Analysis: Fears of TPP’s impact on Malaysia’s sovereignty exaggerated

An ISIS study said concerns that the TPP would result in the loss of Malaysia’s sovereignty might have been over-amplified. File picture shows Minister of International Trade and Industry Datuk Seri Mustapa Mohamed (right) hosting a Q-and-A session, entitled ‘Hey, dare to accept TPP challenges?’ on October 16, 2015 at the Pitching Centre, Kuala Lumpur. — Bernama pic
An ISIS study said concerns that the TPP would result in the loss of Malaysia’s sovereignty might have been over-amplified. File picture shows Minister of International Trade and Industry Datuk Seri Mustapa Mohamed (right) hosting a Q-and-A session, entitled ‘Hey, dare to accept TPP challenges?’ on October 16, 2015 at the Pitching Centre, Kuala Lumpur. — Bernama pic

KUALA LUMPUR, Dec 3 — Concerns that the Trans-Pacific Partnership (TPP) could undermine Malaysia’s sovereignty are real but may be “over-amplified”, a local think-tank concluded based on its study of the agreement.

The analysis by Institute of Strategic and International Studies (ISIS) pointed out that Malaysia has been able to secure exemptions, such as for pro-Bumiputera policies, in the Pacific free trade treaty involving the US and 11 other nations including Malaysia.

“Participation in the TPP is positive for Malaysia’s security interests,” said the ISIS’ National Interest Analysis of Malaysia’s Participation in the Trans-Pacific Partnership released today.

“Concerns that it will result in the loss of Malaysia’s sovereignty and equality are not without basis but may have been over-amplified,” it added.

The ISIS analysis noted that the investor-state dispute settlement (ISDS) provision, which allows corporations to sue a government if they feel their rights are violated, has been made more acceptable with exemptions for government policies regulating public health, safety and environmental protection.

“Bank Negara Malaysia (BNM) retains complete autonomy in managing the ringgit, foreign exchange reserves and capital controls. Malaysia can also elect to deny tobacco control measures from ISDS provisions,” said the report.

Critics of the ISDS provision have cited the case of tobacco giant Philip Morris suing Uruguay for enlarging health warnings on cigarette packs under the terms of a bilateral trade agreement.

As Malaysia strives to strike a balance between its ties with China and the US, ISIS noted that while such a balance exists in defence, the economic area shows formal trade agreements with China but not with the US.

“While not all countries in Asean have been able to respond positively to the TPP, Malaysia is clearly seeking to address the issue of US economic engagement within the context of this 12-country plurilateral framework,” said the ISIS report.

ISIS acknowledged that despite exemptions on matters like government procurement, pro-Bumiputera policies and state-owned enterprises, the TPP would likely lead to more constraints in government policy-making in some areas.

“These constraints, while possibly necessitating change, neither causes Malaysia to infringe its legal obligations nor to abandon policies considered essential for the country. Malaysian sovereignty remains intact,” said ISIS.

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