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Bantah TPPA’s Response to the Malaysian Government’s Position on TPPA Negotiations & The Redlines

17th August 2013
Bantah TPPA welcomes the Prime Minister and his Cabinet’s assurance yesterday that Malaysia’s participation in the proposed Trans-Pacific Partnership Agreement (TPPA) should not be bound by any fixed timeline, since many issues remain unresolved.We also laud the assurance that the Cabinet members are unanimous in reinforcing Malaysia’s position that the government would only agree to the TPPA if its terms that are most favourable to the country.The Cabinet’s position that Malaysia would not agree to any proposal that would deny access to affordable medicine and healthcare is also an assurance that we also greet positively.It should also be noted that Bantah – as a coalition that enjoys the support of more than 60 groups and 10 coalitions of groupings from a variety of backgrounds, membership and advocating a plethora of issues – will also hold the Cabinet to account for the above promises and assurances – as well as the other statements made in the past by representatives of Government over the TPPA.

We are concerned, moreover, that much of the promises and assurances remain just that – until we get more information and see for ourselves not only that (i) such ‘concerns’ and ‘considerations’, which number only three of the many issues we have raised regarding the TPPA – have indeed been incorporated into the negotiating positions of our negotiators at the next TPPA round of talks scheduled for Brunei this month, but also that (ii) these concerns and considerations have been accepted by the other 11 governments negotiating to conclude the TPPA.

It is one thing to declare positions and redlines at the TPPA negotiations, it’s quite another to ensure that such redlines and positions are accepted by the US and the 10 other governments participating in this “21st Century” free trade agreement representing the “gold standard” of FTAs.

We receive with apprehension, for example, that the Cabinet had merely taken “note” of the request to exclude tobacco and tobacco products from the TPPA. Reflecting the unprecedented breadth and depth of the TPPA and its potential impact on Malaysia and her citizens for generations to come, it has been declared that the agreement aims at the complete liberalisation of all goods, services and investment measures.

Bantah is of the position that tobacco and tobacco products do not come within the range of the goods to enjoy the privileges and preferences granted by a trade agreement between governments. Furthermore, as tobacco had been excluded in other free trade agreements Malaysia has signed from all the privileges and preferences granted to other goods and services, it is utterly incomprehensible as to why it should now enjoy such privileges and preferences in the TPPA.

We also take note with concern the spotlight placed on only three areas that purportedly remaining unresolved – as if the other 26 chapters being negotiated at the TPPA do not pose any consternation or raise any controversy.

In addition to the issues highlighted – state-owned enterprises (SOEs), labour and intellectual property rights (IPR) – by the government as being unresolved, we have highlighted many others that had previously as being highly controversial and on which the Government should establish ‘red lines’ on, such as the contents of the:
·       Investment Chapter (including the implications of its provisions on capital controls);
·       Market Access for Goods and Services;
·       Government Procurement;
·       Small-and-Medium-Enterprises (how SMEs will be impacted by other cross-cutting provisions contained in other chapters of the TPPA);
·       Financial Services;
·       Dispute Settlement; and
·       Regulatory Coherence and Transparency

Civil society have, in fact, drawn up its ‘own’ Red Lines, and we urge the Cabinet to draw on these red lines for its own positions.(See attached) These positions and/or red lines should, furthermore, be put forward in the 19th round of negotiations in Brunei.

We also note that Cabinet chosen to insist on Cost Benefit Analyses (CBAs) merely of the interests of SMEs and the Bumiputra business community, whereas we had previously demanded that analyses and assessments be conducted on the TPPA’s human rights impact, social (including labour) impact, environmental impact and legal impact of the 29 chapters.

It had been pointed out in a previous forum that the United Nations Development Program (UNDP), in its assessment of Malaysia’s participation in the TPPA, had urged the government to carry out its own comprehensive National Interests Analysis. The Cabinet, at this eleventh hour of the TPPA negotiations, is now calling for such an analysis to be carried out.

