Trans-Pacific Partnership: Is Malaysia In or Out?

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By Lien Hoang

Will they, or won’t they? No member of the Trans-Pacific Partnership has been more publicly planted on the fence than the Malaysians.

The Southeast Asian country has given mixed signals on whether it will join the trade deal ever since President Donald Trump removed the U.S. in January. Washington had secured a pledge from Kuala Lumpur to improve workers’ rights, such as by allowing migrants lured into slavery to find real work. That promise will be void if Malaysia follows the U.S. example and quits the TPP, whose 11 remaining nations are in Sydney this week discussing whether to enact the accord.

Other pledges that could disappear with the demise of the trans-Pacific pact are longer drug patents, reduced affirmative action for ethnic Malays, and foreign competition in state contracts.

“Realistically speaking, I don’t think TPP 11 is going to be a reality,” said Firdaos Rosli, who helped negotiate a Malaysia-U.S. trade deal that never got off the ground. In a phone interview, he predicted some of the members left standing will withdraw but he urged Malaysia to remain.

In March the country’s trade minister, Mustapa Mohamed, said TPP “ ‘minus one’ would be tough for us,” so Malaysia would focus instead on the Regional Comprehensive Economic Partnership.

More recently, after lobbying from Japan and New Zealand, Mustapa said he’s open to the Pacific deal, as parties “spent a lot of time and invested a lot of money in the TPP,” Bernama state news agency reported Aug. 9.

Post-Trump TPP

Some in the U.S., when it was still in the TPP, criticized their government for engaging with Malaysia through the trade deal, despite what critics say is the country’s poor record on human trafficking, political prisoners, and corruption.

That’s less relevant with the U.S. now out of the trade bloc, but especially with a U.S. president “even less interested” in human rights than his predecessors, said Jomo Kwame Sundaram, a former United Nations assistant secretary-general for economic development. He said the TPP 11, including Malaysia, are “foolish” to continue talks but might be hoping for a post-Trump return by the U.S.

“Even a full term for Trump is being doubted in some quarters, so there may be some wishful thinking,” Jomo told Bloomberg BNA in a call from Kuala Lumpur.

Some TPP provisions are dangerous and onerous for developing countries like Malaysia, he said, particularly two introduced by the U.S.: the dispute-settlement mechanism that allows companies to sue governments, which is seen as a threat to sovereignty; and the intellectual property rules, which are seen as a threat to generic drugs. Both controversies helped make the Pacific trade deal least popular in Malaysia, among all TPP states in a 2015 Pew Research Center poll. The country of 31 million also agreed to liberalize state companies.

‘Significant Concessions’

“Malaysia had to make a number of significant concessions in return for access to the lucrative economic opportunities presented by the U.S. market,” said Adeline Wong, a partner at Baker McKenzie affiliate Wong & Partners in Kuala Lumpur.

She told Bloomberg BNA it’s understandable the country is hesitant to finalize the agreement without Washington, which invited Malaysian Prime Minister Najib Razak to visit Sept. 12.

Mustapa has said the TPP should be renegotiated, while Australia, Japan, and New Zealand aim to keep it intact.

“Malaysia may feel that, since the prized member is not a part of the new partnership, it does not have to make all the concessions that it did,” Shankaran Nambiar, senior research fellow at the Malaysian Institute of Economic Research in Kuala Lumpur, told Bloomberg BNA. “It sees Vietnam as a useful compatriot in reducing the bar for the TPP.”

But if the agreement does come to pass, Shankaran said, Malaysia will probably join.

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

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