TPP: Eight questions the Malaysian government must answer

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Concerned Malaysian raises a string of questions that should be answered before Malaysia signs the Trans-Pacific Partnership agreement.

1) Will Malaysian patients have to pay for the higher cost of biologic medicines?

Biologic medicines can be US$569,000 per patient per year when they are under monopoly. Malaysia agreed to a five-year monopoly on biologic medicines, even when they are not patented in the TPP, something that is not currently in Malaysia’s law.

Since biologic medicines are often not innovative enough to get a patent – but Malaysia will still have to give this five-year exclusivity due to the TPP even when they are not patented – will Malaysia be increasing the Ministry of Health’s budget enough to cover the higher cost of these medicines for the life of the TPP? Or will Malaysian patients have to pay these costs out of pocket?

2) Has Malaysia carried out the required human rights impact assessments?

Has Malaysia done the human rights impact assessment on the Conventions that Malaysia has agreed to (e.g. the Convention on the Rights of the Child which includes the right to health) that the UN Special Rapporteurs on human rights said should be done, before agreeing to the TPP provisions? If so, what were the results?

3) Will the FET provision lead to a standstill in Malaysian laws and regulations?

The fair and equitable treatment (FET) provision in the investment chapter is the most successful way investors sue under US treaties. (74% of the time when investors win, there has been a violation of FET, and FET has been found to have been violated in 81% of the cases won by investors when they allege a violation of FET.)

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The provision has been interpreted as a standstill on laws and regulations. (No new laws/regulations or amending them if they harm foreign investors.)

Since the FET provision in the TPP is the same as in the Central America-US FTA where it was tested twice and both times the attempted narrowing of the meaning in the text was ignored, how can Malaysia be sure that the interpretation of FET will not lead to a standstill in its laws and regulations?

Given the agreed need to reregulate after the current global financial crisis, why did Malaysia agree to FET applying to financial services for the first time in a US FTA, when FET can prevent further financial regulation without any relevant exceptions?

4) Why didn’t Malaysia insist on a cap on damages if it loses an investor-state dispute settlement (ISDS) case?

US investors are the most litigious (twice more litigious than investors from the next most litigious country) and they get a broad interpretation of their rights 98% of the time.

A government which lost an international arbitration case had to pay US$50bn in 180 days.

If Malaysia does not pay up if it loses an ISDS case, the US government can raise the tariffs on Malaysia’s exports until it pays this fine.

So why didn’t Malaysia insist on a cap on the damages it is liable for under the TPP investment chapter or a restriction on the interest it has to pay if it loses (i.e. using simple interest instead of the compound interest, compounded every month, at commercial interest rates, from the date the government took the action. which can add up to US$500m in interest alone)?

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5) Why didn’t Malaysia insist on the health and environment exceptions for investments and intellectual property?

Given the number of investor-to-state cases that have successfully challenged health and environment measures and the lack of sufficient safeguards in the investment chapter, why didn’t Malaysia insist on the health and environment exceptions in the TPP’s exceptions chapter applying to the investment chapter (and the intellectual property chapter, given the impact of stronger intellectual property protection on the affordability of medicines)?

6) How many laws, regulations and policies will Malaysia have to change at all levels of government to comply with the TPP?

Update: Two days after this article was published, the government revealed that 26 federal and state laws would have to be amended. These reportedly pertained to migrant workers, Sabah and Sarawak, intellectual property rights and circulars including those related to government procurement.

7) Will Malaysia agree to take on more obligations in the certification process after signing the TPP?

(Certification is the process required by the US fast-track law which enables it to extracts more concessions from other free trade agreement countries as a condition for allowing it to begin operation.)

8) Where do the GDP and trade benefits come from?

The PWC cost-benefit analysis of the TPP that was recently released had 90% of the GDP gains coming from reduction in non-tariff measures (NTMs) such as subsidies and ‘technical measures’ (which are unspecified).

But in the TPP, only export subsidies are removed (which the US does not currently use and the World Trade Organisation (WTO) just banned in Nairobi last month). So the US’ more than US$100bn in annual domestic subsidies for agriculture, which can help their exports including to Malaysia, are untouched by the TPP.

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So how can the PWC study justify its projected gains for Malaysia from the TPP? Furthermore, the United Nations Conference on Trade and Development includes intellectual property (IP) as an NTM and the TPP text released by Miti shows that IP protection increases, rather than PwC’s assumption that it decreases by 50%.

PWC and other economists find that the TPP will worsen Malaysia’s balance of trade (by US$12billion/year), and its assumptions that lead to its projected gains i.e. increased investment are unjustifiable, according to economists. So where do the benefits come from that outweigh the costs of the government procurement, investment, state-owned enterprises, intellectual property. etc chapters?

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