TPPA will lead to greater inequality, job losses, says economist

Former senior United Nations official Jomo K.S. gestures during the Malaysian Economic Association 2016 Trans-Pacific Partnership (TPPA) forum in Kuala Lumpur today. – The Malaysian Insider pic by Najjua Zulkefli, January 11, 2016.The contentious Trans-Pacific Partnership Agreement (TPPA) will lead to greater inequality and net job losses over a 10-year period among member countries, said former senior United Nations official and renown economist professor Jomo K.S.

Economic gains from the United States-driven supra-trade pact would also be negligible at 3% over the span of 10 years for developing countries in the TPPA while developed countries would only see gains of less than 1% in the same period, he said.

Jomo said these findings were from a yet-to-be released UN study on the impacts of the TPPA which he had led. The full study uses the UN’s own global policy economic model (GPM) to anticipate the TPPA’s impact on its 12-member countries.

Speaking at a forum on the TPPA today, Jomo said the modest economic impact of the TPPA should force Malaysia to reconsider signing on to it, given that the pact could significantly alter the country’s ability to craft national policy.

This is since unlike previous trade pacts, the TPPA introduces new rules for how a country manages, among others, intellectual property rights, labour affairs and the operations of government-linked companies.

It also allows foreign investors to sue governments through the Investor-State Dispute Settlement (ISDS) mechanism for loss of business and potential profits as a result of national policy decisions.

In his presentation, Jomo said these projections are due to how the TPPA would likely change economic activities in member countries.

“First, the production for export will partly replace production for domestic markets with negative consequences. Exports are less labour intensive and use more imported inputs than production for domestic markets.

“Second, businesses in participating countries will strive to become more competitive by cutting labour costs. This will have a negative effect on income distribution and weaken domestic demand,” Jomo said in his paper titled Why Parliament Should Reject the TPPA in the Public’s Interest.

Jomo was one of the speakers at the Malaysian Economic Association’s forum on the TPPA. Others include Bank Muamalat chairman Tan Sri Mohd Munir Majid, Federation of Malaysian Manufacturers president Datuk Seri Saw Choo Boon and University Malaya law professor Prof Gurdial S. Nijar.

In his comments, Gurdial said the deal’s proponents claimed that the ISDS system had safeguards which prevent frivolous suits against governments.

But these safeguards still did not stop companies from suing several governments over policies which they claimed interfered with their ability to turn a profit.

In 2014, there were 608 governments that were sued under the ISDS primarily by US corporations, with 60% of those suits being against governments in developing countries, said Gurdial.

“We are now suspending bauxite mining operations because of public health and environmental hazards. Imagine with ISDS, if a foreign company was involved in mining and we stopped them, we could get sued.”

Gurdial questioned the impartiality of ISDS as it was an open secret that the judges who sit on these international arbitration tribunals are also lawyers who represent corporations suing governments. – January 11, 2016