Just mention the TPP, and suddenly everyone is an expert on the matter, with their vast arguments and assumptions made. The question is, is everything the truth and based on facts?
In fact, there are certain quarters who tried to manipulate the issue, using it as ‘bullets’ to shoot at the government amidst claims of selling the sovereignty of the country to foreign parties and being insensitive to the wellbeing of the locals.
In an effort to unravel the truth, MalaysiaGazette’s very own AINULASNIERA AHSAN and NORLAILI ABDUL RAHMAN interviewed the Secretary General of the Ministry of International Trade and Industry, Datuk Dr. Rebecca Fatima Sta Maria at her office recently.
MALAYSIAGAZETTE: Can you please explain what Trans-Pacific Partnership Agreement is in layman’s terms?
REBECCA: It is a trade agreement among all the 12 member Asia Pacific countries designed to create a bigger market and to streamline rules for doing business. That's the broad story. Trade today is not as simple and straight forward as it was in the past or back in the day. Today trade involves all kinds of issues. Let me give you an example, this is only to share a story, not to create any comments. Recently in Bangladesh, a factory collapsed and thousands of people died. Looking at it, it is not sufficient for you to just say the factory collapsed; the textile factory in Bangladesh collapsed, end of story. You will then go on to say, it is the fault of the government for not assuring the safety of the building. The fault is with the people who constructed the building, corruption, cost-cutting, so they built a shaky building.
The fault is because the greedy factory owners, when the building only can house 1,500 people, cramped the building with 5,000 people and machines that are too big and too heavy for the foundation to bear. You can say all that. But when you look at it more globally, it also about international trade. There is a combination of several factors because it is international trade. What happened is, you have companies outsourcing the manufacturing and today is not as simple as that only. Those companies export or buy or get their products manufactured in low cost countries so that they can sell cheaply to the consumers who keep demanding for cheaper things. If you go to London, shop in Primark, it is one of the cheaper places to buy things. How can they sell cheaper things if they can't find cheaper manufacturers? So because consumers demand it, the owner of this factory then find places like Bangladesh to manufacture and the whole chain of governance over the production process becomes an international trade. At the end of the day it also involves human issues, human rights.
The fact that these people died and we don't know their condition and what situation they were working in becomes a human rights issue. Trade is not as simple as once manufactured then sell to Y. It is not like that anymore. Now it involves so many issues. So we are looking at labour laws in Bangladesh, what were the law that were broken. Then there are environmental laws, where was the factory built. So when you manufacture something, it is not just manufacturing for export but having to look at the context of the workers’ rights, the environment, what kind of emissions your factory is giving out and where are the wastes going. It becomes an issue which is beyond just manufacturing and exporting. That context when put in the TPP means, all these other issues have been considered in the TPP. So , this TPP then is not just about trade agreement but environment issues, labour rights, intellectual property (IP), who owns the IP when you manufacture. It seems a very complex agreement.
Is that the main reason why the TPP has been delayed for many times?
REBECCA: There are a lot of issues. And then you have countries with different stands on these issues, countries with different stands on labour issues, countries with different stands on IP, on environmental issues. And there are also criticisms that we will be using the US (United State) template. If we were to use the US template, we should have finalised on the agreement already. But the very fact that it is going into the 19th round of negotiations and still not concluded, means the US template doesn't work for these other countries. Some of the criticism don't make sense! If we were to go with the US template, Malaysia should have signed the bilateral agreement a long time ago. But we stopped because it wouldn’t work for us.
Some asked why we are starting it again then. It is because now we have a bigger group and the final objective is not the TPP but free trade agreement of the Asia Pacific, a bigger agreement that covers 21 countries in the Asia Pacific region eventually. We are just starting, still in the early process; at the end of the day the other countries can join in because the agreement is open to any of the 21 countries that are interested. It’s up to you. Japan just agreed, so they came onboard. We didn't tell Japan cannot come in, or it is closed door. It is not. The ultimate goal is the free trade agreement for Asia Pacific. A lot of allegation were made that we do not open the door to China, which is not true. China will host APEC and it may want to be a part of this agreement, I don't know. The country will consider the cost and benefits of joining this.
Why is Indonesia not involved?
REBECCA: Indonesia has a huge domestic market. They only sign very few free trade agreements, with different development projects from Malaysia. They have a huge market, enough for their own market. While Malaysia is a small market. At the end of the day (if) we do not export and do not open our market, we cannot see ourselves as a developed country. We can’t see growth. Where will the wealth generation come from if we just want to focus on a small market? That is my perspective. Sometimes, I think some of the arguments are not strong enough. If you have already made up your mind that you don't want Malaysia to be involved, you justify with reasons why we shouldn't be involved.