Similarly, we also note that the special Cabinet meeting held yesterday was the first of its kind, wherein all lead negotiators from the various ministries presented their respective progress of negotiations as well as the challenges ahead. Why – after three years and at the tail-end of the negotiations – were questions and clarifications only sought yesterday on the “several” issues at hand?

Lastly, the Ministry of International Trade and Industry said in a statement that it is currently in discussions with various stakeholders regarding the format and framework of further engagement on the TPPA. The statement also said the Cabinet was very supportive of more transparency in the negotiation process.

We urge herein a few basic pointers with regards to research and analyses. We reiterate that such research and analyses should not be confined to the three topics above, but should be undertaken on the whole range of issues and concerns that have been raised by civil society, trade unions, business associations and other stakeholders, such as the impact of the TPPA’s proposed provisions on goods and services chapters, investment, government procurement, competition (including on SOEs), intellectual property, textiles and apparel/rules of origin (such as the ‘yarn forward rule’), the exceptions chapter, the preamble and initial provisions. Among the points to be taken into consideration in relation to the research and analyses:

a) the research should look at the costs in addition to the purported benefits of the TPPA;

b) the research and analyses should examine the effects of past US FTAs and proposals. Past US FTAs are a more realistic guide of what Malaysia will actually have to agree to if it signs onto the TPPA;

c) the research and analyses should look at the implications over the short-, medium- and long-term effects (as different proposed provisions will affect the various sectors and industries over differing periods of time);

d) examine the impacts on the different sectors and industries if Malaysia changed its positions from its previously-held ‘red lines’;

e) examine the effectiveness of proposed exceptions to the chapters that would have an adverse impact on Malaysia and her citizens (For example, the Government Procurement chapter may have an exception for SMEs and affirmative action, but presumably not for the ethnic majority of a TPPA country’s population. No exception for SMEs/Bumiputras has emerged as realistically possible to apply to the goods chapter, services chapter, the investment chapter, the intellectual property chapter, etc).

While we acknowledge that all such process discussed above may take time, we take consolation in the fact that the Cabinet itself has said Malaysia should not be bound by any timeframe.


Appendix 1:
Bantah TPPA’s Red Lines on the TPPA Negotiations

The TPPA negotiations are the most important event taking place now that will affect the future of Malaysians.  Bantah TPPA having come together at the MITI Open Day on TPPA have issued the following as RED LINES, or positions that Malaysia should take in the negotiations and on which it should not give in.  It is our view that Malaysia should not sign the TPPA if any of these Red Lines are not accepted by the other TPPA countries.  We also ask MITI and the negotiators to adhere to these Red Lines and to regularly and often consult meaningfully with the NGOs and Malaysian business sectors, and to inform us on the state of the negotiations—-in particular what is Malaysia’s official position on these Red Lines issues and how the negotiations are going, in relation to these Red Lines.

1. Chapter on Trade in Goods

(a)   There should not be elimination of tariff (zero tariff) covering all products.  There should be exceptions for sensitive products (whereby if there is tariff elimination or steep tariff cuts, the local producers will be adversely affected).  Thus there should be exclusion of rice, other food products, tobacco crop, alcohol, automobile sector and other sensitive industrial products where there is local production.

(b)  There should not be a ban or restriction on export taxes.  Malaysia depends on export taxes to enable local processing and manufacturing of several commodities, including timber, fisheries, palm oil.  Export taxes are also a source of government revenue.

(c)   There should not be a “yarn forward rule” in textiles and clothing (whereby clothing producers in Malaysia have to source their yarn only from TPP countries, thereby raising their cost of production).

2. Chapter on Services

(a)   The services chapter has to include liberalisation on a positive list basis not a negative list basis as being demanded.   In the negative list framework, all sectors are assumed liberalised totally unless placed on a “negative list.”  The danger includes that all new sectors (not listed) are automatically opened to companies from other TPP countries; and existing sectors that later the country decides it wants to develop domestically, are also opened up already.

3. Investment Chapter.

(a)   There should not be an investment chapter.

(b)  In case there is to be an investment chapter, Malaysia should not agree to an investor-to-state dispute settlement (ISDS) mechanism or provision as this makes the government vulnerable to claims and lawsuits from foreign investors of TPP countries.

