So, what exactly is the TPP Agreement? The TPP is a proposed regional regulatory and investment treaty aimed at creating a platform for economic integration across the Asia Pacific region.
The proposed agreement originated in 2005 as the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4), and included just New Zealand, Chile, Singapore and Brunei.
It was the United States’ (US) participation and its subsequent dominant role in the negotiations of the partnership that resulted in the expansion of its membership, as well as having a primary role in its agenda setting.
How does it affect Malaysia?
Malaysia joined the TPP in 2010 and is expected to increase its GDP by 5.6% and also its export by 11.9% by year 2025.
The industries most likely to benefit from the pact are textiles, apparel, commodities and electronics.
- High medical costs
As the TPP plans to introduce tighter rules for copyright to protect intellectual properties, this could mean monopoly for pharmaceutical companies that currently hold drug patents. As a result drug prices will be locked in high, and inadvertently block cheaper, generic versions from entering the market.
Consumers will have to take advantage of banking products like credit card to manage their cost, such as one that will give cashback on pharmacy’s spending.
This will make access to lifesaving medication much harder and for people in developing countries in the TPP (including Malaysia), denying consumers access to HIV/AIDS, tuberculosis and cancer drugs could be deadly.
Members of the Malaysian AIDS Council and HIV-positive patients protested early last year, claiming that the cost of treatment drugs could go up from RM500 – RM600, to almost RM3,600 per month if the TPP happens.
- How about SMEs?
The removal of tariffs could mean local producers and farmers now have to compete with tariff-free imports from other TPP countries.
On the other hand, provisions under the TPP could also make it easier for SMEs to gain access to foreign markets and to operate across the region, so things could go either way for these industries.
- The local government could lose out
If enacted, the TPP would support multinational corporations (MNCs) and give them the power to undermine policies and priorities on national and local levels.
What this means is that MNCs can expect no local condition or regulation changes affecting them when they reside in a partner country. For example, if Malaysia suddenly finds out that a certain ingredient in tobacco is harmful, and decide to ban it and thereby affecting the profitability of a tobacco MNC, the MNC has the right to sue the government for potential profit loss for the remaining period of their permit in the country, with interest.
The same could happen if Malaysia decides to be more stringent with LYNAS in the future.
To put this to the extreme, legislators and the Parliament may well be relegated to enacting only laws that will not affect MNC’s profitability and business viability.
So, what do you think of the TPPA?
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