A former UN Assistant Secretary-General responsible for analysis of economic development in the United Nations system and one of Malaysia’s leading economists expressed concern that the benefits of the Trans-Pacific Partnership Agreement (TPPA) were grossly exaggerated, while the dire implications for Malaysia and other participating countries are downplayed.
In his public lecture on ‘TPPA: Future or Fraud’ delivered under the Chancellor’s Lecture Series at the main campus today, Dr Jomo Kwame Sundaram highlighted three major concerns, namely trade issues, intellectual property rights, and the investor-state dispute settlement arrangements in TPPA.
He quoted the Wall Street Journal study that showed the misrepresentation of the projected trade and investments gains from TPPA by the US Trade Representative (USTR), the chief negotiator, when actually the trade balance remained unchanged or registered minimal trade growth.
He said participating countries were obliged to follow the TPPA provisions even if these were in conflict with the national or public interest, while advocates claimed dubious growth gains from non-trade measures (NTMs), strengthening of intellectual property rights and from the investor state dispute settlement scheme.
“What I find in this country is almost no discussion of the costs and risks, which is why I am very concerned.” He said a US university study showed that TPPA would actually lead to net job losses of 771,000. Dr Jomo stressed that TPPA hurt labour and would result in unemployment and lower wages.
He said the TPPA also greatly strengthened Intellectual Property Rights and weakened national regulation. “My biggest fear is how it will strengthen pharmaceutical companies.” Dr Jomo explained that it would allow for longer monopolies on patented medicines by extending the patent life, would keep cheaper generics off the market, and block development and use of similar medicines. As a consequence, the people would have to pay higher costs for medicines and would have low access as well.
The third area of concern was Investor-State Dispute Settlement (ISDS) which strengthens foreign investor rights. Dr Jomo said any foreign investor/company registered with a TPPA country could sue the Malaysian government for any change in rules which could adversely affect profits, irrespective of whether it was done for public or national interest. This would then be resolved by a binding private arbitration, with uncapped awards for damages and no system for appeal.
Dr Jomo said there was tremendous incentive for large corporations to sue the government. For example, he said, if Malaysia banned a dangerous herbicide, its manufacturer could sue the government for compensation for lost profits. Only tobacco has been left out of TPPA due to the demand of the Australians. “It will have a chilling effect on government regulations, public interest policies, for fear of litigation by foreign corporate interests. Even when cases are successfully defended, legal costs are very high.”
Dr Jomo said Vietnam is the only country where public opinion favoured joining the TPPA, largely because of its uneasy relations China. “Unless the TPPA is going to be renegotiated, which is very doubtful in the present situation, I am afraid we have to beware to ensure that our legitimate interests and the public interest as well as the financial interest are protected.”
He said the TPPA needed to be renegotiated because it currently enabled regulatory capture by foreign corporations and discouraged important regulations to protect health, safety, the environment and the economy.
The TPPA is an agreement on trade and investment signed by 12 Asia-Pacific countries/trade ministers, including Malaysia.