Trans - Pacific Partnership (TPP) FTA

The Trans-Pacific Partnership (TPP) is a Free Trade Agreement currently being negotiated by Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, United States and Viet Nam. The negotiations commenced in March 2010. The TPP is viewed as the precursor to the Free Trade Area of the Asia-Pacific (FTAAP).

The TPP members have agreed that the TPP will coexist with existing FTAs among members.

The scope of the agreement covers traditional FTA elements as well as new elements as follows:

-Market Access;
- Technical Barriers to Trade;
- Sanitary and Phytosanitary Measures;
- Rules of Origin;
- Customs Cooperation;
- Investment;
- Services;
- Financial Services;
- Telecommunications;
- E-Commerce;
- Business Mobility;
- Government Procurement;
- Competition;
- Intellectual Property;
- Labour;
- Environment;
- Capacity building;
- Trade Remedies; and
-  Legal and Institutional.

The TPP is aiming for a comprehensive, high-standard agreement with no exclusions

The Government has agreed to negotiate the agreed scope of the Agreement and adhere to the time-table of negotiations. Malaysia will negotiate for flexibilities in the sensitive areas.

In the TPP, the horizontal issues that are being discussed are regional integration, regulatory coherence, competitiveness, development, Small and Medium Enterprises (SMEs) and transparency.

- These are current issues that reflect the way businesses operate and workers interact in the 21st century. They are a logical outcome of the deepening regional integration developing within the region, especially with the implementation of new FTAs. There will be more emphasis on ensuring that regulations impacting trade and investment are developed in a manner that will encourage trade and investment facilitation and not impede it.

Discussions/negotiations on horizontal elements such as regulatory coherence and transparency can have a huge impact on deepening regional integration among the Asia-Pacific countries including Malaysia. In order to remain relevant and ensure that Malaysia continues to be one of the major production hubs within the region, issues such as these must be given serious attention. Issues such as transparency is also taking centre stage where traders and investors want clarity together with predictability.

- The developmental element is important considering the different levels of development among the members. Not only should the developmental agenda be aimed at assisting members to possess the ability and capability to implement the agreement but also a mechanism to achieve economic growth and realise full benefits from the agreement It is also imperative that the developmental agenda is maintained and pursued to ensure an open yet fair trading system. 

The difference between previous FTAs and the TPP is the inclusion of the added dimension of SMEs. The TPP aims to make it possible for SMEs to trade and operate in multiple TPP partners in a seamless manner

Membership in the TPP ranges from countries at one end of the development spectrum to the other. The developmental element in the TPP aims to assist members to not only possess the ability and capability to implement the agreement but also a mechanism to achieve economic growth and realise full benefits from the agreement.

Currently 20 Working Groups have been established in the following areas:

- Market Access;
- Technical Barriers to Trade;
- Sanitary and Phytosanitary Measures;
- Rules of Origin;
- Customs Cooperation;
- Investment;
- Services;
- Financial Services;
- Telecommunications;
- E-Commerce;
- Business Mobility;
- Government Procurement;
- Competition;
- Intellectual Property;
- Labour;
- Environment;
- Capacity building;
- Trade Remedies;
- Legal and Institutional; and
- Horizontal Issues.

The Chief Negotiators meet separately during each round to consider:

- Management issues such as negotiating process, new membership, Ministerial Meetings, media coverage and next steps;

- Horizontal issues such as development, SMEs, transparency, competitiveness and regulatory coherence; and

A unique feature of the TPP negotiations is the stakeholder consultations. These have become an integral part of the negotiation process and it is expected that every member that hosts a round make provisions for stakeholder participation.

- These stakeholder consultations take the form of seminars, briefings and presentations where stakeholders are welcomed to share their views and concerns with other stakeholders as well as the negotiators. The stakeholders that have participated thus far have come from the industry, civil society as well as specific labour and environment interest groups.

