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Trans-Pacific Partnership Agreement

Background
On October 4, 2015, Ministers of the 12 Trans-Pacific Partnership (TPP) countries Australia,
Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore,
United States, and Vietnam announced conclusion of their negotiations. The TPPA has 29
chapters which include goods market access, textiles, apparel, intellectual property rights,
government procurement, dispute settlement and exceptions, to name a few.
What it provides
1)
2)
3)
4)
5)
6)
7)

Economic growth;
Support the creation and retention of jobs;
Enhance innovation, productivity and competitiveness;
Raise living standards;
Reduce poverty;
Promote transparency, good governance;
Enhanced labor and environmental protections.

Impact to Malaysian economy


1) Malaysia seeks to expand large duty-free market access, enhance our competitive
advantage and builds investor confidence.
2) Malaysia wants to engage in a more concrete way with important trading partners such
as the US, Canada, Mexico and Peru, with which we currently do not have any
structured framework, such as trade agreements.
3) In the long run, the TPP will bring benefits of lower cost of goods and more efficient
production by taking advantage of the competition and economies of scale.
4) The successful conclusion of the TPP will form an unprecedented market of 793 million
people, with a combined GDP of USD27.5 trillion. This far surpasses the limited
domestic market of 29.5 million people and a GDP of USD 300 billion in Malaysia.
5) TPP provides an opportunity to a seamless market with preferential access, far beyond
our population and also provide investment opportunities globally and regionally.
6) Malaysia's Gross Domestic Product (GDP) is projected to increase by US$107bil
(RM444bil) to US$211bil (RM876bil) over 2018-2027.
7) Investments projected to rise by US$136bil (RM565bil) to US$239bil (RM993bil) over
2018-2027 - attributable largely to higher investment growth in textiles, construction
and distributive trade.
8) More than 90% of the economic gains will be attributable to lower non-tariff measures.
9) Firms to benefit from access to US government procurement, greater digital
liberalization and stronger enforcement of trade secret protection.
10)
Bumiputra and SME policies will remain unchanged.
Challenges for Malaysia in the TPP.
1) Government Procurement (GP) in construction services.
Issues
Build-Operate-Transfer (BOT)
model.
Threshold for participation.

Mitigating strategy
Malaysia has carved it out from the scope of
commitments.
Malaysia negotiated a longer transitional period for
liberalisation; the threshold will be reduced over a
21-year transitional period before settling at (Special
Drawing Rights) SDR 14 million (From SDR 63 million
upon entry into force for 5 years).

Others
Areas of interests to the Bumiputra business community and SMEs have been
excluded from Malaysias offers.

2) Intellectual Property Rights (IPR).


Issues
Mitigating strategy
Longer copyright protection Malaysia has made it clear that the Agreement MUST
term.
NOT have a negative impact on the healthcare of
Increase of pharmaceutical
Malaysians.
prices.
Others
Doesnt affect SMEs that much. More on high prices for medicines and healthcare.
3) State-Owned Enterprises (SOE).
Issues
There were fears that the TPP
would necessitate the
dismantling of SOEs and
GLCs.

Mitigating strategy
Malaysia is seeking flexibilities in the agreement that
will allow the continued participation of SOEs and
GLCs in our economy and provide public and social
goods and services.

4) Labour and Environment


Issues
Labour: Malaysia is seeking to strike a balance
between workers rights and maintaining harmonious
employer-employee relations.
Environment: Malaysia supports environmental
preservation chapter but we do not want to allow
environment clauses to be used as a disguised barrier
to trade.

Mitigating strategy
Malaysia together with
other parties are seeking to
have a dispute resolution
mechanism that is more
consultative in nature and
also not sanctioned based.

Impact to SMEs
Issues
Increased competition
from large international
corporations

Differing rules imposed on


SMEs

Solutions
1) Longer transition periods for liberalization.
2) Carve-outs in terms of GP, whereby a number of projects
at certain thresholds are only available to Malaysian
SMEs.
3) The Government has forwarded a position to enable
SMEs to be integrated in the regional supply and value
chains.
4) The Government ensures large corporations do not
abuse their positions and adopt monopolistic behavior
which could impact SMEs
1)
TPPA aims
to develop
uniform rules to ensure
Definition
of Special
Drawing
predictability.
Rights
(SDR):
The SDR is an international reserve
asset, created by the IMF in 1969
to
supplement
its
member
countries official reserves. As of
March 2016, 204.1 billion SDRs
(equivalent to about $285 billion)
had been created and allocated to
members. SDRs can be exchanged
for freely usable currencies. The
value of the SDR is currently based
on a basket of four major
currencies: the U.S. dollar, euro,
the Japanese yen, and pound

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