Press statement by Dr Kua Kia Soong, SUARAM Adviser 23 Jan 2016

Allow me to dispel some misconceptions raised by some supporters of the TPPA who seem genuinely concerned about wanting Malaysia to submit to a higher “rule of law” trade regime yet appear naïve in making those assumptions.

Is the rejection of the TPPA a retreat into isolationism?

These supporters of the TPPA argue that a rejection of the TPPA is a retreat into isolationism. Some even use the examples of North Korea and Iran to scare Malaysians into accepting the Agreement. This is disingenuous indeed. For a start, North Korea and Iran have been forced into isolation because of sanctions applied by the world community. On the other hand, Malaysia, which is modelled along liberal democratic lines, has one of the most open globally interconnected economies in the world, without being in the TPPA. At the other end of the spectrum is China, which is run by the Chinese Communist Party and is doing pretty well thank you in its trade with countries in every continent even though it is being strenuously isolated from the TPPA by the US.

Will investors stop investing in Malaysia if we do not ratify the TPPA?

That depends on what we have to offer. If tenders cannot be won on merit, if corruption and commissions are the order of the day, if the rule of law is suspect, which investor would want to put their money here? But does the TPPA ensure such bad governance conditions will not prevail anymore? Think again!

Now, assume that we do not join the TPPA. Do you think Lynas will stop dumping their toxic rare earth in Kuantan? Will other Multinational Companies stop coming to invest in Malaysia if the Malaysian government continues with its union-bashing and low wage policies? Only the absolutely naïve would think so. It was the MNCs that demanded these policies in the first place when the first Free Trade Zones were established in Malaysia in the seventies.

Will joining the TPPA lead to a huge growth in trade?

Supporters of TPPA also make the assumption that joining TPPA will lead to a huge growth in trade. However, the facts, according to the recent study of the TPPA by Price Waterhouse Coopers show that the rise in import growth would outpace the increase in export growth. Export growth is projected to rise by 0.54 to 0.90 percentage points in 2027, attributable mainly to higher manufacturing exports.

“The size of the trade surplus will be smaller at US$29.7bil to US$35.1bil, compared to the baseline scenario of US$41.9bil where the TPPA does not exist.”

We also know that with the TPPA, there will only be a negligible 0.01% increase in GDP by 2025. So what is the big deal?

Will the TPPA entrench the rule of law in Malaysia?

Some supporters of the TPPA are of the opinion that the binding stipulations in the Agreement will have a positive impact by strengthening the rule of law in Malaysia. The evidence shows otherwise. Now, even before we have signed the TPPA, the US has already lowered its standards on human rights for Malaysia. First, it upgraded the ranking for Malaysia’s record on human trafficking despite the shocking discovery of mass graves near the Thai border. Then it agreed to the Malaysian government’s request for racial discriminatory exemptions for Bumiputera interests in the TPPA.

The only “rule of law” that the TPPA is concerned about is securing the interests of multinational corporations whenever they face challenges to their profits. Thus the ISDS (Investor-State Dispute Settlement) mechanism is not so much the “rule of law” as the extrajudicial process written into the TPPA whereby governments can be dragged before supra-national tribunals by corporate lawyers if they think national laws violate their TPP rights or limit the MNCs’ expected profits.

Do you think the US is concerned about the “rule of law” in Malaysia beyond the ISDS? President Obama’s diplomatic replies to this question to placate the Najib government during his last visit is instructive. Is the US concerned about the rule of law in Saudi Arabia, their strongest ally in the Middle East?

Geo-political shadow of the TPPA

For the information of these supporters of the TPPA, the US is not so much interested about creating a “Trans-Pacific Rule of Law Abiding Community” as in extrapolating the TPPA into a defence agreement among these countries to isolate China. Countries such as the Philippines and Singapore are famously known to be US protectorates. Vietnam is cozying up to the US because of its dispute with China over the South China Sea claims.

Then Defence Minister Najib Razak’s speech at the US Heritage Foundation on 3 May 2002 exposes the Malaysian Government’s less open allegiance:

For many years US and Malaysian forces have cooperated on a wide range of missions with virtually no fanfare or public acknowledgement. And in spite of its success, our bilateral defence relationship seems to be an all too well-kept secret…Historically, Malaysia has been a steady, reliable friend of the US. Our multitude of common interests includes trade and investment on a sizeable scale and security cooperation across a range of fronts…” (Kua Kia Soong, ‘Questioning Arms Spending in Malaysia: From Altantuya to Zikorsky’, SUARAM 2010:10)

Do you think the US cares if the Prime Minister of Malaysia decides to sack the Lord President and suspend any Federal Court judges? Did the US care about the rule of law when the military took over in Indonesia in 1965 which then led to the slaughter of more than half a million Indonesians?

So let us not get carried away by the rhetoric embedded in these trade agreements or bear misguided hopes of any nobler rule of law somewhere beyond the TPPA rainbow…