TPP DERAILMENT: (From left) Malaysian Institute of Management (MIM) chairman Datuk Ng Tieh Chuan, Asean Strategy Leadership Institute (Asli) CEO Tan Sri Dr Michael Yeoh, Mah, Asli director Tan Sri Ramon Navaratnam and MIM CEO Sivanganam Rajaretnan at the launch of Ramon’s book titled ‘Malaysia’s Transformation Challenges — Debating Public Policies’ in conjunction with the 19th Malaysia strategic Outlook Conference 2017 in Kuala Lumpur yesterday. Malaysia stands to lose over RM7b in potential CPO exports to TPP member countries in the next 4 years, following the new us administration’s decision to dismantle the controversial trade pact.
Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said Malaysia’s CPO exports to 11 TPP member countries stood at RM13 billion in 2014, and were expected to touch RM20 billion by 2021 (Pic by Muhd Amin Naharul/TMRpic)
Malaysia stands to lose over RM7 billion in potential crude palm oil (CPO) exports to Trans-Pacific Partnership (TPP) member countries in the next four years, following the new US administration’s decision to dismantle the controversial trade pact.
Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said Malaysia’s CPO exports to 11 TPP member countries stood at RM13 billion in 2014, and were expected to touch RM20 billion by 2021.
He said the CPO exports would have benefitted tremendously from the significant export tariff reduction proposed via the TPP on CPO imposed among major importers — namely the US, Canada and Mexico.
“Currently, the US imposes tariff as high as 18% on Malaysia’s CPO and palm products. TPP would have reduced the tariffs significantly and that would have been a boon to our export figures.
“Not only the US, but tariff reductions in Canada and Mexico would have boosted exports,” he told reporters after officiating at the 19th Malaysia Strategic Outlook Conference 2017 yesterday.
US President Donald Trump had on Tuesday signed an executive order for the US to formally withdraw from the TPP trade deal, keep- ing his promise that was made during his presidential campaign.
To mitigate the loss of TPP’s potential to exports of Malaysian commodities, Mah said the ministry will work harder to export to new destinations and enhance movements in existing markets.
Meanwhile, Mah said a decision on the enforcement of the Malaysian Sustainable Palm Oil (MSPO) certification will be made by the end of next month. By then, the government will also announce whether the MSPO would be made compulsory to all oil palm industry players — both large estates and smallholders.
Mah added that the MSPO is very critical to mitigate the perception of Malaysia’s palm oil globally. Such certification is also a standard practice in foreign countries.
Meanwhile, Minister for International Trade and Industry (MITI) Datuk Seri Mustapa Mohamed said Malaysia and 10 other TPP member countries will meet and deliberate on all available options before deciding the future of the controversial trade pact.
He noted that chief negotiators from the 11 countries will be in constant communication to discuss all available options to realise the TPP.
“They have been working closely in the last five years and will continue to communicate with each other,” Mustapa said in a statement yesterday, released after Trump’s announcement.
As the TPP fizzles, Mustapa said Malaysia would turn its focus to enhance the economic integration of Asean in the context of the Asean Economic Community Blueprint 2025; push for the timely conclusion of the Regional Comprehensive Economic Partnership (RCEP); as well as pursue bilateral free trade agreements (FTAs) including TPP members — which Malaysia currently does not have any preferential trading arrangements with.
Former MITI secretary-general Tan Sri Dr Rebecca Fatima Sta Maria said TPP member countries should now explore a multilateral trade agreement excluding the US.
She commented that the new multilateral trade pact can utilise similar framework as the TPPA, thus not consuming time and energy.
“All the countries have spent over five years to negotiate what is best for each of them. So, why put all that to waste?” she told reporters on the sidelines of the conference.
She said TPP member countries should sit down and discuss whether they want to amend the agreement clause to enable them to go forward with TPP, even without the US.
Sta Maria stated it would be presumptuous to think that only the US can be the driver for TPP and negate the efforts of the other 11 countries.
Director of the Economic Studies Programme at Jeffrey Cheah Institute on South-East Asia Prof Dr Yeah Kim Leng said the shelving of TPP is expected to pave the way for Malaysia to pay greater attention to other regional trade partnerships that would mitigate all the related losses, following the unravelling of pact.
Yeah said the immediate impact of TPP’s derailment on Malaysia is very minimal.
However, the effect can be felt in the long term should Malaysia remain separated from other global trade developments.
“It gives us the opportunity to look at other mega regional trade pacts such as the RCEP. We also have the Asia-Pacific Trade Area,” Yeah said.
He added that Malaysia should also move forward and be part of other regional trade arrangements which would bring Malaysia closer to mega-economies — namely China, India, the Middle East and Africa.
Meanwhile, the RCEP is being negotiated by the 10 South-East Asian countries, along with China, Japan, South Korea, Australia, New Zealand and India.
It is touted as the world’s largest free trade deal as it will cover half the world’s population and — with a combined output that stood at US$22.7 trillion (RM100.79 trillion) in 2014 — almost 30% of the global economy.
In 2015, the total trade of RCEP economies reached US$10.8 trillion, while total foreign investment inflow hit US$366.3 billion.