TPPA – what we must know

I think this TPP has become big issue in our country. As non economy people, most of us don’t really know about this partnership between among those country that sign the agreement.
What is the Trans Pacific Partnership (TPP) agreement?

The Trans Pacific Partnership (TPP) agreement is a set of trade and investment negotiations among 12 Asia-Pacific countries to cut tariffs, improve access to markets and set common ground on labour and environmental standards and intellectual property protections.
There’s twelve countries represent 36 percent of the world economy including Malaysia, New Zealand, Australia, Brunei, Canada, Chile, Japan, Peru, Mexico, Singapore, Vietnam and the United States of America.

What the effect on TPPA to us ? MalaysianInsider give their opinion which is good for to share
Effects on inflation/ cost of living

TPPA may result in GDP growth but at the expense of inflation. That is, the TPPA may (quantitatively) heighten or contribute to imported inflation. The same goods sold in one member country may be much higher than in Malaysia. And this may not be reflected in the purchasing power parity (PPP), i.e. the domestic price of the exporting country may exceed the exchange rate with the importing country.

Effects on income and wealth distribution

Can the government guarantee that our Gini co-efficient will be lower as a result of TPPA? Or will the income and socio-economic divide exacerbate?

Effects on wages

Will the country be forced to continue its heavy dependency on foreign migrant labour to keep wages down and thus maintain “competitiveness” – and will this eventually intensity so that there is wage compression (for the locals)?

Effects on jobs

Is the TPPA a stepping stone towards a much more integrated and unified and cohesive structure where freedom of labour, capital and services extends now also to freedom of movement (as the “last” frontier of national sovereignty, i.e. so-called “open borders”?) Since the TPPA is not an ordinary free trade agreement (FTA), this means that our borders will be open (in the future) to twelve or (even) more countries.

Effects on corporate taxable income – profit shifting, base erosion, transfer pricing

Will the regime under TPPA encourage MNCs to divert and declare taxable profits in/ to other jurisdictions (other than Malaysia) especially in relation to economic activities that are related to intellectual property (IP) – at least in the short- to medium-term? This is in particular reference to the tech & IT, bio & agro-tech and pharmaceutical companies that maintain IP hegemony, dominance and monopoly. Formally, the TPPA not only facilitates economies of scale but eminently well poised to provide the geographical “cover” as an integrated economic area. Will there be private deals between the government of Malaysia and the aggressive tax avoiding corporations?

Effects on government revenue – compelled to rely even more on consumption tax – GST to be increased to double-digit?

Under the TPPA regime, will the government be induced to drastically (instead of incrementally) lower the corporate tax rate (which at 25% is currently not as comparably competitive) so continually ensure a competitive base for foreign direct investment (FDI)? And correspondingly, will the government be “compelled” to pursue the agenda of increasing its tax intake via GST?

Effects on the ringgit – exchange rate

Will Malaysia be forced to devalue the ringgit to maintain “competitiveness” under the TPPA regime?

Effects on monetary policy – will there be policy and political pressure and/ or constraints

Will Bank Negara (be pressured to) abandon its conventional practice of monetary stability – in favour of, e.g. nominal GDP targeting – in the event that economic growth is in the doldrums – in accordance to the dictates of the TPPA regime? That is, will there be the pressure to supposedly inflate the aggregate demand via loose monetary policy and boost credit creation vis-à-vis the TPPA? This in turn would probably make Malaysia would more vulnerable and susceptible to the “sentiments” of international bond traders. Unlike the US and UK, Malaysia has neither the experience in “money-printing” (e.g. asset swapping) nor the self-declared flexibility to increase its deficit spending (because of self-imposed targets influenced by neo-liberalism).

Effects on free movement of labour?

Will the TPPA converge with the Asean Economic Community’s policy of free movement of labour (skilled and unskilled)? Again, this would impact on local employment and domestic jobs market.

– See more at: TheMalaysianInsider
Do you agree with the opinion. Let’s share your point of view about TPP/TPPA.

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