THERE should be clarity on issues that were raised over the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) by the new government, an economist said.

Sunway University economics professor Yeah Kim Leng said since the CPTPP was resuscitated with Japan taking the lead, the issues raised on procurement, investors disputing settlements, and other issues need clarity.

“But that should not derail the agreement as this was a long process and Malaysia had prepared for it over the years.

“One way for the new government to go about it is to scrutinise those issues carefully and put in place safeguards for earlier objections that were raised,” he told The Malaysian Insight.

On September 30 this year, Malaysia ratified the CPTPP, becoming the ninth out of 11 countries to do so. The other signatories are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, and Vietnam.

Former international trade and industry minister Mohamed Azmin Ali announced on October 6, four days before parliament was dissolved, that the CPTPP would come into effect on November 29.

Free Malaysia Today reported that groups criticising the move said newly appointed International Trade and Industry Minister Tengku Zafrul Abdul Aziz should relook the free-trade agreement (FTA).

Also opposing the pact were 143 civil society groups, economists and members of the Gabungan Kedaulatan Negara coalition.

They claimed that the ratification was done without extensive feedback from the public, and that the cost-benefit analysis of joining CPTPP was not debated in parliament.

However, the Malaysian Consortium of Mid-Tier Companies, Federation of Malaysian Manufacturers and Institute for Democracy and Economic Affairs are against having the government withdraw from the CPTPP.

Yeah said they understand there are some strenuous objections as the earlier version of the CPTPP (TPPA) was much more stringent.

“There were some exemptions and clauses included (in the TPPA) to allow Malaysia a longer period of transition to the full agreement.

“But now, some of the objections may be valid, although the government has commissioned a full study looking into the costs and benefits.

“So, some areas may not be fully addressed where mediatory measures taken would satisfy the critics.”

He said the CPTPP should go ahead.

“The issues raised must be looked at, and most importantly, if the countermeasures are inadequate, the government can put more resources into it.

“For example, investors disputing the settlement agreement, where foreign companies can sue the government for breach(ing the terms).

“So, the government has to come up with a satisfactory response for how to tackle some of these risks if they were not taken into consideration during the full comprehensive study by PricewaterhouseCoopers, which was carried out by the accounting firm.

“That would be the proper way to proceed rather than withdrawing (from the agreement).”

On people’s objections

As for people objecting, Yeah said that with some agreements, there are winners and losers for some areas of the FTA, but not all.

“Generally, the FTA will benefit all by increasing access to markets, raising the level of investments, (encouraging) economic integration, and facilitating trade, including the exchange of goods and services and raising the level of economic behaviour regarding international trade and investments.

“It’s like a win-win situation because it (improves) the welfare of all parties through this cooperation”

Nevertheless, he said, there are certain non-trade issues that have been incorporated in the CPTPP, such as on the environment, workers’ rights, dispute settlements affecting the sovereignty of the country, and more.

“So, the government needs to ensure there are countermeasures ready if there is a need to strengthen some of the rules and regulations.

“We have to upgrade ourselves in areas that have been covered in this agreement.

“We also have to be mindful that some of the provisions may not benefit us in the short run, so we hope the government has measures ready to address them.”

On the impact of Malaysia retracting at this time, Yeah said the move will not likely have any immediate effect.

“The issue is that it will be a missed opportunity in increasing the country’s market access, having been with a community that will signal benefits as a country that is open for trade.

“Not supporting the FTA will damage our credibility in terms of subscribing to international agreements and also (turn away) investors who are looking forward to joining Malaysia in compliance with higher standards of international trade.”

He said Malaysia stands to benefit from trade and investment gains as part of a larger group, which helps it gain access into other countries’ markets and attract more foreign direct investments.

“Basically, it (CPTPP) is lowering trade barriers and facilitating investments for greater economic gains.” – December 22, 2022.