The TPP have established an agreed process of participation. The decision on new membership must be agreed collectively. Interested countries must undertake consultations with the TPP members individually and as a group. The objective of these consultations is for the interested countries to demonstrate their readiness to negotiate the agreed scope of the Agreement and adhere to the time-table of negotiations

Malaysia welcomes any country in the Asia-Pacific region to join the TPP provided they subscribe to the scope and objective of the TPP. These countries must undertake the agreed process for participation which involves consulting bilaterally with the individual TPP members and the group collectively to demonstrate its readiness to negotiate the agreed scope of the Agreement and adhere to the time-table of negotiations.

Over the past two decades, we have witnessed increasing economic integration occurring as a result of the FTAs. As a trade-dependent nation, Malaysia seeks market opportunities through FTAs which have become an integral part of Malaysia's trade policy.

- Malaysia has already established regional and/or bilateral FTAs with several of the current members of the TPP, e.g. Singapore, Brunei, Viet Nam, Australia, New Zealand and Chile.

- Nevertheless, Malaysia views the Trans-Pacific Partnership or TPP as a positive step towards deeper integration within the Asia Pacific region that would also allow Malaysia to continue to engage the US, which remains Malaysia's major trading partner and source of investment.

Note: Malaysia was involved in 8 rounds of negotiations to conclude the bilateral Malaysia-US FTA before negotiations were put on hold.

Participating in the TPP offers Malaysia several advantages. The current TPP membership means that once realized the TPP will create a single market of 466.9 million people (Australia, Brunei, New Zealand, Singapore, Peru, Vietnam, the US, and Malaysia), with the potential to increase further should countries like Japan, Canada and other APEC economies join in. Since the TPP is viewed by many as a precursor to the wider FTAAP involving all APEC economies, this could offer a potential market of 2.7 billion. For Malaysia, the export potential is a huge opportunity that should not be missed.

- The US remains an important trading partner and source of investment, and one that Malaysia currently has no preferential trading arrangement with. With the US as part of the TPP , an additional 11.7 per cent of Malaysia's global trade will be accorded preferential treatment. This would bring the total preferential trade to 71.2 per cent of Malaysia's global trade.

- Furthermore, Malaysia is expected to enjoy inflow of investments from third countries that may wish to use Malaysia as their base to penetrate the other TPP markets. This will ensure Malaysia remains an attractive production hub for value-added products and quality investments.

- The “Horizontal Issues” in the TPP like regulatory coherence facilitate production and movement along the supply chain covering all different TPP members. The ongoing discussions and final outcome can have a profound effect on Malaysia as it can ensure that Malaysia remains an integral part of that supply chain hence guaranteeing that Malaysia remains an attractive investment destination and production hub.

- SME negotiations in the TPP will also look into ways how the TPP can facilitate the development of SNEs and promote SMEs into the international market. This would certainly benefit Malaysian SMEs who are increasingly looking to expand to markets internationally

No deadline has been set for the conclusion of talks. The TPP countries regard the TPP as an important agenda. They acknowledge the wide scope of the issues and the high standards being pursued, the complexity created by existing bilateral arrangements and the diverse interest of the nine members and have agreed that substance should not be compromised for early conclusion. Nevertheless, TPP members hope to achieve substantial progress by the time of the next APEC Leaders' Summit in 2011

In order to ensure that a substantial outcome is reached before the APEC Leader's Summit in November 2011, a series of negotiating rounds have been agreed on, as follows:

- 5th Round Meeting, Chile, 14-18 February 2011

- 6th Round Meeting, Singapore, 28 March-2 April 2011

- 7th Round Meeting, Vietnam, 20-24 June 2011

- 8th Round Meeting, US, 6-10 September 2011

- 9th Round Meeting, Peru, 24 – 28 October 2011

- Where necessary, inter-sessional meetings will be arranged.

The TPP members have agreed to confidentiality clause which obligates each party to maintain strict confidentiality of all working papers and decision points taken during the course of the negotiations.