The Trans-Pacific Partnership Agreement (TPPA) talks among 12 Pacific countries have been stalling.
This is largely due to the perception that the TPPA will benefit much more the dominant developed countries like Australia, Canada, the US, Japan and even the small but rich Singapore.
On the other hand, the developing countries participating in the TPPA negotiations, such as Malaysia, Peru, Mexico and Vietnam, generally feel they are being unfairly treated by the Big Boys. Hence the developing countries are reluctant to move the talks at a faster pace. Why this unholy haste, they ask? Can’t they give us more time to improve the balance of benefits?
However, US Trade Representative Michael Froman, during his recent meetings with many of our leaders, gave some assurances that Malaysia will be given “time to adjust”. He said the US will take into account the different stages of development among the 12 countries in the TPPA negotiations
This assurance must be encouraging to leading negotiator YB Mustapa Mohamed and his able International Trade and Industry Ministry officials. Their tenacity and negotiating skills are paying off, as the US is apparently softening its earlier tough gang-ho approach to the talks. It is coming round to realise that many countries like Malaysia are doing well without any TPPA so far and can thus afford not to rush in where angels fear to tread!
Thus the US and other rich developed countries have to show more consideration and care for the welfare of the less developed and vulnerable potential partners, in the mainly US push for stronger trade and economic development. This need for greater understanding and flexibility is essential for the TPPA negotiations to progress in a mutually beneficial and sustainable manner, for all partners, in the longer term.
However, overall there is no doubt that Malaysia and all developing countries will gain much from a bigger and richer TPPA market, if the terms for participation are fairer.
The challenge for the negotiators is to be more reasonable, less selfish and be more accommodative of our genuine concerns about the internal political and economic acceptability of the US business dominated TPPA proposals!
What then is Malaysia’s major concern in the TPPA negotiations?
Malaysia’s major concern is the sensitive issue of government procurements. This is a delicate matter as it relates to the present long standing bumiputra protective policy, where preference is given to bumiputra contractors and the government-linked companies (GLCs) and Khazanah.
The US and other rich countries will have to recognise Malaysia’s special problems of racial income disparity and our policy to overcome the skills and capacity gaps amongst the bumiputras and between them and others.
Exemption period of five years?
There are several possible solutions.
Firstly, the US negotiators could give Malaysia, a limited time frame to adjust its policies, to meet the full competition standards in international tendering for government procurement contracts. For instance, Malaysia could be given exemption from international competition for bumi Class F contractors, during an exemption period of say about five years?
After that specified period, all government contracts could be offered for open international tendering.
In this way, Malaysia can better prepare itself to tender domestically for all big government contracts, as well as international contracts, in all TPPA countries.
Thus Malaysia can gain access to developed industrial countries and win their government contracts, too.
Secondly, Malaysia could increase its chances of winning the big contracts locally and abroad, by forming ‘One Malaysia Companies’. For instance preference could be given to Malaysian companies that are jointly owned and managed equitably by all races in Malaysia.
To encourage the formation of ‘One Malaysia Companies (OMCs) or ‘My Coms’, the government could provide small tax concessions for these OMCs. With the support of government (Khazanah) and corporate capital and the employment of the best Malaysian business talent available from all Malaysians, these OMCs can become quite formidable competitors.
They will then be able to compete effectively in Malaysia and internationally, for all government contracts.
Then all Malaysians will gain on a win-win basis. The present unproductive rivalry and animosity among different races striving to obtain the bigger business share from a shrinking cake, will decline and goodwill and national unity will increase!
Judging from all the TPPA talks thus far, it is clear that the US wants to move faster, not only for its economic but also internal political imperatives.
But the TPPA talks will move faster only if the rich industrial countries are fairer to the developing countries!
At the same time Malaysia has to be more open to international competition and less protective in its policies and practices in order to move ahead more successfully.
To move the TPPA talks at a faster pace, both sides must be more fair, reasonable and pragmatic. The assurance given by the US Trade Representative Michael Froman that the US will give Malaysia more time to adjust our present policies has to be followed through in good faith.
Then all Malaysians can work together, to accelerate the pace of progress of the TPPA negotiations that can benefit us all.
RAMON NAVARATNAM is chairperson of Asli/ Centre of Public Policy Studies.
