I just wanted to draw your attention to the Free Trade Agreement that the US and Malaysia will begin negotiating come June. The US has signed several similar agreements with other countries, the closest to home being the recent attempt with Thailand which was met with a 10,000 people strong demonstration by the citizens of Thailand. (The Thai-USA negotiations are currently on hold because the Thai Government is in caretaker mode).
These agreements are not just about selling another Nike shoe or the opening of the US market to our products or people – for the US it is all about securing market share and having a strong economy (no country ever won a war by being poor) through being allowed into our countries on an equal footing with Malaysians, the controlling of our natural resources and our sovereignty.
These agreements are of a new breed and are very wide ranging, dealing with issues such as government procurement, investment, intellectual property rights. From the word go it is hard for Malaysia to effectively negotiate because of a lack of local data on various sectors in this country. For example, in the FTAs a negative list is used for services and investment, meaning that every sector is liberalized unless protected by being listed on the negative list. This is not the case under WTO where developing countries can choose the sector it wishes to liberalise and how much. Furthermore, based on existing USFTAs, all of Malaysia’s tariffs on goods coming from the USA whether they are manufactured products or agricultural will have to be reduced to 0%. This and the negative list would very much kill infant industries if not properly protected, plus we would have to be soothsayers to know what industries need protecting in the future. We will be tying ourselves down almost blindly and a USFTA would make it virtually impossible to move up the value chain and become a more technologically advanced economy.
There is one thing that is absolutely clear – Malaysia should not sign the agreement. If at all Malaysia negotiates with the US it should be at WTO level where the developing countries can come together and protect themselves. What the US is trying to do through these bilaterals is to break the resistance of developing countries by entering into one on one agreements with us which are more onerous than anything asked for under WTO.
None of the countries which have signed the FTA with the US have benefited, not even Australia. Why do they sign then? For the developing countries it is pressure eg US now gives preferential tariffs to a lot of third world countries at its sole discretion which it can be revoked at anytime – it holds these against those who resist; another reason is stealing a march on neighbours – here, the intention is to be the first to get the benefit of preferential treatment by the US, but this benefit will be eroded under WTO in time and also when other countries enter into similar FTAs with the US.
Why is the FTA so bad – won’t it mean better goods and services, lower prices and advancement due to competition, industrialization and globalization? The answer is a flat out no. A lot of the theories argued in favour of opening markets fully really do not have any proven basis economically and what is reported in the media is not what it really is.
There will be less competition, de-industrialization if the FTA comes into force. What there will be is among other (many many more) things, more expensive medicines, health treatments and the control of our natural resources by the US. The US has a standard model FTA that it uses and based on an analysis of past FTAs we have found the following to be true:
The US will seek to have stronger patent laws which will allow it to patent its inventions here for longer periods of time. This means for eg. in the case of medicines – significantly delayed introduction of generic versions of medicines which is what brings the prices down. Malaysia has a fantastic generic medicine industry and this will be strangled if a USFTA is signed. A USFTA will mean more medicines are patented for longer and even when there is no patent, another form of monopoly called data exclusivity will stop generic medicines being sold. The free trade agreement will not encourage competition it will kill it – the persons who drafted the provisions in relation to this issue are the big pharmaceuticals in the US and they have only one thing on their mind – profits.
The US will also seek to patent – health treatments and methods – imagine the way an operation is carried out being patented, the method which a doctor diagnoses you being patented – they tried this in the US but had to do away with it because everyone started suing each other. So the US requires of us what they don’t require of their own citizens.
The US will also seek to patent animals and plants for eg neem and basmati rice in India – they didn’t succeed. If they succeed in doing this, it means they will control what is a natural resource and our farmers may not be able to plant padi without paying royalty.
The difference of price between patented medicine and generic price in Malaysia can be as much as 1044%. One example – drugs for AIDS patients used to cost as much as RM1,500 per month, now costs on RM72-00 per month. For this group, for asthma patients, for diabetic patients – it is a matter of life and death.
Under the FTA – the US will require us to reduce all tariffs to 0. We currently have 40% tariffs on rice to help our farmers survive. Reducing this to 0 will mean that our rice farmers will have to fight much cheaper US imports (as agriculture is heavily subsidized in the US). How will they survive? With larger subsidies from the government? But how can the government afford to pay higher subsidies when it has no more income from tariffs on imports from the USA? How will it make up this income when it loses it? Higher taxes on its citizens, higher oil prices?
There are also other provisions – one of the most insidious to me being the “expropriation” clause. What this clause requires is this: that the Malaysian government cannot do anything that will negatively impact on a US investment in Malaysia. If it does the Malaysian government can be sued in the international court by a US individual – not the US govt - but any US individual who feels his investment has been affected can sue the govt. And if we do not comply with paying up compensation, the US can impose retaliatory tariffs against our country. How this translates is this – say the US wants to build a toxic waste dump in Malaysia and we refuse on grounds of public health – it may be possible that that rejection will amount to expropriation. What it also means is this –that every time we want to draft policy, pass a bill, send out a surat pekeliling we have to think – will this breach the FTA? Is that not a loss of sovereignty? Our ability to live and breathe as Malaysians as we choose will be a thing of the past. Existing laws will have to be amended – there is a case in Guatemala arguing that it will have to amend 130 provisions of its CONSTITUTION to comply with what was agreed under its USFTA.
