Malaysia stands to gain from the revised Trans-Pacific Partnership (TPP) agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and will be its biggest winner as the deal opens access to new markets, according to Moody’s Investors Service.
Moody’s, in a recent report, said that Malaysia would benefit from export access into markets including Canada, Peru and Mexico, alongside a boost for the country’s produce such as palm oil, rubber and electronics products.
Prime Minister Najib Abdul Razak had pushed through with the ideals of the TPP despite opposition from certain quarters, including former prime minister Dr Mahathir Mohamad.
The US was once a strong voice behind the TPP, but President Donald Trump made abandoning the trade deal part of his election campaign, arguing that the agreement would undermine the country’s economy and independence.
Without the US, the 11 remaining members of TPP, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam had on March 8, signed a revised free trade agreement in Santiago.
The CPTPP retains most of the existing terms of the TPP with some key exceptions, as it provides member countries greater flexibility to consider domestic market conditions, before deciding what policies they should retain or remove.
The CPTPP will account for 13.5 percent of the global GDP, about US$28 trillion, and a market of 500 million, compared to the TPP which would have covered 40 percent of the global economy and 800 million people.
If the CPTPP expands its membership to include other large Asian economies, such as Indonesia, South Korea, the Philippines, Taiwan and Thailand, which have expressed interest in joining the trade deal, then real income gains for members would be greater than that of the original TPP.
According to Moody’s, an analysis by the Peterson Institute for International Economics (PIIE) showed that the inclusion of the five Asian countries, would result in real income gains of US$486 billion for members.
The benefits will be even greater if China and/or European countries sought membership in the future, it said.
It was reported that the CPTPP has already attracted interest from the United Kingdom.
Canada and Mexico, two members of the North American Free Trade Agreement (Nafta), would be able to attract more investments from CPTPP members, particularly Southeast Asian exporters looking for greater access to the US market.
Meanwhile, the failed TPP, signed earlier on Feb 4, 2016 in Auckland, had been dubbed as the most ambitious trade deal in history, and one that was controversial in having drawn strong protests and criticisms.
While former President Barack Obama said the TPP's benefits would touch many sectors of the US economy, some labour unions there voiced concerns that the TPP would inhibit domestic investments, particularly in manufacturing.
For Trump, the TPP would have hurt American workers and undercut US companies.
Nearer home, among the concerns over the TPP before was that, it would affect Malaysian sensitivities with regard to racial diversity, economic disparities and income levels.
Mahathir had been reported as saying that Malaysia would lose the independence to enact laws in accordance with these sensitivities once the TPP was signed.
But the government has since affirmed its commitment to the TPP as long as Malaysia’s concerns can be accommodated.
International Trade and Industry Minister Mustapa Mohamed considered the signing of the CPTPP as timely, indicating Malaysia’s commitment towards an open and liberal trading system, saying the world needed more trade and investment flows and not restricted markets.