Response to Mustapa Mohamed’s speech in Parliament — Leonardo Losoviz

JANUARY 27 — This is TPPDebate.org’s response to International Trade and Industry Minister Datuk Seri Mustapa Mohamed’s speech yesterday, on day 1 of the debate and vote on the TPPA in Parliament.

What mustapa said:

Mustapa said Malaysia decided to join TPPA as the nation did not have any free trade agreement (FTA) with the United States, Canada, Mexico and Peru, adding that TPPA would pave the way for local companies to penetrate the huge US market.

Our response:

How much tariffs from each of these four countries (US, Canada, Mexico and Peru) will be reduced by signing into TPP? This must be compared against the baseline today: all the 12 TPP countries are in the World Trade Organization (WTO) already.

When doing trade with Malaysia, WTO members are not allowed to raise their tariffs above the level that they are bound at at the WTO, even on Malaysia’s products, even if Malaysia doesn’t sign the TPP. They are locked in. According to legal advisor Sanya Reid Smith from the Third World Network, the average locked tariff rate is just 3 per cent for the US and 6 per cent for Canada, they are pretty low already, so there is not much difference going to 0 per cent in the TPP.

That leaves just Mexico and Peru. If it is really such an important thing to get Malaysian exports into Mexico and Peru, then why not just having a free trade agreement with Mexico and Peru?

What Mustapa said:

“Malaysia is the only country among the 12 member countries involved in the treaty to debate it in Parliament,” he added.

Our response:

Possibly true, however since UMNO’s MPs are the majority and they are voting in bloc, as Lembah Pantai MP Nurul Izzah Anwar has suggested, then how is this debate different from a PR campaign?

What Mustapa said:

Similarly, Mustapa said the import tax on textile products will be reduced by 70 per cent and it will give a 30 per cent boost to exports of Malaysian textiles.

Our response:

The textile industry in Malaysia will not benefit, actually quite the opposite will happen, because of the Yarn Forward Rule. This rule forces the textile industries in TPP countries to buy yarn from within the TPP. The only country within the TPP with an economy of scale big enough as to provide the yarn is the US.

However, US yarn is more expensive than Chinese yarn. As such, the end price in the USA of the zero-tariff Malaysian product is likely to be higher than the taxed products from competing non-TPP countries such as China, making Malaysia actually lose market in the textiles exports to the US.

The Vietnamese Chamber of Commerce and Industry has acknowledged that, with this rule, Vietnam gets no benefits from the TPPA. If Vietnam, with its lower costs in producing textiles than Malaysia, will not benefit, then how shall Malaysia?

What Mustapa said:

He said the obligation on labour under TPPA is to increase the standard of the current labour force like having the freedom to form workers union, collective agreements, minimum wage, safety and health aspects as well as abolishing forced and child labour.

Our response:

These labour obligations are enforceable only between Malaysia and the US, by having each country sue each other. The Australian Government cannot sue Malaysia because of Malaysia’s violation of labour rights, only the US Government can sue. This is because these provisions are not in the labour chapter itself, but in the side letter, the Labour Consistency Plan, signed between Malaysia and the US.

Why is this a problem? According to Sanya Reid Smith, the US Government doesn’t sue about these labour rights.

It has sued only once, Guatemala, after intense pressure from their trade unions. There is US-Colombia free trade agreement. Trade unionists get murdered in Colombia quite regularly, yet the US hasn’t sued Colombia yet. And only their government can sue; their trade unions, citizens, human rights activists cannot sue. If the US Government chooses not to sue, there is nothing we can do to enforce it.

What Mustapa said:

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said Malaysia could exit TPPA without having to pay any penalty as stipulated in Chapter 30 of the proposed agreement.

“If the agreement is detrimental to the country, we can always scram after giving six months’ notice,” he said during a briefing on the TPPA’s costs and benefits here yesterday.

Our response:

What is interesting about this statement, is the contradiction his own statement on why Malaysia must sign in first place. Mustapa had said that by staying in the TPPA, Malaysia will send the right signal that the country is open, business-friendly, worker-friendly and environment-friendly.

“If we stay out, we are sending the opposite signal,” he said.

So, how does this compare with actually pulling out? Just think about it: ‘I’m not friending you anymore, right? I’m withdrawing.’ Politically, it might look a bit unfriendly, right? So far, no country has withdrawn from a free trade agreement with the US, once it’s taken effect.

We believe this is not by chance.

What Mustapa said:

“There are pros and cons. Compared to the time when the 12-page Pangkor Treaty was signed in 1874 where the nation was sold out (to British imperialism), we are smarter now.

Our response:

This comparison is pointless, we are living different times, and the world hegemonies (Britain back then, US nowadays) impose their might in different ways than in 1874.

Indeed, Mustapa has recently said that the nation’s sovereignty will not be harmed with the TPPA as the people are getting smarter and knowledgeable.

This looks like dumbing down the whole issue on how Malaysia could potentially lose its sovereignty, as in lose its ability to take decisions to safeguard the interests of the country, if contested under the ISDS. Certainly, “the people are getting smarter and knowledgeable” is not a proper response to this very serious issue.

The irony of it, is that this “explanation” was given by Tok Pa one day after TransCanada Corp launched US$15 billion (RM63.571 billion) lawsuit against the US government for rejecting the Keystone XL pipeline.

I think you don’t get much more “smarter and knowledgeable” than the US government, yet they got sued. 

We wonder, is Tok Pa implying that people in Malaysia are smarter than people in the US?

That this shall not happen in Malaysia? That even the possibility of it ever happening is null?

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.