The point is – the government is negotiating an agreement which experience shows only benefits the US, yet it has been represented to the US that the Malaysians will not oppose the agreement. How can we in fact when the Malaysian public is not being told much? More information is posted on http://www.ftamalaysia.org/ and there is an excellent issue of Resurgence, a magazine by Third World Network that has good coverage on the FTA experiences of other countries and a good explanation of the issues involved. Let me know if you want a copy. The latest copy of Utusan Konsumer which will be available in Popular bookstores next week or on the FTA website above, carries the issues too. You can also check out the TWN website at http://www.twnside.org.sg/ and the latest happenings in Parliament on Mr. Lim Kit Siang’s blog http://blog.limkitsiang.com/
The government needs to show its people the cost benefit analysis which it has done to justify the FTA. We need information and we will only get it if we ask.
The government is intending to complete the agreement by the end of the year – the rush is because Bush has fast track approving authority (ie agreement cannot be amended by Congress) which will end mid next year. The one negotiating the agreement for the US is the US Trade Representative and he cannot promise many things most importantly of which are VISA requirements which is the role of Congress. Even if we succeed in getting a VISA, many professionals will not be able to work in the US if they do not get their qualifications recognised which is usually not controlled by the Federal but State govt. Tradewise – what have we to give to the US? We are US’ 18th trading partner while they are our no. 2 importer. Trade sanctions against the US will not be more than an ant bite to them, but trade sanctions against us may well be devastating.
See write up on the issue in Asia Times and an excerpt from Mr. Lim’s blog.
There is a petition on the http://www.ftamalaysia.org/ website (also attached herewith) – it would be great if you could sign it and send it off to the PM.
These agreements are not just about selling another Nike shoe or the opening of the US market to our products or people – for the US it is all about securing market share and having a strong economy (no country ever won a war by being poor) through being allowed into our countries on an equal footing with Malaysians, the controlling of our natural resources and our sovereignty.
These agreements are of a new breed and are very wide ranging, dealing with issues such as government procurement, investment, intellectual property rights. From the word go it is hard for Malaysia to effectively negotiate because of a lack of local data on various sectors in this country. For example, in the FTAs a negative list is used for services and investment, meaning that every sector is liberalized unless protected by being listed on the negative list. This is not the case under WTO where developing countries can choose the sector it wishes to liberalise and how much. Furthermore, based on existing USFTAs, all of Malaysia’s tariffs on goods coming from the USA whether they are manufactured products or agricultural will have to be reduced to 0%. This and the negative list would very much kill infant industries if not properly protected, plus we would have to be soothsayers to know what industries need protecting in the future. We will be tying ourselves down almost blindly and a USFTA would make it virtually impossible to move up the value chain and become a more technologically advanced economy.
There is one thing that is absolutely clear – Malaysia should not sign the agreement. If at all Malaysia negotiates with the US it should be at WTO level where the developing countries can come together and protect themselves. What the US is trying to do through these bilaterals is to break the resistance of developing countries by entering into one on one agreements with us which are more onerous than anything asked for under WTO.
None of the countries which have signed the FTA with the US have benefited, not even Australia. Why do they sign then? For the developing countries it is pressure eg US now gives preferential tariffs to a lot of third world countries at its sole discretion which it can be revoked at anytime – it holds these against those who resist; another reason is stealing a march on neighbours – here, the intention is to be the first to get the benefit of preferential treatment by the US, but this benefit will be eroded under WTO in time and also when other countries enter into similar FTAs with the US.
Why is the FTA so bad – won’t it mean better goods and services, lower prices and advancement due to competition, industrialization and globalization? The answer is a flat out no. A lot of the theories argued in favour of opening markets fully really do not have any proven basis economically and what is reported in the media is not what it really is.
There will be less competition, de-industrialization if the FTA comes into force. What there will be is among other (many many more) things, more expensive medicines, health treatments and the control of our natural resources by the US. The US has a standard model FTA that it uses and based on an analysis of past FTAs we have found the following to be true:
The US will seek to have stronger patent laws which will allow it to patent its inventions here for longer periods of time. This means for eg. in the case of medicines – significantly delayed introduction of generic versions of medicines which is what brings the prices down. Malaysia has a fantastic generic medicine industry and this will be strangled if a USFTA is signed. A USFTA will mean more medicines are patented for longer and even when there is no patent, another form of monopoly called data exclusivity will stop generic medicines being sold. The free trade agreement will not encourage competition it will kill it – the persons who drafted the provisions in relation to this issue are the big pharmaceuticals in the US and they have only one thing on their mind – profits.