(c)   It should not restrict regulation of capital flow; and thus this chapter should not require free movement of capital flows.

(d)  There should not be a provision on “fair and equitable treatment.”

(e)   There should not be an expropriation provision.  At the least, there should absolutely not be a provision on expropriation that includes “indirect expropriation.”

(f)   There should not be restrictions on performance requirements beyond those at the WTO

(g)   It should not bind state and local governments as a number of investment disputes have       already required national governments to pay monetary damages for the violations of the investment protection provisions by state/local governments.

4. Government Procurement

(a)   There should not be any government procurement chapter.

(b)  If there is to be such a chapter, it must have provisions or effective exceptions that allow for freedom for Malaysia to maintain policies allowing preferences for locals, and for set asides for specific local communities, as according to national objectives.

(c)   If there is a chapter on GP, it should have high enough and adequate threshold levels.

(d)  It should also allow for offsets that are adequate.

5. Intellectual property

(a)   There should be no intellectual property chapter.

(b)  If there is an IP chapter, it should not go beyond the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

(c)   Most importantly, there should not be any extension of patent term.

(d)  There should not be any provisions requiring data exclusivity, linkage between patent status and medicine registration, patents on new uses or ban on pre-grant patent opposition, etc.

(e)   There should be no copyright term extension.

(f)   There should not be provisions requiring patents on plants, animals and naturally occurring microorganisms. (This would go against our Patent Act 1983.)

(g)  There should not be any provision requiring Malaysia to join the International Convention for the Protection of New Varieties of Plants 1991 (UPOV Convention). (Malaysia already has the Protection of New Plant Varieties Act 2004 which should not be amended by the TPPA).

(h)  There should not be any provision requiring Malaysia to join the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1977), as amended in 1980.

6. Competition and State Owned Enterprises

(a)   There should be no competition chapter

(b)  If there is a competition chapter, it should not be enforceable via state-state dispute settlement.

(c)   There should not be any provisions or section on state owned enterprises, as these would restrict their operations or viability.

7. Financial Services Chapter

(a)   This chapter should not require Malaysia to liberalise its financial services or bind its level of financial openness.

(b)  It should not in any way reduce the ability or policy space of Malaysia to regulate the financial sector, especially for the purpose of financial stability.

(c)   Malaysia should not be prevented from having maximum policy space to introduce or strengthen capital controls over the inflow and outflow of funds.

(d)  The chapter should not require Malaysia to open up to the establishment or spread of new financial instruments, especially introduced by foreign institutions, since the risks of this are little known.

8. Telecommunications

(a)   There should be no telecommunications chapter.

(b)  Any telecommunications chapter should not have additional obligations aimed at ‘major suppliers’ such as Telekom Malaysia (otherwise Telekom Malaysia’s profitability and ability to achieve social objectives may be severely harmed)

9. Food Safety and Labelling

(a)   There should not be any provisions (for example in a chapter on TBT or SPS) that restrict the ability of Malaysia to regulate in favour of food safety;  in particular the TPP should not require changes to our existing laws (i.e. Biosafety Act 2007 and Food (Amendment) Regulations 2010) that require the identification and labelling of genetically modified organisms (GMOs) and products of such organisms, including GM food.

10. Public Health

(a)   The TPPA must not contain provisions that reduce the ability of patients and government to obtain medicines at affordable prices.

(b)  It should not have any provisions that discourage or prevent the viability and growth of production and use of generic medicines.

(c)   Tobacco and tobacco products should be explicitly carved out from the TPP. Nothing in the TPPA should apply to tobacco and tobacco products

(d)  The TPP must not restrict the ability of government to require quantitative ingredient declarations or health warning labels on alcohol in as large and prominent manner as desired, for consumer/health reasons.

11. Halal Products

(a)   The TPP should not reduce the ability of government to regulate halal products.  Therefore there should be a carve out (exception) from the TPP for regulations on halal products.

12. Exceptions(a)   The exceptions chapter should have effective exceptions needed (eg for financial crises, health, environment, consumer protection, halal etc) that apply to all chapters

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