Do you know why too many parties oppose the implementation of the TPP?
REBECCA: For me it just been politicised. That's it. In fact I have talked to the `Bantah Group', we are actually on the same page with them, and we share the same perspectives. I mean, for example, when you work constructively what can happen? The `Bantah Group’ includes the anti-tobacco group. I told Dr. Molly Chia that I am not an expert on tobacco control but we are the signatory to the Framework Convention of Tobacco Control (FCTC). It is an international convention. Malaysia is a signatory to the convention. Therefore when you are a signatory you must make sure certain rules and laws in your country are aligned to that convention. She went on and on, telling me that the TPP will make it worst for the industry. I told her to help me then, help the negotiators. So I asked her to come up with the proposal that Malaysia can table it. And that’s what we did. She took the challenge and together we wrote up the text that Malaysia presented at this round. Everyone was so pleased because our text is better than the US text. I told her that you must help us get other countries to agree with the Malaysian proposed text, and that is what they doing now.
We also getting another group, the cigarette manufacturers who are not happy with us for tabling the text, involved. They are afraid that we are going to curb the cigarette trade. In every situation there are two parties. So, I explained to my officers, tobacco industry consists of two components, one is the market access of tobacco and the other one is the right of the government to regulate. As far as manufacturers are concerned, we can bring down the duties, doesn't matter; that is for market access but you manage the situation through your regulations. Some countries have zero tax for alcoholic beverages, technically possible but you can't do it so easily because all the regulations and licensing are already in place. That's the way you protect your citizens, whatever you want to call it. With Singapore it’s the same thing. We have the ability to protect ourselves. We have the right to still manage our industries. The right of the government is to regulate. In TPP we do this; otherwise companies can sue the government for putting up preventive regulations. There are examples where companies have been successful in suing the government. Phillips Morris against the Australian Government. Another one just happened, I don't remember the company, I think it was Marlboro that sued the Thailand Government. On a cigarette pack, 65 percent of the box must display the health warning, but the Thailand Government wants that to go up to 85 percent. So they sued and they won. We can use it as a basis to tell the cigarette companies not to be afraid because they (can) sue.
In that case the government has the right to implement regulation but is there a possibility of the government being sued?
REBECCA: Even without the TPP they can. Thailand is not a TPP member, Australia is also not a TPP member yet. It will happen regardless, if you want to. What we want to say within the context of the agreement is we don't want to make it easier. That's why we want that aspect in the agreement; the government has the right to regulate tobacco consumption. That is one example how we work with NGOs, we are not on different pages. It’s the same thing with the Aids Group. I have been telling the Aids Group that no way will the government give up the right to provide medicine, access to medicine for Aids patients. Right now even without the TPP our medicine prices are already expensive because our procurement is a very expensive process. But that is a separate issue. I tell them not to use the TPP as an excuse; they should work with the government to clearly make it simpler for medicine purchases. The real story is, they are actually barking up the wrong tree. Go and solve your own problem right now. We have the most expensive access to medicine in the world without the TPP. They should lobby that. Don't just imagine the worst first. MITI is also of the same opinion like you. We will not allow the agreement to stop us from accessing medicine. It is a fine balance at the end of the day - access to medicine, allowing it through your IP laws versus encouraging innovation in new medicines. I think the US position is that, there is no agreement. Right now the US is alone. All the other countries agreed that we cannot have IP laws that are strict and make it difficult for the production of generic medicine. All countries are aligned, except for the US. So now it is only working on ensuring flexibility from the US.
Are you aware that there are protests, and what will happen if negotiations are rejected by Malaysians?
REBECCA: That's their job to fix the noise every day. We at MITI have a lot of things to do. I need to clarify that we did some studies before this engagement. The more known is a UNDP study and now what we normally do as we go along is, we observe things developing. The studies were done years before we started the engagement. The studies didn't include Canada, Mexico and Japan. Things have changed. Now we have gone on to another stage and with all these concerns it is only right for us to do another take on the studies. What are the sensitive issues, what other possibilities to solve the issues and what if we go along with certain stands and what if we don't go along? What would the consequences be? That's the study that will be done by CIMB Asia Research Institute (CARI). They are doing the study for us. We have already started some discussions with them. They will identify the sensitive areas and we will analyse that.
Is there any turning back?
