PETALING JAYA: The Consumers’ Association of Penang (CAP) wants Malaysia to withdraw from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) before it comes into force in 60 days as it says the free trade agreement has “far more costs than benefits”.
CAP president Mohideen Abdul Kader said the association was “shocked” that the Cabinet had decided to ratify the controversial FTA despite a cost-benefit analysis (CBA) commissioned by the international trade and industry ministry underestimating the negative impact of joining the CPTPP.
In a statement, Mohideen said the CBA did not reflect the actual CPTPP text. Instead, he said, its modelling exercise was about “a different hypothetical free trade agreement”.
“In claiming that Malaysia’s gross domestic product, investment, wages and tax revenue will increase, the CBA uses unrealistic assumptions such as full employment in Malaysia and no change in government revenue even when tariff revenue is lost, because the CPTPP requires Malaysia to remove all its tariffs on imports from other CPTPP countries,” he said.
“The CBA itself admits that the estimation of these benefits is based ‘to a certain extent’ on ‘intuition’. For example, parameters include NTMs (non-tariff measures) which are difficult to quantify.
“The CBA also acknowledges that it has assumptions or characteristics ‘that may not entirely represent real-world features’.
“It is, therefore, unbelievable that Miti has relied on a problematic CBA that nevertheless points out many high costs to conclude that ‘it is clear that the benefits accruing from the ratification of CPTPP far outweigh any potential costs that may arise’.”
Mohideen also noted that Miti had promised Parliament earlier that the CBA report would be open for parliamentary discussion, then backtracked to say it would be posted on its website.
“And now, when the country is on the brink of a general election, the Cabinet, without any qualms, has moved to ratify the CPTPP and rushed off the legal instrument,” he said.
He also said Miti had consistently downplayed a major intrusion into national sovereignty in accepting the right for foreign investors to sue the government directly if their profit interests were affected by government actions, including those that were legitimate, under the CPTPP’s investor-state dispute settlement (ISDS) provision.
He said other countries “trapped” in recent ISDS cases had to pay compensation “in the billions” after private arbitration proceedings which bypassed national courts and did not provide for public accountability.
A Bernama report on Wednesday quoting Miti said the Cabinet had agreed to ratify CPTPP and had officially submitted the instrument of ratification to New Zealand as the CPTPP depositary on Sept 30.
The ministry said a CBA on the trade deal projected that total trade would increase to US$655.9 billion in 2030 through the CPTPP.
The CPTPP is a free trade agreement among Malaysia, Australia, Brunei, Canada, Chile, Japan, Mexico, Peru, New Zealand, Singapore and Vietnam.
The agreement came into force for Australia, Canada, Japan, Mexico, New Zealand and Singapore in December 2018, for Vietnam in January 2019, and Peru in September 2021.
Brunei and Chile are now the only countries which have yet to complete their ratification processes.