QUESTION TIME Try as I might, I find this advance strong opposition to the Trans-Pacific Partnership Agreement (TPPA) - which has not been agreed to yet - rather difficult to understand and puzzling to say the least.

This agreement, effectively a free trade agreement (FTA) between countries on the Pacific rim, is still under rather active negotiation and so far there is still considerable disagreement among the potential partners.

NONESome people, and some of them very influential at that including a former prime minister, have basically urged that Malaysia even withdraw from the talks, which is rather short-sighted and completely irrational.

What’s wrong with negotiating for a good  FTA among a number of like-minded countries which will give free and fair access to each other’s markets and crystallise some rules for international trading? We are only negotiating at this stage, after all.

There are many things that have been said about the TPPA which are simply not right as pointed out in this article, and the misinformation continues with the issue getting a life of its own and many people jumping on the bandwagon.

Let’s be clear about a few things. First, Malaysia is a trading nation, one that is large for its size - ranking around 20th in the world in terms of trade. But its domestic market is small - exports are one of the mainstays of the economy and are likely to become more important in future.

Much of Malaysian production depends on access to markets overseas. If these are closed off for any reason, including because Malaysia is not part of a major free trade arrangement such as the TPPA, the consequences can be dire.

The TPPA includes 12 negotiating countries now. Two of these are the US and Japan. The US is the largest economy in the world, Japan is the third largest. The other nine countries besides Malaysia are Australia, New Zealand, Chile, Peru, Mexico, Canada, Singapore, Vietnam and Brunei Darussalam.

The combined size of the market, as measured by the goods and services produced of the 12 countries, amount to a staggering US$33 trillion while Malaysia’s market size is less than a hundredth that at just US$300 billion. That means that Malaysia will have a much larger access to the markets there.

Out of the US$33 trillion, the biggest markets are US and Japan with about US$15 trillion and US$6 trillion respectively, accounting for US$21 trillion or nearly two thirds of the total market size, with the rest of the 10 making up about US$12 trillion, about a third.

Also, the TPPA may well be the model for a FTA with the European Union, a US$18 trillion economy which will increase market size by over 50 percent. China, a US$7 trillion economy, has stayed out so far because it has a large domestic economy.

Smaller countries have much more to gain

Given such a breakdown, the argument that multinational companies or MNCs will gain huge market access may be exaggerated. So long as trade opening is on a reciprocal basis, smaller countries will have much more to gain than to lose by a TPPA, provided that it is not lopsided in favour of the rich countries.

Economic buffs will understand Ricardo’s law of comparative advantage which basically states that even if some economies are more efficient than others, everyone benefits from the dismantling of protectionism which increases productivity overall. A good short explanation of the law can be found here for non-economic buffs.

So who are the people who are really opposed to TPPA, even before it is negotiated? Probably the ones who are most afraid are those who want protectionism to continue for their own (not the people’s) benefit.

NONESo it is not surprising that the Malay Economic Action Council or MTEM and associated groups are at the core of many protests, refusing to even take part in dialogues over TPPA. MTEN is a lobby group for Malay business interests who are afraid that their opportunities for business might be reduced with opening up.

But even here, it is possible for carve outs where exemptions can be made for affirmative action. Apparently, even the US has affirmative action for special groups and they want exemptions for them as explained by International Trade and Industry Ministry officials here. So what’s the fear?

Another person very publicly against the TPPA is former prime minister Dr Mahathir Mohamad. No doubt, he is pushing the bumiputera agenda but he may also be interested in protecting one of his brainchilds, probably the most inefficient industry in the country - the manufacture of cars.

azlanBut seriously, Proton has been given enough time to become efficient - almost 30 years. Probably the only thing which will eventually enable it to become competitive is simply to open it up to competition. Then it will have to find a way to survive or it will die. The Malaysian car buyer has suffered for way too long.

It is worthwhile remembering that the really efficient parts of industry, those who are able to compete efficiently in the world markets such as palm oil producers and glove producers and many members of the Federation of Malaysian Manufacturers, want the TPPA so that they will have equal access to large markets.

For the moment, it is imperative that Malaysia be part of the negotiating process so that it can best represent its own interests instead of staying out and having no representation in possibly one of the largest FTAs ever to be drawn up.

That way it  has every opportunity to work with those of similar minds to ensure that a fair deal is struck. If a fair deal can’t be struck and the balance is not in favour of the country as a whole ( as against some lobby groups), then simply don’t sign at that point of time.

But it will be ridiculous, illogical, foolhardy and highly irresponsible for Malaysia to stay out of negotiations right now and abdicate completely the right to representation. Malaysia simply must participate in the negotiations. Why is that so difficult to understand?

P GUNASEGARAM is founding editor of KiniBiz.