COMMENT Back in 2008, the Malaysian government concluded the signing of a US-Malaysia FTA with 58 redlines or "red-stops", which discontinued the two-year negotiation. Among leading protagonists was then Agriculture Minister Muhyiddin Yassin, who mentioned that he would not compromise the livelihood of local farmers.

He was even quoted as saying ‘over my dead body'. MP Khairy Jamaluddin led a protest, citing that the FTA would take away Malaysia's sovereignty, while patent protection would deny access to generic medicine. What has changed in the past five years? One thing for sure, it is definitely not the content of the FTA.

Why Trans-Pacific?

We can imply that TPPA is called Trans-Pacific because of the geographic locations of the countries taking part in the negotiations. TPPA is unique in the sense that it is open-ended agreement.

Any country interested can join in as long as they agree with concluded texts and the other countries agree to that entry.

Every country participating in the TPPA already has existing FTAs with America except Japan,

New Zealand, Malaysia and Brunei. Japan and New Zealand are developed economies with very large trade volumes with other countries of the world, and Brunei is a resource-rich nation with a less significant trade size.

That leaves Malaysia, which has most at stake as a developing nation and a new entrant to any FTA with America.

For countries with existing FTAs with America, the TPPA will probably just result in minor additions to status quo. But for our small economy, the TPPA will entail a much bigger impact.

The first TPPA negotiation was held in March 2010 among 8 countries, while Malaysia joined in December 2010, followed by Mexico and Canada in December 2012. Recently, Japan joined in at the Kota Kinabalu negotiation round.

Other US FTAs with Singapore, South Korea and Chile serve as good guidance for us to know what to expect in the TPPA.

Also, they do not vary much from each other, about less than 5 percent of variance on average. This clearly indicates, on the part of the Americans, that there is standardized ‘template' and that there is reluctance to entertain non-conforming measures (termed as "exclusions") at the negotiation table.

The content of TPPA's texts is confidential and negotiations are held behind closed doors. What we have are five leaked chapters, namely Investment, Intellectual Property, Trade to Barrier and Regulatory Coherence. MITI reported that it has almost concluded 14 out of the 29 chapters.

On Investment and sovereignty

This is arguably the biggest chapter, with linkages to most of the other chapters. This chapter will restrict the policy space of governments through its ‘Investor-To-State Dispute Settlement (ISDS)' and the ‘State-to-state Dispute Settlement' (SSDS) clauses.

SDS is a provision under the investment chapter which will essentially allow any corporation to take the Malaysian government to court for claims to damages or losses.

TPPA supposedly "strengthens" trans-national ‘corporate' justice (fairness and equity). What do fairness and equity mean here? Basically, MNCs can expect no local condition or regulation changes affecting them once there reside in a partner country.

But actually, it is ticket for multinational corporations to trample over national legal systems through international arbitration tribunals comprising three judges; two international and one local.

For example, if Malaysia suddenly happens to find out that a certain ingredient in tobacco is harmful, and decides to ban it 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 Malaysia, with interest.

Such was the case with Phillip Morris, when it sued the Australian government over a new law on cigarette packaging. The same could happen if Malaysia decides to be more stringent with Lynas, for example.

We can even say that legislators and Parliament will be left redundant; their hands tied to enacting only laws that would not affect MNCs' profitability and business viability!

We recall Mexico being sued for US$ 16 billion ( for disallowing removal of toxic waste harmful to its environment by an American corporation.

It is also widely known that developed nations like America and Japan are attempting the ISDS via the TPPA. It was not ratified previously under existing World Trade Organization (WTO) agreements.

Although we can only assume that these clauses were not ratified then for their potential negative impacts, there is still reason to be cautious.

Government procurement and Petronas vendor development programme

With this chapter, all government procurement including that of GLCs and Petronas cannot in any way favour local contractors in any way deemed unfair to other corporations.

There is a floor threshold for this ruling; from previous US FTAs, we expect it to be around RM23 million and above.

This leaves room for only the small peripheral contracts for local companies. Meanwhile, the government procurement bill is sized at RM130 billion, or 25 percent of the Malaysian GDP.

Empirical evidence has shown that 94 percent of the American government procurement goes to American companies (Khor, 2008) and only 6 (percent) goes to over 170 companies worldwide.

Such limited potential gains from what is supposed to be opening our doors to America! It is in fact our floodgate that is being opened for America.

What will happen to our local contractors especially the oil and gas contractors? Can even our giants like Sapura Kencana and MMHE at their nascent stages survive the competitive onslaught from developed nations? Not to mention the smaller players. Even the Petronas Vendor Development Program and licenses will witness its death.

On SMEs and agriculture

Among other things, The TPPA aims at trade liberalization and tariff reduction, which may cause drastic loss of jobs in many sectors.

A direct impact is downward pressure on workers' wages, expanding even further the currently large income disparity gap.

Mexico serves as a good reminder; following the signing of the North American Free Trade Agreement (NAFTA) with Canada and the US, three million out of ten million Mexicans lost their jobs.

Tariff reductions will adversely impact particularly agricultural products. Promoting efficiency and healthy competition, however noble, becomes unfair when more than 90 percent of Malaysian companies in the agriculture sector are SMEs.

They will face unfair competition from giant agricultural exporters from TPPA countries such as the US, Canada, and Japan, whose governments in the TPPA will not reduce huge subsidies to their farmers.

A study by UNCTAD showed that subsidies reduce the price of American rice crop by 45 percent below cost of production, soybean by 32 percent and cotton by 52 percent.

A rough calculation indicates that their rice can flood the Malaysian market at as low as RM1.40/ kg- what will happen to Bernas, and more importantly, local planters then?

Tomorrow: Bantah TPPA Guide: Medicine prices to go up

ANAS ALAM FAIZLI is an oil and gas professional. He is pursuing a post-graduate doctorate, and is co-founder of Blindspot and Bantah TPPA and tweets at @aafaizli.