Asian Development Bank official says only Malaysia can withdraw from regional trade pact with US up to 2 years after signing
By P Prem Kumar
KUALA LUMPUR – A lead economist at the Asian Development Bank revealed Friday that Malaysia is the only country granted the option to withdraw from a controversial regional trade pact with the United States up to two years after signing the agreement.
Jayant Menon said that under the opt-out clause, clearly indicated in a side letter to the Trans Pacific Partnership (TPP) agreement, Malaysia could exit the deal negotiated between 12 countries within the 24 months the country’s parliament has to ratify it.
“I’m amazed how Malaysia was able to secure this. But, I think it was the good work of International Trade and Industry Minister Mustapa Mohamed as a negotiator,” he told reporters in Kuala Lumpur.
He added that Malaysia was “perhaps the most successful in securing exemptions in many sensitive areas,” listing government procurement, reform of state enterprises or government-linked companies and protection in certain areas of intellectual property reforms as examples.
“With so many exemptions, probably it is not a big deal for Malaysia to go through with the TPP after all,” Menon said.
While the deal is expected to open up a market with a gross domestic product worth $27.5 trillion to Malaysian companies, the emergence of anti-TPP movements in the country has battered efforts to justify the agreement’s benefit to the general public.
A draft of the final agreement will be presented alongside two cost-benefit analyses to Malaysia’s parliament later this month.
Leaders of the 12 countries involved are set to sign the deal in New Zealand on Feb. 4, subject to the approval of their legislatures.
Menon, however, underlined Friday that the first step for the realization of the TPP first depended on it receiving approval from the U.S. Congress.
“There is no guarantee that it will. The Republicans have to be supported in large numbers as the Democrats are already opposed to it,” he said.
“Politics is playing a bigger role now. There is no guarantee that the TPP will simply pass through Congress. We just to have to wait and see,” he added.
In addition to Malaysia and the U.S., the TPP was negotiated between Japan, Mexico, Canada, Australia, Chile, Singapore, Peru, Vietnam, New Zealand and Brunei — which represent more than 40 percent of the world’s gross domestic product.
Their negotiations were completed in early October in the U.S. city of Atlanta.
The world’s largest economy, China, has initiated a counter Regional Comprehensive Economic Partnership (RCEP), however, between ten Southeast Asian countries and Australia, India, Japan, South Korea and New Zealand.
In Malaysia, the main areas of concern in the deal include state-owned enterprises, labor and Bumiputera rights — privileges granted to ethnic Malays considered economically weaker than the minority ethnic Chinese.