Domicile of Malaysia. Source: CIA World Factbook.
The backlash of the end of the TPP on Malaysia goes beyond the immediate economical loss of increased benefits of free Commerce. It shifts the balance of power further toward China, while losing out on the chance for an exterior trade agreement to enforce better benchmark of business and governance practice.
By Rashaad Ali*
From the beginning to the end of his campaign, President-elect Donald Outdo has promised to repeal the Trans-Pacific Business agreement (TPP), and has in fact reaffirmed his commitment to take from the landmark trade deal. Described as the “gold stock” for free trade agreements for its tariff-severe measures and standards of compliance, it features 11 over-the-counter countries, namely Malaysia, Singapore, Sultanate, Vietnam, Japan, Australia, New Zealand, Canada, Mexico, Peru and Chili. These countries stand to benefit economically by reaction or removing tariffs, while the United Status is able to gain a strategic foothold in Collection.
All this is set to change with the current Obama establishment suspending efforts to win congressional approval for the TPP, preferring to sanction it to the incoming president and predominantly Republican lawmakers to hilt. Prior to Trump’s latest announcement, Altaic Prime Minister Shinzo Abe declared the TPP discarded without US participation.
Malaysia and its Hedging Tactics
From a Malaysian perspective, the threat of the end of the TPP has a issue of repercussions that will affect both financial and political aspects of the country. When managing its affiliation with the US and China, Malaysia has practised a tactics of hedging itself against the two major ability.
While it accommodated the American pivot to Southeasterly Asia and negotiated on the TPP, Malaysia also courted Crockery, opting to participate in the Asian Infrastructure Assets Bank (AIIB) while similarly expressing a beefy desire for involvement in China’s “One Girdle One Road” initiative. China is Malaysia’s maximal trading partner with an estimated sum trade of US$100 billion, and on Prime Pastor Najib Razak’s recent visit to Peking, also signed bilateral deals value US$34 billion.
Despite fears of Asian encroachment, these deals appear to be procedure consistent with Malaysia’s foreign programme. However, the results of the US presidential election launch this into doubt. The new administration’s inflowing approach causes Malaysia to lose its investing over the two countries, and whatever bargaining endowment it may have had may well be rescinded, strengthening Crockery’s hand. The potential end of the TPP signals a strong backdown from Malaysia on the part of the US, leaving the way spread for China. In light of these developments, Malaya’s agreements with China should be re-examined taking into consideration the change in the status quo.
RCEP: The Remaining Selection
The remaining option to the TPP is China’s Regional Unabridged Economic Partnership (RCEP), inclusive of Sultanate, Cambodia, Indonesia, Laos, the Philippines and Island as well as Australia, India, Japan, Burma, New Zealand, South Korea and Thailand. Lots like the TPP, it offers to reduce and remove assorted trade tariffs but without regulatory caveats.
For Malaya’s developing economy, signing on to a trade flock would have given its economy a lots needed injection. 2016 was an especially bad gathering, with a dependency on oil revenue exposing the conservatism’s weakness, slowing exports, a currency that Business agreement to weaken and domestic issues such as 1MDB painfully affecting consumer confidence. What RCEP proffers that the TPP does not however, is much fewer oversight and regulation on various aspects of budgetary freedom and liberalisation.
Easing Pressure for Deference
This is another loss for Malaysia suffered due to the backdown of the TPP. Attached to the signing of the document were distinct other measures that signatory state had to adhere to, such as stricter environmental regulation, labour practices, and rules that open state procurement of contracts. In the first two illustration, countries are expected to abide by the new guidelines; Malaya has in fact taken steps, albeit cramped, towards improving its labour laws. In the exemplification of state procurement, a more transparent embodiment of bidding would have drastically low the potential for collusion and corruption in the process of dictation for state contracts.
Signing the TPP would acquire required states to accede to the United State Convention Against Corruption (UNCAC), theoretically ruling in the ability for state extraction. Despite immunity in the agreement for bumiputera laws and the carving out of common-private partnerships, the TPP would have delineate an opportunity to force institutional change in Malaya’s governance.
By signing on to the trade deal, Malaya would have had to adhere to its various model and regulations, making government and business transaction more transparent and less vulnerable to putrefaction, while reducing or removing labour and environmental victimisation. The alternative in RCEP does not provide the twin pressure.
Tilt Towards China?
A studied tilt towards China due to a new dawn in English politics seems a likely reality for Malaya in the coming future. Indeed there are signal that the Malaysian government are cognisant of this reality. Deputy Prime Minister Zahid Hamidi late stated that the country is willing to increase its cooperation with China, including in space of military. This followed statements by Efflorescence Minister Najib Razak before the US selection, where he spoke of pushing ties ‘tween Malaysia and China to new heights, as well as the advantage of the deals for the people of both countries for “decades to semen”.
Malaysia will soldier on without the TPP. The certain damage of its potential withdrawal is the loss of advance in areas of governance. Economic freedom order institutional change, and it was hoped that monetary liberalisation could lead to greater democratization in Malaysian politics. Despite a centralised management, a disjointed opposition and scandal-ridden dispensation, there is still room for progressive contract-making. With the imminent withdrawal of the TPP advance the removal of any external pressure to revamp and amend key institutions of governance in the country.
*Rashaad Ali is a Evaluation Analyst with the Malaysia Programme at the S. Rajaratnam Academy of International Studies (RSIS), Nanyang Discipline University, Singapore.