REBECCA: Not by just looking at where the issues come from. The cost and benefit will determine our move forward. Just like your question. The decision will be made after the new analysis is done. The first study we did was back in 2010 without including Canada, Mexico and Japan, and so much had changed. The dynamics have change, that time we were thinking that those were the possibilities and just use the US template. But now things have change and along with changes, a very different study had to be done. So this is a new one, and will be a marker for us to determine whether to move forward or stop here. If we move what are the consequences, and if we stop what will be the consequences. That will come from the study. We give them (CARI) three months, starting 1 September.
So the study has just started?
REBECCA: Yes, that's why I was surprised some people said that they have not been consulted. It has not started yet. The cost benefit will be more economic. They will consult different groups. All members of the `Bantah Group’ will also be consulted. Another study is The National Interest Analysis which will be done by ISIS. Its module is more to political analysis, looking at the geopolitics. For that one, they really have to talk to all people who truly `bantah' (protest) beyond economic issues. Another one is by Teraju who are doing a study on the impact to Bumiputeras. After receiving the reports, we will table them to the Cabinet. Explain the situation. Then wait for the Cabinet to agree or disagree. That's it.
You mentioned sensitive issues. What kind of sensitive issues will arise in the TPP?
REBECCA: IP issues, government procurement, Bumiputra issues. Bumiputra issues will be embedded in government procurement, state owned enterprises (SOE) environment maybe, the labour issues. We must understand when the first time we did the study, we didn't include tax. Even now, there is no tax issue, but it in the discussion. Now when you hear people say something, it means they have some ideas. Based on this, we will make the information available to the researchers all the facts so that they can do a proper analysis.
What is your comment when people say that the TPP is MITI's KPI?
REBECCA: No, it is not. That's truly terrible. I can say this, the TPP is not our KPI. Our KPI is a lot of other things. Our KPIs are trade values, investment numbers, employment numbers, how many companies we have managed to develop. Those are our KPIs, our core business. TPP is not a KPI but if it happens, it is a policy matter towards further enhancing Malaysia’s competitiveness and trading position. It is not like if we didn't implement it we don't get the marks. That is nonsense!
I know some of the things I was told earlier were because many of us involved here are non Malays. And as I have said so many times, we may be non Malays but we are Malaysians. That is the most important thing. And being Malaysian we are so devoted to this country. This is our country. I told an MTEM guy that I am more Malaysian than he is. My roots are so deep in this country. MITI is one of the more diverse ministries. The diversity in MITI you don't see in any other ministry; the diversity in terms of race, religion and gender. This diversity is our strength, not our weakness and that is my foremost perspective. I strongly believe we are identified as Malaysians because we are Malaysians, not because of our race. If you are not Malay or you are not a Muslim, it doesn't mean you are not loyal to the country. Nobody should question my loyalty to the country. I have been working with this government more than 30 years and have never given away secrets. For me the allegation is a horrible thing. You tell another Malaysian they are less Malaysian because they are not Malay. That is apartheid for me. It is just terrible that you should discriminate like this. I told my officers, just because I am not Malay, doesn't mean I not loyal to my country. Whatever it is, I have been here, my family have been here donkey years and our first loyalty is to Malaysia. I negotiated so many agreements, I quarrelled with people when I negotiated with the European Union (EU). I even said to the EU that Malaysia have no intention to conclude any agreements with them.
Are you the one who insisted to ensure that TPP has to be implemented?
I have said this so many times that if the government asks me to stop, I will stop. If the government says to proceed with the agreement and negotiate, I will negotiate to the best of my ability for the interest of the country. If they said stop, I will stop. Why do I want it to be implemented so badly? I am only a civil servant.
I now understand the issues and the situation, but people out there do not understand the whole story. What will you do to clear the air?
REBECCA: We held so many briefings and presented many reports. Members of the `Bantah Group' have also attended so many meetings with us. You know, some of the members in `Bantah Group' have businesses with the USA - their partners are also US-based.
Why does Malaysia still need the TPP when we already have bilateral agreements with most countries except the USA?
REBECCA: TPP is not about the USA. The ultimately aim is the trade agreement with the 21 countries. But maybe not now; it may take 10 years. They will eventually be members. It is like the WTO. When we started the WTO, Malaysia was one of the earlier members. New members who want to join have to contribute to the membership. Countries like Laos and Cambodia are more open than Malaysia was today. They are late comers to the game. When they wanted to be members, they have to pay higher prices compared to when we started. Another interesting example is Malaysian Airlines System Berhad (MAS). When MAS was initially offered to be a member of oneworld Star Alliance, we refused to participate. Finally when we wanted to become a member of Star Alliance, we had to push and worked so hard. There were countries in Star Alliance who said they didn’t want MAS to be in. That was why we took a long time to get into One World. It took long time to negotiate for that.
