Malaysia in a post-TPP world

The Sun (Malaysia) - - SPEAK UP -

THE Trans Pa­cific Part­ner­ship Agree­ment (TPPA) can be put to rest. It seems so, at least for now. If there is a flicker of hope, it comes from the talks that Ja­pan Prime Min­is­ter Shinzo Abe had with Pres­i­dent-elect Don­ald Trump dur­ing his visit (Nov 17-18) to the US. It is not clear if Abe man­aged to con­vince Trump about the need for the TPPA dur­ing their meet­ing.

Can Abe do enough to change Trump’s mind? As things go, that is an un­likely pos­si­bil­ity.

At best one would ex­pect Trump to relook the agree­ment. He might want a changed agree­ment. It may not be legally pos­si­ble to change the terms al­ready agreed upon by the 12-mem­ber part­ner­ship. The agree­ment will have to pro­ceed as it is, or not at all.

What else is pos­si­ble? Per­haps the other like-minded mem­bers of the TPP can agree to go ahead with the TPPA. That would have to be with­out Amer­ica’s par­tic­i­pa­tion.

Not hav­ing the US as part of the deal will sub­stan­tially weaken any such agree­ment that emerges. The out­come would be thin. It would not be de­sir­able for Malaysia, which has been hav­ing de­clin­ing trade with the US over the years. Malaysia’s fo­cus would be to en­joy more ac­cess to US mar­kets and gain from greater US trade and in­ter­est in Malaysia.

Nei­ther will the TPPA mi­nus the US be at­trac­tive to some of the other mem­bers. Viet­nam will prob­a­bly balk at such an idea. Sin­ga­pore will not be fazed be­cause it al­ready has a bi­lat­eral free trade agree­ment (FTA) with the US. What, then, could Malaysia do?

One pos­si­bil­ity is to rekin­dle in­ter­est in a US-Malaysia FTA. A US-Malaysia FTA was con­sid­ered in 2006 and negotiations came to a halt in 2009.

If the bi­lat­eral ex­er­cise was tough back then, it would be even more de­mand­ing un­der Trump’s scru­tiny.

He is not likely to be ap­pre­cia­tive of Malaysia’s stand on gov­ern­ment pro­cure­ment, sta­te­owned en­ter­prises and na­tional agenda (or bu­mipu­tra pol­icy). All of th­ese poli­cies re­strict the en­try of Amer­i­can busi­ness into the Malaysian busi­ness space.

Since a bi­lat­eral FTA with the US seems more re­mote un­der the Trump regime, Malaysia’s trade pol­icy in the post-TPPA era runs into a wall. Two pos­si­bil­i­ties are open.

One is to pur­sue the Re­gional Com­pre­hen­sive and Eco­nomic Part­ner­ship (RCEP) agree­ment with ad­di­tional vigour. Malaysia can ex­tend it­self by pro­vid­ing RCEP with the lead­er­ship that Asean needs.

This de­pends on whether Na­jib is up to the task. He has some nat­u­ral ad­van­tages, one of which is his re­cent visit to China. This might help him with the trac­tion that he has gained from his re­la­tion­ship with China.

How­ever, Pres­i­dent Joko “Jokowi” Wi­dodo may be a more dif­fi­cult en­tity to han­dle. Jokowi has lit­tle pa­tience for ab­strac­tions, wants to see quick re­sults and has lit­tle time for end­less meet­ings. Asean does not quite fit this mould. It might be more dif­fi­cult con­vinc­ing him of the use­ful­ness of Asean as an in­sti­tu­tion whose in­te­gra­tion will bring bet­ter trade and in­vest­ment to all mem­ber states. If Na­jib can con­vince Jokowi, prod China, and get In­dia to soften its ne­go­ti­at­ing stance that would do much to ac­cel­er­ate the RCEP process.

RCEP negotiations may not meet the 2016 dead­line. The timeline might be pushed fur­ther to the end of 2017.

What if there are ten­sions that may fur­ther de­lay the com­ple­tion of RCEP? What, can Malaysia do then?

The most se­ri­ous en­deav­our that Malaysia can ini­ti­ate is to uni­lat­er­ally lib­er­alise. That does not need the as­sis­tance of any other coun­try. That will also skirt dis­agree­ments amongst dif­fer­ent coun­tries and their dif­fer­ing agen­das. And, ul­ti­mately, re­sources do not have to be wasted on ex­pen­sive trade negotiations if only Malaysia will un­der­take do­mes­tic re­forms, with­out wait­ing for any ex­ter­nal com­pul­sions.

It is ab­so­lutely clear Malaysia has to re­solve some prob­lems if it is to take full ad­van­tage of trade in goods and ser­vices, and in­vest­ment. If there is a need for a check­list of is­sues, the TPPA comes in handy. Although we ob­tained con­ces­sions on a num­ber of points, an FTA of a higher stan­dard would be one with­out those waivers.

In the ab­sence of any mul­ti­lat­eral lib­er­al­i­sa­tion ef­forts from the World Trade Or­gan­i­sa­tion, the best ap­proach is to ap­proach trade from a uni­lat­eral per­spec­tive. Whether we have the po­lit­i­cal will to do so is a dif­fer­ent ques­tion.

Shankaran Nam­biar is the au­thor of the re­cently pub­lished book, Malaysia in Trou­bled Times.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.