A 12-nation Pacific free trade pact pushed by the United States will not benefit Malaysia as it is meant to isolate fast-growing economic giant China, United Nations economist Jomo Kwame Sundaram said last night
Malaysia is currently in talks to ratify the Trans Pacific Partnership Agreement (TPPA) but there has been growing opposition to the deal due to its impact on procurement, medicines and business regulations in the country.
“The purpose of the TPP is to isolate China and you don’t want to do that to your main trading partner,” the prominent Malaysian economist said at the launch of his latest book in Kuala Lumpur.
The former University Malaya academic has worked as the United Nations Assistant Secretary-General for Economic Development in the United Nations Department of Economic and Social Affairs (DESA) since 2005.
Jomo said the trade agreement’s main purpose to isolate China became meaningless after the US narrowed its deficit against the Asian giant.
“The US dollar has devalued the last few years so the huge US deficit with China has closed,” he said after launching his book Malaysia@50 in Universiti Malaya.
“So now it’s yesterday’s problem. Why should we get stuck in such a policy and an agreement which was hatched up earlier?” he added.
The trade pact has been viewed as the US’s entry point into market dominance within Asia, which China sees as an attempt by Washington to overstep on the Chinese’ backyard.
The Wall Street Journal had quoted the former World Bank chief for China, Yukon Huang as saying the pact discouraged and complicated shipping of parts to and from Asian countries.
He pointed out the implication would affect China’s role as the final assembly point for electronic items whose parts are usually from other nations.
Jomo believed that instead of getting into trouble, the Malaysian government should be aware of the potential trade agreement between the US and the European Union.
“The bigger problem now is that the US and EU will come up with an economic NATO that’s going to weaken the WTO,” he said, referring to the North Atlantic Treaty Organisation defence pact and the World Trade Organisation.
Jomo expressed concern that a trade pact between Western nations would affect Malaysia’s exports, in particular palm oil which competes with other vegetable oils including the popular soya oil in the US.
“That’s why we need to keep multilateral agreements,” the economist said, explaining that such agreements allow Malaysia to have more control over negotiating the terms.
He also reasoned that Malaysia’s trade negotiators are inexperienced to deal with such a complex agreement, placing the country at a losing end at the bargaining table.
At the centre of the protests against the TPPA is concern that it would destroy the local and smaller enterprises. The agreement has appeared more favourable to foreign established firms that would have the technology and skills to receive tenders. While the awarding of contracts appear merit based, many are worried that Malaysia got the worst end of the deal.
“If this was an APEC deal, we have partners that are negotiable,” said Jomo, referring to the 21-member Asia-Pacific Economic Cooperation.
“But with bilateral agreements, what power does Malaysia have against other countries?” he added.
Apart from the TPPA, Malaysia is also involved in the negotiations for Regional Comprehensive Economic Partnership, another trade pact that includes China. It is between Southeast Asian nations, China, India, Australia, Japan, South Korea and New Zealand. - October 3, 2013