National Interest Analysis of Malaysia's Participation in the Trans
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NATIONAL INTEREST ANALYSIS OF MALAYSIA’S PARTICIPATION IN THE TRANS-PACIFIC PARTNERSHIP INSTITUTE OF STRATEGIC AND INTERNATIONAL STUDIES (ISIS) MALAYSIA This report was prepared by: Firdaos Rosli H.K Yong Juita Mohamed Ahmad Rafdi Endut Puteri Nor Ariane Yasmin Justin Lim Ming Han Nursalina Fairuz Salleh Steven C.M. Wong This study report has been prepared in good faith based on four main criteria: 1. All assessments were carried out based on the final TPP text that was released to the public domain on Thursday, 5 November 2015. 2. The study report was conducted independently by the Study Team of ISIS Malaysia and facilitated by the Government of Malaysia. 3. The Study Team observed the confidentiality requirements of the Non-Disclosure Agreement. The release of any part of this study report is at the discretion of the Minister of International Trade and Industry, Malaysia. 4. This study report is prepared for discussion purposes only. 1 PREAMBLE At a Cabinet meeting held on 15 August 2013, the decision was taken that the Institute of Strategic and International Studies (ISIS) Malaysia should conduct an objective and independent National Interest Analysis (NIA) of Malaysia's participation in the Trans-Pacific Partnership (TPP). The first meeting with the Ministry of International Trade and Industry (MITI) was held on 9 September 2013 and preparatory work commenced soon after. This document represents the final study report of the NIA and covers the national interest criteria and its impact on Malaysia’s security, social and economic interests. BACKGROUND OF THE STUDY The TPP was initially a free trade agreement (FTA) between the four Asia Pacific Economic Cooperation (APEC) countries of Brunei Darussalam, Chile, New Zealand and Singapore (P4). It was signed on 3 June 2005 and came into force on 1 January 2006. In September 2008, the US Trade Representative announced that the US will negotiate entry into the P4 agreement. In November of the same year, the governments of Australia, Peru and Vietnam announced their inclusion as well. The TPP is an economic partnership agreement negotiated by 12 countries in three continents, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam. MITI commissioned a study by the United Nations Development Programme (UNDP) in May 2010, which listed the key advantages and challenges to Malaysia entering into TPP negotiations. The Malaysian Cabinet gave the go-ahead to join the negotiations in August 2010 and it became the ninth member of the pact, participating as a full negotiating member in October 2010 during the third round of negotiations in Bandar Seri Begawan. 2 OBJECTIVES SCOPE OF WORK The study aims to evaluate Malaysia’s national interests in being a The scope of work in this NIA covers relevant policy documents, party to the TPP agreement. The following objectives are covered reports from past studies, TPP releases, Expert Research, in the study: memorandums submitted to the Government by various NGOs and i. to formulate the NIA Framework in order to address the final TPP text. definitions as to what constitutes the country’s national interests; and Whenever relevant, the study is also intended to provide a reference ii. to analyse the impact and implications of becoming party or comparison with other economic partnership agreement and to the TPP. This study attempts to identify the potential preferential treatment and examine the depth of liberalisation to be benefits, risks, opportunities, and the challenges on undertaken by the country. Malaysia’s participation in TPP. The output of the study attempts to address the following : i. The potential opportunities, threats and challenges to Malaysia OUTPUT AND DELIVERABLES from the TPP member countries; ii. The externalities that would be derived including efficiency This study report finalises the NIA study that was conducted gains, transfer of technology, increased productivity, and starting September 2013. Preparatory work to finalise this study increased competitiveness of Malaysian firms; and report started soon after the conclusion of the TPP negotiation on iii. Implications towards the rakyat on the issue of access to affordable medicine, cost of living, consumerism, and market 5 October 2015. This report took 25 days (5-30 November 2015) to study the final TPP text. access. 3 TABLE OF CONTENTS PREAMBLE .............................................................................................................................. 2 Background of the Study .................................................................................................. 2 Objectives ......................................................................................................................... 3 Output and Deliverables ................................................................................................... 3 Scope of Work .................................................................................................................. 3 Glossary ..................................................................................................................................... 6 Executive Summary ................................................................................................................... 9 Consequences of Not Participating in the TPP ........................................................................ 13 Malaysia’s National Interest Analysis ..................................................................................... 16 Framework ...................................................................................................................... 16 Methodology................................................................................................................... 17 Understanding Positions Taken By Negotiators............................................................. 18 Role of Government Policy ............................................................................................ 18 PILLAR I: SECURITY............................................................................................................ 19 Sovereignty and Security ................................................................................................ 19 Geopolitical Consideration ............................................................................................. 30 Food Security.................................................................................................................. 38 Energy Security .............................................................................................................. 41 Technology and Cyber Security ..................................................................................... 44 Health and Safety Safeguards ......................................................................................... 47 Public Order and Stability .............................................................................................. 58 4 PILLAR II: SOCIAL ............................................................................................................... 67 Bumiputera Participation and Welfare ........................................................................... 67 Education / Human Resource Development................................................................... 77 Good Governance ........................................................................................................... 79 Social Harmony .............................................................................................................. 87 Cost of Living ................................................................................................................. 89 Labour Standards .......................................................................................................... 100 Environment ................................................................................................................. 108 PILLAR III: ECONOMIC ..................................................................................................... 115 Market Access .............................................................................................................. 115 Investment .................................................................................................................... 140 Competition .................................................................................................................. 163 Small and Medium Enterprises (SMEs) ....................................................................... 177 Innovation ..................................................................................................................... 187 Job Creation .................................................................................................................. 192 Wealth Creation ............................................................................................................ 196 APPENDIX: TABLES AND FIGURES ............................................................................... 200 STAKEHOLDER’S ENGAGEMENT LIST ......................................................................... 222 5 GLOSSARY ABS Access Benefit Sharing EEV Energy-efficient vehicles AFAS Asean Framework Agreement on Services EEZ Exclusive economic zone AMS Asean Member States EIF Enter-Into-Force AP Approved Permit EU The European Union APEC