KOTA KINABALU: DAP Sabah has cautioned the State Government the impacts the Trans-Pacific Partnership Agreement (TPPAA) could bring to the Sabah economy.
DAPSY National Publicity Secretary cum DAP Sabah State Assistant Secretary Junz Wong proposed the State Government set up a committee to study the effects of the free trade agreement on Sabah.
Malaysia is currently negotiating the agreement with Australia, New Zealand, Brunei, Vietnam, Singapore, Japan, Canada, USA, Mexico, Peru and Chile. It is scheduled to be concluded in October 2013 with the next negotiating round to be held at the end of August 2013 in Brunei.
Junz said a number of the 29 chapters of the TPPA currently being negotiated could affect Sabah. He gave two examples.
The TPPA includes the USA and the USA has a strong template which requires other countries to sign in their free trade agreements (FTAs). Therefore although the TPPA text is secret until it is signed, what is likely to be in it can be seen from the publicly available past USFTAs which are all very similar.
Malaysia currently has export taxes on crude palm oil (CPO) and the Sabah Government receives a 7.5% cess (export tax on crude palm oil).
Past USFTAs have required countries signing them to ban export taxes on products between them. Therefore the TPPA is almost certain to prevent Malaysia from having any export taxes on exports of palm oil to the (currently 11) other TPPA countries.
(Malaysia is also currently negotiating an EU FTA and the EU typically tries to ban or at least restricts export taxes on products to the EU. If agreed to, this would mean that the Sabah Government would lose export tariff revenue from CPO exports to another major market).
“What will this mean for the Sabah Government’s revenue?” Junz asked.
Both Sabah and Federal Governments could lose palm oil industry revenues as the golden goose of the national economy, he explained.
Junz also pointed out that past USFTAs have liberalised services and investment on a negative list basis. In the TPPA, this would mean that every sector is opened to investors from other TPPA countries, unless all countries agree to give Malaysia an exception (‘non-conforming measure’). All TPPA countries including Malaysia have agreed to negative list services and investment liberalisation.
Negative list liberalisation means that companies and people from other TPPA countries could own land in Sabah, unless all TPPA countries agree to give Malaysia a non-conforming measure for land ownership but it has to be negotiated.
“It simply means by entering into TPPAA, TPPA foreign investors can come freely and own even Sabah native lands and Sabah or Federal Government can be sued in International Court for huge compensations if we refused,” he said.
He disclosed that leaked texts confirmed that the TPPAA is a typical US free trade agreement (FTA). Past USFTAs have required constitutional changes or overridden the constitutions of the (non-USA) countries which have signed onto them.
For instance, the North American Free Trade Agreement (NAFTA) required Mexico to alter Article 27 of its Constitution – that was the land reform provision that broke up large plantations into “ejidos” community plots the right to which could be passed down in families but not sold outright.
The change not only allowed outright sale of these lands, but also widened foreign ownership rights, i.e NAFTA undid the progressive land reform that had redistributed land from large plantations to families.
“As TPPAA is a legally binding agreement between all TPPA countries which could result in Sabah compromising its constitution when it clashes with the treaty. Thus Sabah must set up a special committee comprising of both ruling and opposition leaders to have an indepth studies on TPPAA implications and make the closed-door negotiations transparent to the public,” Junz added.