another obligation suspended under IP is the data exclusivity for chemical drugs. Malaysia currently provides five years of data exclusivity, from the time of marketing approval, to all approved drugs.
On the provision to extend a further 20 years for copyright protection from the existing 50 years under the TPP, Malaysian negotiators also got it suspended. This provision covers books, movies among others.
For government procurement provision, Malaysia managed to secure suspension that requires negotiations to begin within three years of the entry into force of the original TPP which seeks to liberalise more government procurement at the subnational level (state and local government).
The suspension of this government procurement provision under the new deal means negotiations can only begin after five years.
“This is something that Malaysia wanted because it gives us more time and experience on how to administer it,” said an official.
The government procurement chapter was widely criticised when the TPP was tabled in Parliament for fear that local businesses will have to compete with bigger foreign companies.
The new agreement also covered another contentious issue – the Investor-State Dispute Settlement mechanism. This limits the scope for investors to take governments to international arbitration by suspending provisions on investment agreement and investment authorisation.
It was one of the last few issues Malaysia and many others had to compromise with the United States.
With the deal broadly agreed in Danang, there is a lot more work waiting for the negotiators now.
For one, the legal scrubbing of the agreement proper and the various domestic processes in each country will need to be done before the signing date can be determined.
As Najib reiterated in Danang, Malaysia wants a deal that it can accept.
“We want TPP but TPP on our terms,” he emphasised.