No need to be alarmed just yet

The Prime Minister’s call for a review will give a chance for Malaysian negotiators to explain to the new government why Free Trade Agreements are vital.

IS Malaysia seriously reviewing a free trade deal which it is a party to?

That seems to be the message relayed by Tun Dr Mahathir Mohamad, first during an interview with Nikkei Asian Review last week and yesterday at the Nikkei conference in Tokyo.

Malaysia, the Prime Minister said, is not completely against the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP) but needs to renegotiate the terms of the free trade deal so that smaller countries are given due consideration to compete against more powerful and developed nations.

Now that a new government is in place, no one can fault Pakatan Harapan if it wants a review.

“Most of these people are new in the Government after serving so long in the opposition. Let them review to better understand what we have committed to.

“A review may just provide a better appreciation of what has been committed to so that this Government can make an informed decision,” said one negotiator.

Eleven AsiaPacific nations signed a slimmeddown version of what could have been a mega Free Trade Agreement (FTA) – the TransPacific Partnership Agreement (TPPA), now known as CPTPP after President Donald Trump pulled out.

The deal involved Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, representing 13.5% of the global economy. The 11 countries form a market of 500 million people.

When Malaysia got involved in the TPPA, a USled FTA under president Barack Obama, the considerations were obvious. Malaysia is a trading nation with a relatively small market of 30 million people. It needs foreign direct investments and to constantly find new markets for exports. As the world is becoming more competitive, trading becomes more vital. Globally, more countries are signing FTAs.

Malaysia too changed its policy by promoting and strategising its global competitiveness in international trade by producing high valueadded goods and services.

So far, Malaysia has implemented seven bilateral FTAs and six regional FTAs. In 2017, Malaysia’s total trade value stood at RM1,122.73bil with FTA partners.

Unlike other FTAs that Malaysia has signed, the TPPA is the first one that went beyond traditional ones.

Instead of just concentrating on goods, services and investment, TPPA also involved chapters on government procurement, stateowned enterprises (SOEs), environment, intellectual property rights, labour and competition policy.

It was a tough five years for the team of negotiators to conclude negotiations and it was made worse with the US pullout in 2017.

The 11 countries left in the deal decided to salvage it. For Malaysian negotiators, they saw an opportunity to suspend some of the provisions agreed when the US was in TPPA as they were aware this is not another negotiation to renegotiate the TPPA.

However, until today, the TPPA is still viewed suspiciously by many quarters and Dr Mahathir is one of them.

For a start, government negotiators who came from various ministries need to be more forward to explain how Malaysians benefit in the various chapters under the CPTPP.

But first of all they need more support from the management of the ministries. It is a known fact among the circle of negotiators that some did not get the support from their higherups, unlike those under the International Trade and Industry Ministry (Miti).

“It is also an issue how deeply involved some of the secretariesgeneral are in the negotiating process. They just send their officials to attend the meeting. Sometimes we wonder if even their ministers were well briefed,” said a senior negotiator.

Others are suggesting for more outreach programmes to better explain to the public on what the Malaysian team of trade negotiators have secured for the country.

“What was done in the past was general in nature. Negotiators need to explain to the public what government procurement is all about and how Malaysian companies can participate in government tenders for projects in CPTPP countries.

“Or for SOEs, we can tell what is the ratio for foreign companies to participate in Malaysia. But what is the ratio in other countries?” he said.

Another said information and explanation are lacking.

“So people speculate and create perception which is not good for the FTA. You can also tell people to read the agreement but who has time to read such a voluminous agreement?” he added.

It is interesting to note that since he took office, Dr Mahathir spoke about reviving his Look East policy and the first country he decided to visit is Japan.

Coincidentally, Tokyo is hosting the next ministerial round of another mega FTA that Malaysia is involved in – Regional Comprehensive Economic Partnership. It will be preceded by officials level meeting.

Since it is still under negotiations, perhaps the Pakatan Harapan government may want to restrategise policies and approaches and look at its position in RCEP.

Hopefully, by the time the ministerial meeting takes place in about two weeks, a new Miti minister would have been appointed and can immediately get cracking to conclude the FTA which is in its sixth year of negotiation among Asean and six of its dialogue partners – Australia, China, India, Japan, South Korea and New Zealand.

Perhaps it is also a good idea for the Council of Eminent Persons, headed by Tun Daim Zainuddin, to have a session with the Malaysian team of free trade negotiators from the various ministries and get a clearer picture of the commitments secured for Malaysia by the negotiators in CPTPP and the story so far in RCEP.

For the moment there is no need to sound the alarm bell especially among CPTPP partners of Malaysia’s next move.

A review is necessary at this stage to convince the new government by the team of negotiators that they have gotten enough flexibilities that Malaysia wanted.