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Should it be TPPA, RCEP – or both?
Published on: Sunday, March 19, 2017

By Dr Rafiq Idris
In 2011, Malaysia announced that it will be joining the Trans-Pacific Partnership (TPP) negotiation that involves twelve countries from three continents which are namely the United States, Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam.

The Trans-Pacific Partnership Agreement (TPPA) that was finally signed in 2016 is viewed by some as a strategic step and efforts towards achieving high income nation status and as a way to penetrate the Latin American Market.

TPPA is ambitious and comprehensive trade agreement and there has been a lot of controversy and debate on this mega-trade deal.

The recent development and news which says that the United States (US) is withdrawing from TPPA poses an interesting question, whether or not TPPA is still relevant without the US for Malaysia?

Some even suggest that we can just focus with Regional Comprehensive Agreement Partnership (RCEP).

This article argues that we can have both trade agreements to maximise the potential benefits for Malaysia with some suggestions. Part of my opinion I have expressed in an article in New Straits Times recently.

Firstly, I strongly believe that we should proceed with Trans-Pacific Partnership Agreement.

Why should we proceed? Although Malaysia has FTA agreements with most of the TPPA members, the TPPA is seen as a positive step towards deeper economic integration within the Asia Pacific region as well as a platform for Malaysia to foster better trade ties with countries in the American continent. In addition, the TPPA is viewed as a stepping stone towards providing a stable and sustainable trade relationship between Malaysia and other TPPA members.

The TPPA is also expected to add impetus to the economic integration and access of member countries, through the establishment of a large duty free market that comprises of approximately 500 million people.

There is a huge market there. Table 1 shows Malaysia’s total trade with TPPA members in 2015.

In my opinion, based on the data in table 1, trade agreement may add impetus towards further trade expansion between TPPA member countries because of immediate or gradual removal of trade barriers.

Secondly, some of the provisions or new things being introduced which are controversial and potentially bring negative impact for Malaysia’s economy be relaxed or taken out, if all member countries agree.

This will make this trade agreement to be something like other FTAs that Malaysia has signed.

On this regard I would suggest that provisions like patent linkage, patent term restoration and data exclusivity to be relaxed or taken out.

Why should we exclude these 3 provisions? These 3 provisions are TRIP-Plus provisions which have been debated and alleged to may cause negative impact on access to medicine due to extra protection given to patent holder.

Implementing TRIPS-Plus provision would mean Malaysia is following a high standard practices/ provisions.

Allowing these provisions would mean that Malaysia agrees to comply the ruling of potential patent protection for additional 5 years for data exclusivity and patent term restoration while patent linkage provision does not allow generic manufacturer to apply for marketing approval until the minimum patent protection of 20 years expire.

All these give extra protection for patented medicine holder to enjoy higher profits in the protection period as a result of their big investment in research and development for new medicine invention.

I suggest if possible we exclude this if we were to proceed with TPPA.

My article some months ago suggested that even with these provisions, if Sabah can position itself to attract giant medicine manufacturer to invest in Sabah for the manufacturing of new medicine, we can gain.

Thirdly, Malaysia should proceed also with RCEP. Why? RCEP is a trade deal involving 10 ASEAN countries and its 6 FTA partners which are namely Australia, China, India, Japan, New Zealand and South Korea.

This is a big potential for market integration involving about 3.4 billion people and approximately 30pc of world’s Gross Domestic Product. RCEP is 6-7 times bigger than TPPA.

However, controversial issues like Investor State Dispute Settlement (ISDS) and TRIPS-Plus among others if it is in the agreement need to be addressed before we proceed. Will RCEP be more stringent than the TPPA?

Stakeholders’ engagement program is necessary. Experience of other countries implementing similar provisions need to be looked at. Study to assess the impact is compulsory.

Effort to improve Malaysian economy through trade agreements should be supported by any means if it is clear that Malaysia is potentially to get more benefits. Hence, I would suggest that a comprehensive study to be conducted to quantify the overall cost and benefits of having both TPPA (now without the US) and RCEP.

If can be proven through a comprehensive study that the benefits are much greater than the cost, taking into account the views of stakeholder, we should proceed with both or one of the agreements.

Indeed, comprehensive study is not an option.

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