This article first appeared in The Edge Financial Daily on January 16, 2019

KUALA LUMPUR: The Institute for Democracy and Economic Affairs (IDEAS), a strong proponent of free trade, has hit out at Putrajaya for allegedly dragging its feet over ratifying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Speaking at an IDEAS workshop on the CPTPP yesterday, the think tank’s director of research and development Laurence Todd said that while he was confident that Malaysia would ultimately ratify the pact, there was an urgent need for the government to set a clear timeline to ratify it this year.

Todd said there is an opportunity cost stemming from not being in the CPTPP, as the gap between Malaysia and those inside the treaty will widen, particularly with regard to trade and investment.

“The benefits are compounded by the opportunity cost of being outside, and that starts today frankly in terms of the gap between Malaysia and Vietnam, and it will just grow over time and as new members are added, and ultimately that will reach its peak opportunity cost when the US’ re-entry is put on the table,” he said.

The CPTPP has been in force in six countries (Japan, Mexico, New Zealand, Singapore, Canada and Australia), and from yesterday in Vietnam, a development which IDEAS views as opening up the risk that new trade and investment opportunities will be directed to Hanoi.

Todd also questioned Putrajaya’s decision to adopt a wait-and-see approach even to issues that are not part of its own manifesto commitments.

“There is [a] slight tendency from this government, on those issues not in the manifesto and that they had a clear position on, not to lead.

“To let debates play and decide as late as possible? I think we have seen that in other areas,” he said.

Todd said even if the government were to immediately agree to ratify the treaty, the earliest possible ratification date could be at the end of 2019. This is as the government has to amend more than 20 legislations in order to ratify the deal.

“Even with an immediate decision, ratification is unlikely in the first half of 2019. At the rate we are doing it, which is one amendment every six months, we are not going to be there for a while — the fastest you can do it is [at] the end of 2019,” said Todd.

Stressing the advantage of being part of the treaty, Todd said, Malaysia would be able to diversify and strengthen its position in the global trading system, as it is not in the driving seat for some of the agreements it is currently in.

“We have the Asean, Regional Comprehensive Economic Partnership [and] the Malaysia-European Union Free Trade Agreement.

“Ultimately, Malaysia is not going to be in the driving seat for these models. So from the Malaysian perspective, I think it needs to diversify its position in terms of participating in as many of these vehicles as possible in order to give yourselves the best possible position and advantages in the global trading system,” he said.

He added that in the event of the US showing fresh interest in the treaty, Malaysia would be in a stronger position for any future negotiations as part of the treaty.

“The conjecture is that Malaysia would be in a stronger position in any future negotiations with the US as a member of the CPTPP,” he said.