The US will also seek to patent – health treatments and methods – imagine the way an operation is carried out being patented, the method which a doctor diagnoses you being patented – they tried this in the US but had to do away with it because everyone started suing each other. So the US requires of us what they don’t require of their own citizens.
The US will also seek to patent animals and plants for eg neem and basmati rice in India – they didn’t succeed. If they succeed in doing this, it means they will control what is a natural resource and our farmers may not be able to plant padi without paying royalty.
The difference of price between patented medicine and generic price in Malaysia can be as much as 1044%. One example – drugs for AIDS patients used to cost as much as RM1,500 per month, now costs on RM72-00 per month. For this group, for asthma patients, for diabetic patients – it is a matter of life and death.
Under the FTA – the US will require us to reduce all tariffs to 0. We currently have 40% tariffs on rice to help our farmers survive. Reducing this to 0 will mean that our rice farmers will have to fight much cheaper US imports (as agriculture is heavily subsidized in the US). How will they survive? With larger subsidies from the government? But how can the government afford to pay higher subsidies when it has no more income from tariffs on imports from the USA? How will it make up this income when it loses it? Higher taxes on its citizens, higher oil prices?
There are also other provisions – one of the most insidious to me being the “expropriation” clause. What this clause requires is this: that the Malaysian government cannot do anything that will negatively impact on a US investment in Malaysia. If it does the Malaysian government can be sued in the international court by a US individual – not the US govt - but any US individual who feels his investment has been affected can sue the govt. And if we do not comply with paying up compensation, the US can impose retaliatory tariffs against our country. How this translates is this – say the US wants to build a toxic waste dump in Malaysia and we refuse on grounds of public health – it may be possible that that rejection will amount to expropriation. What it also means is this –that every time we want to draft policy, pass a bill, send out a surat pekeliling we have to think – will this breach the FTA? Is that not a loss of sovereignty? Our ability to live and breathe as Malaysians as we choose will be a thing of the past. Existing laws will have to be amended – there is a case in Guatemala arguing that it will have to amend 130 provisions of its CONSTITUTION to comply with what was agreed under its USFTA.
The point is – the government is negotiating an agreement which experience shows only benefits the US, yet it has been represented to the US that the Malaysians will not oppose the agreement. How can we in fact when the Malaysian public is not being told much? More information is posted on http://www.ftamalaysia.org/ and there is an excellent issue of Resurgence, a magazine by Third World Network that has good coverage on the FTA experiences of other countries and a good explanation of the issues involved. Let me know if you want a copy. The latest copy of Utusan Konsumer which will be available in Popular bookstores next week or on the FTA website above, carries the issues too. You can also check out the TWN website at http://www.twnside.org.sg/ and the latest happenings in Parliament on Mr. Lim Kit Siang’s blog http://blog.limkitsiang.com/
The government needs to show its people the cost benefit analysis which it has done to justify the FTA. We need information and we will only get it if we ask.
The government is intending to complete the agreement by the end of the year – the rush is because Bush has fast track approving authority (ie agreement cannot be amended by Congress) which will end mid next year. The one negotiating the agreement for the US is the US Trade Representative and he cannot promise many things most importantly of which are VISA requirements which is the role of Congress. Even if we succeed in getting a VISA, many professionals will not be able to work in the US if they do not get their qualifications recognised which is usually not controlled by the Federal but State govt. Tradewise – what have we to give to the US? We are US’ 18th trading partner while they are our no. 2 importer. Trade sanctions against the US will not be more than an ant bite to them, but trade sanctions against us may well be devastating.
See write up on the issue in Asia Times and an excerpt from Mr. Lim’s blog.
There is a petition on the http://www.ftamalaysia.org/ website (also attached herewith) – it would be great if you could sign it and send it off to the PM.
Karina Yong
Legal Advisor
Third World Network/ Consumers' Association of Penang
No. 10, Jalan Mesjid Negeri
11600 Penang
Tel No.: 04-829 9511; Fax No.: 829 8109
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1 comment:
Malaysia have been foolishly entering into bi-lateral and multi-lateral trade agreements whereby the end result would prejudicial and detrimental to the interest of the Malaysian citizen and Malaysian public.
When Malaysia joined the World Trade Organisation(WTO), they also became party to many trade agreements, like the TRIMs (Trade Restrictions Invesment Measures Agreement) - and now Malaysia can no more place "local content" and/or "transfer of technology" requirement and/or conditions on foreign companies. Now most of the Malaysian companies are companies that provide for these "local content" requiement - what will now happen to these Malaysian companies - what will happen to the workers in these companies. Malaysia also cannot now impose conditions about the necessity of a certain percentage of Malaysians in the edministration, management and/or technician/engineers of the company. How many Malaysians will lose their jobs and there will most likely a reduction of job prospects of Malaysians in these foreign companies that come to Malaysia and open factories to produce their products?
Malaysian government has in no way acted for the best interest of Malaysians.
Patriot
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