So, if we do not participate in the TPP, will we face the same problem?
REBECCA: Whatever will be negotiated, they don't need your stand because these countries already have their own views, and we have to face with new terms and data. Whatever terms will be decided by them. They are bigger countries that have bigger population and lesser issues. We depend on these markets, no matter what you say; the US is a big market for us, it could be bigger. If tomorrow Vietnam comes in, we will lose to Vietnam because they will have better access than us. If another year Thailand comes in, we will be competing with Thailand. This agreement doesn't mean that if we sign it today, everything will happen today. Take the ASEAN agreement for example. We started negotiating in 1993 and the reality was fully reached in 2010. So you can imagine how many years it took us then. The services agreement for ASEAN negotiated in 1995 was fully realized in 2015 - it was 20 years of implementing an agreement. It didn’t happen overnight. We signed an agreement with Japan in 2005 but full realization will only be in 2016. It takes a long time for it to come into force. When we negotiate, we negotiate on adjustment and transition periods and paving in. The only exception we had was an unusual situation with Australia. They gave us zero tax immediately. Sometimes people make it more frightening than what it actually is. Agreements are for long term not short term.
Do other countries involved in the TPP face the same situation?
REBECCA: They also have their own NGOs. Everybody have the tobacco groups, the Aids groups. Issues are similar, that's why we negotiate to ensure there are balances between what the industries want and what is good for the people. We work that balance.
There are some quarters claiming that the TPP is not a collateral agreement which means all members have to sign it with the US individually. This is actually different from what I have understood earlier. So, perhaps you can clarify on this matter.
REBECCA: I don't understand why people look to the US as so good. We are equal in this world. Why do we make the US so special? If they are so powerful or so great, why is it that this has dragged to the 19th round? We should have finished earlier because we just have to follow the US template.
I tell you what, when we did the FTA, it was a harmonization of regulations because for example, for ASEAN we have one set of regulation, ASEAN-China one set, ASEAN-India one set. What we are doing in ASEAN is try to harmonize the regulations. We try to create the same situation with the TPP. What we are looking are at the regulations and making it easy. Once you harmonize the regulations it is easy to create businesses, otherwise if we want to do business with Mexico we have different regulations, with Japan another set of regulations. If you harmonize across the countries, it will make things easier, that's all
Do you think MITI should be the initiator to discuss the TPP in Parliament?
REBECCA: Datuk Seri Mustapa Mohamed also proposed a debate in Parliament. Our system doesn't require it but the minister said with so much public interest in this, it is okay to have the debate. The opposition is asking for Parliament to appoint a Committee, but the minister thinks it makes more sense to have the debate. That is up to the government to make the decision, we just follow.
Another issue is rice. We have explained it before. They frightened the farmers. With rice, whether you bring down the duties or not, we only have one buyer. Bernas can buy rice with zero duty at any site in the world without duty. With or without FTA, it is only Bernas. Like tobacco, we can bring down duties, but our regulations only allow X, Y and Z to buy. In the case of rice, we can bring down the duties, but the US cannot dump their rice here because they have to sell to Bernas. Our main supplier is Vietnam not Thailand. On paper it is 20 percent, but in reality it is zero because only Bernas can import. I don't understand why they are frightening the farmers. This is just common sense.
What about government procurement?
REBECCA: This is the most difficult for me. Procurement and SOE are the most difficult chapters in the TPP. We can't leave out procurement. That's why the PM requires special workshops to engage with the different parties. Like what we did for the investment, we called in all the experts. The procurement will put under the Ministry of Finance, they will manage this with the industries. The US already has come out with formulation for the states, unless the states disagree, then the states will be included. They have also carved out different segments for small businesses, women, war veterans, the disabled. That constitute to up to 33 percent of the US government procurement segment. It's up to us how we want to spread it out. If we want to cover SME or Bumiputra, it is up to us. Then you go to the formula for goods and services, there is a threshold. For instance, foreign companies can only bid projects that are beyond the threshold, anything below it must be given to locals.
So we have to determine what is the level we should set the threshold at. The problem is where you draw the threshold. At WTO the threshold is quite low, about RM20 million for construction. That's the worry. It's up to us to negotiate, but everybody must agree. That was the WTO agreement and that is a starting point. That is our issue, now it is whether they agree that below RM20 million belongs to Malaysians and above we can open to everyone. We decide how we can get to the threshold, we have a time frame. Those are all the issues we have to discuss, before negotiating