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This article first appeared in The Edge Malaysia Weekly, on Month November 16 - 22, 2015.

 

Ministry of International Trade and Industry (Miti) Secretary General Tan Sri Rebecca Fatima Sta Maria seems confident when she says there is no downside for Malaysia if it signs the Trans-Pacific Partnership (TPP) agreement.

“With this final text, no, there is no downside,” she says in an exclusive interview with The Edge.

Nevertheless,  the TPP has come under fire for a number of reasons, and Miti has come under criticism.

“Sometimes people say some really silly things and I don’t want to engage. But basically, if you look at the deal that’s on the table, I don’t understand why people are complaining … I am not getting it. Is it because they haven’t read it [the text of the TPP]?” asks Sta Maria.

To recap, the TPP is a free trade agreement (FTA) between 12 countries — Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, Vietnam and Japan — touching on a wide range of subjects. An agreement was reached on Oct 5 after seven years of negotiations, with the respective countries to ratify the agreements by next year.

While the TPP has come under much scrutiny, the bottom line is, it has its merits (see sidebar)

Despite that, the TPP has been under attack from all corners, including by Majlis Tindakan Ekonomi Melayu (MTEM), NGOs and opposition politicians.

The latest to join the fray is the Malaysian Council for Tobacco Control, which claims that Putrajaya had agreed to get tobacco control measures out of the TPP in 2013, but then backed down. Basically, the carving out of tobacco control measures enables a country to develop its own rules for tobacco products, which may include banning or taxing them.

Opposition lawmaker Ong Kian Ming tells The Edge, “Critics and supporters of the TPP tend to only focus on a few selected items that have been featured in the popular press rather than have a more systematic and balanced analysis of all sectors covered by it . Both sides do not concede that there are pros as well as cons.”

 

The main issues     

The main issues that have cropped up include the purported higher cost of medication under the TPP, government procurement, and other matters that stem from the seemingly secret way in which the main tenets of the TPP were negotiated.

On the higher price of medication, opposition lawmaker Wong Chen says in New Zealand, the government has accepted that under the TPP, medical costs will rise, and urges the Malaysian government to come clean.

However, presentations by Miti indicate that the patent-protection clauses in the TPP are not all that different from the country’s current regulations.

In a nutshell, there is a class of drugs called biologics which are used to treat AIDS and cancer, among other diseases.  However, these biologics are very expensive, even for a small dosage.

The problem arises when generic versions, known as biosimilars, which only cost a fraction of the price, are not made available. That’s because TPP’s data exclusivity clauses prevent biosimilars from entering a market until the protection period for the biologics has expired.

Some critics had assumed that Malaysian law does not protect biologics, but Sta Maria clarifies, “Initially, we didn’t have a way of protecting biologics, so we used our present law, and it is being protected as if it is a pharmaceutical. For biologics, the US wanted 12 years, Australian law was eight years. We didn’t have any protection to begin with, so now, we are protecting for five years … which is not bad.”

Ong says while there has been a lot of discussion over the patents for biologic products, which may increase the price of pharmaceuticals, there is less certainty as to the specific drugs that will be affected by the TPP, and the number of patients that will be impacted in Malaysia,

“Are we talking about a few thousand or hundreds of thousands of patients? The answers to these sort of questions are not clear, at least to me,” he says.

 

Of course there’s secrecy

It has been chaotic from day one with many questioning the reason for the secrecy in the TPP negotiations, compounded by talk of the prices of medicine and pharmaceuticals surging.

Sta Maria refutes this: “Which negotiations are not held in secret? I don’t understand that, and people were going on and on and over and over again about how we were negotiating in secret.”

But it’s not just about the secrecy.  

Ong explains that the government isn’t doing itself any favours in terms of explaining the benefits and potential costs of the TPP, since it involves explaining current shortcomings in government procurement and enforcement of labour and environmental standards.

“The opponents of the TPP, especially among the NGOs, have been much more effective in using social media and forums to highlight possible shortcomings of the agreement, even before it was finalised,” he says.

He adds that Miti, which has not released the cost-benefit studies related to the TPP, gives the impression that there is something to hide, as studies by PricewaterhouseCoopers and the Institute of Strategic and International Studies (ISIS) have already been completed.

Sta Maria counters that a cost-benefit analysis can only be done when the negotiations are finalised.

“How can you do one (cost analysis) when the negotiations are not final and still evolving?” she asks. She adds that many discussions were as transparent as possible, with the Minister of International Trade and Industry Datuk Seri Mustapa Mohamed having had 153 engagements on TPP.

Miti, it seems, even went so far as to adopt “cleared advisers”, a similar process to the US. These advisers have the details of the negotiations, but have to sign a non-disclosure agreement.

“We invited a lot of people — FMM (Federation of Malaysian Manufacturers), MTEM, Datuk Abdul Farid Alias (Maybank CEO), (corporate personality) Tan Sri Munir Majid … everybody. We tried to be as fair as possible. We had meetings with Khazanah, Petronas and others,” Sta Maria says.

“I’ve never briefed the cabinet so many times … so actually, no minister should say he does not know. Also, before we leave for the meetings, we get the mandate, we brief ministers, so there was no negotiation in secret. The process was very transparent, it was very inclusive. If nothing, we’ve learnt to be open about the whole process.”

It’s  ironic that Sta Maria and her team have come under so much flak, when  they are ecstatic about the recent developments.

Policies that favour bumiputeras have been preserved, with bumiputera contractors still enjoying 30% of jobs being carved out for them, and the margin of price preference for bumiputera suppliers and manufacturers being maintained. State-owned enterprises such as Khazanah Nasional Bhd, Petroliam Nasional Bhd (Petronas) and various pension funds have been exempted from TPP regulations.

“We negotiated it, we’ve carved out for bumiputeras (contractors), we’ve carved out some for SOEs (state-owned enterprises), all our pension funds, Khazanah, Petronas, have all been taken out, so if you are looking at it, this agreement is to a large extent status quo for Malaysia,” Sta Maria says.

Ong, meanwhile, says that an honest discussion on the TPP cannot just focus on the limited number of disputed areas but should include larger questions and objectives surrounding the agreement, but the larger questions need to be discussed by policymakers in the country as part and parcel of the discussions.

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